Question

You are an OD practitioner that has been called on to help in the merging of two financial organizations (both international organizations). One organization is primarily in the property and casualty business but has also recently purchased an HMO organization focused on healthcare and insurance. The other organization is a large provider of life insurance, pension insurance and other financial investment businesses. The first company mentioned has an entrepreneurial culture. The second company is very process driven and approaches work in a very team-based manner. Your job is to assist leadership in facilitating an effective merger so that the overall organization can quickly return to profitability and be perceived by shareholders as an effective combination of talent and business units.

How would you diagnose what is needed? What suggestions might you make to have competing cultures merge into one that works together effectively? What types of information might you collect and what tools might you use to effectively diagnose what is needed? What type of suggestions would you suggest to the new leadership to effectively manage change? What type of human resource or process interventions might be required to handle resistance to change?

Provided all or most of the realistic and relevant techniques associated with diagnosis, culture merging, leadership action and change strategies. Expertly examined opportunities and provided most appropriate interventions.

Answer 1

How to diagnose what is needed:

In order to make the merger effective and profitable, it is very important to diagnose the cultures of both the organizations so that merger is made easy, the profit earning capacity of both the organizations need to be understood properly so that the profit centers can be merged properly and the effectiveness of work and dedication among the employees need to be diagnosed so that decisions on mergers can be made.

Diagnoses can be done as follows:

By using the past financial reports of both the organizations to study the financial stability.

By going through the annual reports of both the organizations to understand the overall business and culture.

By looking at the relations of the organizations with the outside world and the society, to understand how well they coordinate with other organizations.

Suggestions for effective merger of competing firms:

Both the organizations should be understood properly and their strengths should be used while merging.

The cultures from both the ends should be modified a bit so that it complement the other organization's culture.

The rules, regulations and policies should be changed from both organizations so that none have to compromise during the merger process.

Merger should not be done randomly and quickly. Instead full time should be given to the process of merger.

Information to be collected and tools to be used for diagnoses:

In order to diagnose the cultures of both the organizations, information about the working of the organization, the satisfaction level of customers, the turnover rate can be collected. This can be done with the help of annual reports of past few years.

In order to diagnose the cooperative nature of organizations, the past history about organizations' mergers or acquisitions can be studied from different internal as well as external sources.

In order to diagnose the financial stability of the organization, financial reports need to be studied and different ratios can be analyzed.

In order to understand how dedicated the business towards the society is, the corporate social report can be studied and judged that how much efforts the organization put for the society.

Suggestions to new leadership to manage change:

The leaders should follow flexible approach in dealing with the employees so that they do not resist change.

The problems faced by the employees during merger should be discussed openly by the leaders so that the employees do not feel neglected.

The leaders must try to highlight the positive attached with the merger and the benefits that can be gained out of it.

Any kind of grievances shall be handled on time and none shall be left unseen or unhandled.

Proper delegation of the authority and responsibility should be there so that the change can be accepted without any confusion.

HR interventions required to handle resistance to change:

The change should be made clear in the minds of all being affected so that the level of confusion is reduced to minimum.

Time to time feedback must be taken from the employees on whether they can adapt to the changes or not.

Engaging the right kind of 'resistance managers' in the organization so that they use their skills to handle resistance.

The change so brought should be flexible in nature and the rules, regulations should be modified if required.