MGT8033: S2 2012 – ( i ) Intervention Categories (ii) Mergers & Acquisitions

MGT8033: S2 2012 – (i)Intervention Categories (ii) Mergers & Acquisitions

Lecture Overview – • Revisiting ‘Intervention’ • Cummings & Worley’s typology of interventions • Threats inherent in mergers & acquisitions • Social Identity Theory. What is it and how does it relate to this module material? • Acculturation and mergers & acquisitions • Merging groups – focus on implementation

Intervention refers to…??? • The method, technique or means used to change a structure, work behaviour or technology[Ivancevich, Lorenzi & Skinner 1994, p.539] • Earlier focus in the literature is on targets of change • Coming between or among members or groups of an organisation for the purpose of effecting change[Harvey & Brown 1997, p.98] • Literal interpretation focusing on levels of change

What is an intervention? • The term intervention is used in this course to refer to a sequenced, planned change effort or program such as the implementation of self-managed teams or changing from a functional to a matrix structure. • Increased effectiveness is the major objective. • An intervention is typically the application of various tools available to an experienced change agent. • Note that intervention may have other uses and definitions (eg any action by a change agent), but the preferred application, (as described in the dot points above) should limit the possibility of confusion. • Clearly, certain interventions will be useful to achieve certain ends. Some form of grouping (of interventions) helps us to make sense of the array of possibilities.

To what do interventions relate? • Interventions can address three different levels (as seen with diagnosis in Mod. 2) of an organisation: • organisation-wide • group-level • Individual-level • Some interventions may target (initially at least) a specific level • Most interventions will impact on more than one level • Different interventions target different organisational situations or problems • The key is to think systematically, because of the possibility of cross-level effects (which requires some consideration of integration strategies)

Relationship between intervention & diagnosis • Before you can ‘intervene’ you must ensure that you have an accurate diagnosis of the problem • Most texts on Org. Change & Development have entire sections on diagnosis. • Note that no intervention can be implemented without first establishing the need/justification. This diagnosis is critical … it legitimises action. • It is expedient to think about diagnosis as similar to the doctor-patient situation and how the relationship develops from the point of arranging an appointment (the patient can describe the effects but doesn’t understand the underlying cause). • The key to effective diagnosis is to know what to look for at each level • Important to understand the correct order. To reiterate, diagnosis must precede intervention

The typology of change interventions based on the Cummings & Worley approach ... • Categorisation of interventions based on the type of problem (or opportunity) the intervention is intended to change, is the Cummings & Worley approach (see your text p. 160) • There are 4 problem or focal issue groups • Interpersonal interventionsincludes work relationships • Techno-structural interventionsoften poor alignment is implicated • HRM interventionsgenerally targetingbetter use of employees • Strategic Interventionspitched at broader organisational level

The typology of change interventions based on the Cummings & Worley approach ... 1. Interpersonal interventions • These interventions relate to social processes and relationships among employees • They can be applied at all three organisational levels • Individual and group techniques include • Conflict resolution • Team building • T-groups • Process consultation • Third party interventions • Team building

The typology of change interventions based on the Cummings & Worley approach ... 1. Interpersonal interventions (continued) • System-wide techniques include • Organisation confrontation meeting • Intergroup relations • Large group interventions • Grid organisation development • Particularly in situations of conflict, it is often wise to use the skills of a change agent/consultant from outside the organisation.

The typology of change interventions based on the Cummings & Worley approach ... 2. Techno-structural interventions 2.1 Structural redesign • Appropriate when structure-environment doesn’t align (‘fit’). eg. Telstra (Australia’s) move from monopoly to strong competition in a high tech. sector meant a shift away from the historically appropriate functional form • Generally aim to move to more effective ways of structuring activities (network structures often implicated) • Often involve downsizing • BPR falls into this category … radical redesign of business processes to improve performance

The typology of change interventions based on the Cummings & Worley approach ... 2. Techno-structural interventions 2.2 Employee Involvement interventions Common denominator here -employees are given power, info., knowledge, skills and opportunity to be involved in decision-making (more committed = better performers) • Includes Quality of Worklife (QWL) interventions (including self-managed teams, job enrichment) • Parallel structures (project groups included) • High involvement initiatives (eg TQM)

The typology of change interventions based on the Cummings & Worley approach ... 2. Techno-structural interventions 2.3 work/job design including… • Engineering approaches • focus on improving efficiencies & job simplification • Motivational approaches • focus on the intrinsics of work to energise workers • Socio-technical systems approaches • focus on accommodating technical/technology demands and social sides of work

The typology of change interventions based on the Cummings & Worley approach ... 3. HRM Interventions Common denominator here is personnel practices & how they are used to energise and include organisational members, viz. • Performance management • Goal setting • Performance appraisal • Reward systems • Career planning and development • Managing workforce diversity (diversity can provide competitive advantage) • Employee wellness programs

The typology of change interventions based on the Cummings & Worley approach ... 4. Strategic Interventions Common denominator here is better organisation-environment fit • Strategic interventions are applied primarily at the organisational level and include • Open systems planning • Integrated strategic change (integrating strategic & operational levels) • Trans-organisation development (eg. network orgs.) • Also interventions that question & reshape org. culture (assumption here is that existing org. culture is inhibiting overall performance)

Mergers and Acquisitions • Both involve combining two business entities • Rarely are two organisational cultures so similar that the union will proceed without difficulty • Mergers typically reflect that both entities will retain a presence/identity in the new arrangement • Acquisitions typically indicate a dominant entity (the acquirer).

Threats inherent in mergers and acquisitions ... • While many welcome mergers or acquisitions (more opportunity & work variety), others see threat. • In ‘acquired’ firms, members often feel they’ve been ‘sold out’ or betrayed. Redundancy fears are also real in the aftermath as either dynamic (i.e. either M or A) means some duplication of jobs, roles or positions. Loss of control and career direction - often reported. • Job satisfaction, levels of engagement can suffer. Absenteeism, turnover and lower individual & group performance will all impact on org. functioning • See Hayes (2010 p. 408) - discusses post-merger behaviours • Note also there are high rates of exit by top managers from acquired companies

http://www.youtube.com/watch?v=ZwQ2nZMECsg Short clip that identifies differences between merger and acquisition

Social identity theory - how it helps to explain the behaviours of groups ... • Social identity theory features the idea of ‘belonging’ to the organisation. • Extent of belonging to a group can influence behaviour. • Intergroup discrimination describes behaviour intended to reduce the relative importance of other work groups. In-group bias describes attitudes & behaviours intended to elevate one’s own work group. When groups are brought to work together (in mergers and acquisitions) both responses are predicted. • The more the group’s distinctiveness (identity prior to the change) is under threat, the more likely the above responses.

Social identity theory - how it helps to explain the behaviours of groups ... • Members of dominant parties in merger or acquisition tend to experience ‘continuity’ (limited disruption to work life). • Members of the weaker partner entity tend to experience discontinuity. Feelings of belonging are rather less likely. (Note impacts on performance from previous slide). • Different organisational cultures are often brought together in mergers & acquisitions. Culture consists of shared values & beliefs that inform how things should be done, how people should be treated etc. Org. cultures can vary substantially on these matters ... clear potential for conflict.

Acculturation & mergers/acquisitions • Acculturation – cultural and psychological change that occurs as a result of contact between 2 or more cultural groups and their individual members. • The interest is in the degree of fusion of two (often) quite different sets of values, beliefs, and work practices • The greater the similarity in organisational cultures, (Hayes calls this ‘congruence’) the more likely an effective acquisition or merger. Low congruence can equate to negative emotions and behaviours

Acculturation & mergers/acquisitions • Note the ways that different org. cultures can influence mergers and acquisitions (Hayes 2010 p. 411). • Be prepared to differentiate between - • integration (some accommodation for both parties to retain values, beliefs etc in the new enterprise) • assimilation (one party willingly adopts the culture/identity of the other) • separation (one party retains its identity and practices) • deculturation (acquired party members don’t value their own culture, but also reject the acquiring organisation Which of the above have you experienced in your workplace?

Different workplace cultures and the merging groups intervention • Note how pre-screening can limit the likelihood of incompatible or divergent cultures (Hayes 2010 p. 414). • Familiarise with the idea of a culture audit. • Four types of culture. Distinguished by the degree of constraint they place on members 1. Power Cultures • High constraint on members (do as you are told). • Few rules/limited bureaucracy • Unequal access to resources • Power is centralised – strong leader

Different workplace cultures and the merging groups intervention 2. Role cultures • Less constraint and more freedom in one’s work area • More hierarchical and less communication outside functional areas • Planning and method are more important than outcomes alone 3. Task/achievement cultures • More freedom than Role cultures • Task completion is a dominant driver of behaviour • Expert power is characteristic of this type as an influence in work organisation • Highly adaptable work teams

Different workplace cultures and the merging groups intervention 4. Person/Support cultures • Impose the least constraint on members • Members help each other beyond the formal demands of the job • Minimum formal org. or job structure • Mutual trust between members and the employer, and confidence in employer support when necessary

Different workplace cultures and the merging groups intervention • Clearly, knowledge of the 4 culture types is only a starting point in demonstrating familiarity with implementation. • What is the role and importance of communications (management) in limiting feelings of alienation/discontinuity? • Note on Hayes 2010 p. 420, reference to transitions and the relevance of material addressed earlier in our studies

http://www.youtube.com/watch?v=7C_z8UuCJ-Y Some problems with poorly planned mergers

When the objective is to fundamentally redesign the ways that the firm carries out its operation, the approach is a …..… intervention Human process Technostructural HRM Strategic 2.The disciplines of HRM and Marketing were brought into one School (School of Management & Marketing), though little attempt was made to create a single culture. Which of the below is most evident here? integration disintegration assimilation deculturation How effective is your learning?

3.The USQ sets up a formal mentoring program where newer staff are linked with more senior staff for the explicit purpose of sharing knowledge and guiding behaviour. In Cummings & Worley’s framework, which of the following is most implicated? Process consultation Job redesign Workforce diversity Career planning & development 4.When members of an ‘acquired’ firm believe the acquiring company’s culture is likely to be less constraining ... Everyone will be happy They are more likely to let go of their old work values and beliefs Deculturation occurs Managerial ethos is implicated How effective is your learning?

How effective is your learning? • In your capacity as a senior manager, you invite your organisation’s main suppliers and customers to a 2-day retreat with other middle and senior managers to ensure that everyone understands how current performance is achieved and to identify threats and opportunities in the future. The intervention illustrated here is most closely linked with …? • Experts and systemic problems • Task significance • Integrated strategic change • Open systems planning

MGT8033: S2 2012 – ( i ) Intervention Categories (ii) Mergers & Acquisitions