1.

0 Merging Incompatible Organization Culture

Merger is a strategy that combines two companies into one. It is a legal consolidation of two companies into one entity. In this global business world merger is one of the popular strategy which are widely used for taking batter advantage in competitive market. Most of the time it was great but sometime it can destroy all the entity. In our case we are going to talk about the merging of incompatible organization culture. Incompatible organization means when two or more organization differs in many ways like the culture, policy, profitability, product, services and so on, those organizations are called incompatible for one another. If two organizations, incompatible to each other merge together to emerge as a new entity, we can call the merging as the Merging of Incompatible Organizations. As we know merging is a beneficial tool in the competitive business world but sometime it become difficult to establish a new company as because of different organizational and human resource cultures. And wrong practice of organizational and human resource culture can turn a healthy merger into the merger from hell which means becoming the looser rather than the gainer. Our case is one of the e!amples of this.

"ere we discuses about two large home healthcare organization, one is "omedco "ealthcare and another one is Abbey "ealthcare. #oth of them used to be the fierce competitors. $ater they decided to merge their organization for strengthen the market value of both rather competing each other. %ogether they create a new firm named Apria "ealthcare &roup and they e!pand their home health service nationwide. %he industry has grown about '() a year by offering less than the hospitals for treating patients at home.

#ut several years later the stock value of Apria has decline significantly and earning have fallen. And this is happened because of operational problem which is caused by the merger. #ecause of the conflict between the e!ecutives and employees of two organizations those issues had not been resolved. $ater on the board of directors of both organizations decided to remove the *+O of Abbey "ealthcare and has *+O from "omedco "ealthcare. Page 1 of 12

After this decision another problem has arisen, that is difference of organizational culture. "omedco "ealthcare practicing more formalized structure with centralized decision making policy, where as Abbey "ealthcare had decentralized decision making policy. ,e know centralized structure all the decision making and authority are focused on the top level management. %hese few people are the ones that dictate company policy and make all the crucial decision. On the other hand decentralized system delegates authority throughout the organization and to all levels of management.

%he computer and billing system used in Abbey "ealthcare also followed in Apria but the employees of "omedco healthcare was not trained fast enough. -or this reason the duplication of work and complain from customer was increase. Massive errors have taken place for this reason. And for reduce the cost and eliminate the duplication of .ob /0) of employee of Apria lost their .ob. Main things is most of them were the employee of Abbey "ealthcare. %he managers of Abbey health care affected more compare to the managers of "omedco "ealthcare. Out of '/ only 1 regional managers were stay with the Abbey for that reason abbey lost their many best performing sales representatives.

In case of changing some basic "2 policies also create problems in the organization. ,hen the "2 policies of "omedco healthcare were e!tended into Abbey office new dress code and time recording procedure irritated many former Abbey workers. -or that reason many of them left the organization in the first year of merger. As the day pass the conflict between employees is increased at e!treme level, and employee from one firm referred to those from other firm as idiots and refused to return phone calls from employees with the other firm. -or all of these reason the Abbey "ealthcare face Merger from "ell rather than being a healthy merger.

%his problem is not only happened in Abbey healthcare, conflicting culture have diminish the effectiveness of merger in almost every industry. %here are many e!ample of it, 3aimler #enz *hrysler *orporation also face the merger problem. %heir combined corporation lost profitability and staff departures have occurred and they plunged employee moral by eliminated thousand of employees. Page 2 of 12

At last we can say that the human resource issues and organizational culture incompatibility can destroy the value of merger.

2.0 Answer of the question

2.1 Question no 1 !escribe how anal"sis of human resource issues coul# ha$e been beneficial prior to the Apria merger. It is the responsibility of the "uman 2esource department to carry out a detailed evaluation of the potential human resource issues that can emerge and this in turn will aid the top management in determining the financial costs in terms of handling likely human resource issues. In nutshell the impact of poorly managed human resource issues in the case if the Apria "ealthcare group merger has lead to effects of downsizing, employee stress, poor performance, difficulties in employee retention, process issues, information system issues etc which ultimately lead to merger failure. %he following are reasons as to why the analysis of human resource issues would be beneficial at the pre merger phase.

2.1.1 %e#uce conflict in &ob roles an# responsibilities A human resource audit should have been out carried to determine and predict the effect the merger would have on the employees of both "omedco and Abbey "ealthcare &roup. It is a generally accepted fact that a merger activity is likely to cause performance issues of employees during the period of transition which lead the conflicts between the e!ecutive and managers of the Apria group. A detailed analysis would have lead to clearly defined .ob roles, responsibilities and duties of employee of both companies. %he performance of the employees is mainly affected during the presence of role conflict and ambiguity, uncertainty of environment, cultural differences and differences in the management style.

2.1.2 !e$elop retention strategies to 'eep 'e" emplo"ees *arrying out an analysis of "2 would have enabled Apria to retain key employees by,

Identifying the key employees who hold key positions and responsibilities in both companies Page 3 of 12

+valuating current market rates pertaining to compensation and benefits if the employee is to leave

*ommunicating the value of the employee during the pre4merger and post4merger

*ommunicating the new employees roles, responsibilities and duties within the merged company 5Apria group6

*onsistent communication and employee relationship building by top management

2.1.( )roper management of o$ercapacit" Implementing a merger option would lead to an overcapacity of employees. And thus, Apria has contended in eliminating e!cess staff with a view of creating a more efficient corporation. %his strategy is adopted in order to maintain economies of scale by reducing internal operational costs. %he Apria "ealthcare group should have ideally implemented a proper downsizing strategy along with propose compensation, benefits and outplacement programs implemented during and after the merger. An effective analysis of human resource issues might have bought in to light the proper process and method of dealing with e!cess staff. As in the case mentions that more of "omedco managers were not affected by the .ob cuts, there by showing a certain level of discrepancy in managing downsizing which lead to even the best of employees resorting to 7uit the company. 2.1.* +a$ing unnecessar" costs %he ob.ectives of merging is to combine resources in order to achieve economies of scales by minimizing costs of processors, systems, human resources etc in order to earn higher margins. %he non compliance to an effective analysis of human resources has lead to Apria "ealthcare &roup spending an e!cess amount of hiring new employees, e!cess costs on training and development, loosing of customer base and market share due to increasing complaints and drop in service levels, loss of revenues and profits due to reduction of performance in the marketplace. *arrying out a detailed analysis of human resource issues would lead to the "uman resource department being able to estimate financial costs pertaining to laying off employees and

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leave allowance to potential leavers. +stimated costs include costs of benefit and severance packages of terminated and other employees8 cost pertaining to outplacement programs for terminated employees etc.

2.1., I#entif"ing proper training an# #e$elopment programs for emplo"ees 9rior to the merger Apria should have conducted a detailed skilled analysis of employees of both companies. %his analysis would have revealed the gaps in skill by comparing e!isting skill versus e!pected skills and thus would comply with the merging companies: ob.ectives. %his was further .ustified in the case where it was mentioned that Apria "ealth group used the Abbey "ealthcare system billing processor which was unfamiliar to the employees of "omedco. Ideally, before the merger if the management decided to use a particular system, the employees of "omedco should have initially be trained in using Abbey "ealthcare system before the merger took place. %he overlooking of implementing a structured and timely training and development program caused drop in service 7uality and customer dissatisfaction due to errors in the billing system. 2.1.- .mplo"ee morale an# commitment It is clear identifies that there was a lack employee morale and commitment during the Apria "ealthcare Merger. %his is better e!plained through the stages that the employee goes through when adopting to change. 2.1./ +hoc' +mployees would be confused on their new .ob roles, need for .ob security, changing lifestyle and the general fear of unknown in moving to a new culture. 2.1.0 !enial an# confusion Most employees would be unsure on how the merging would affect their employment status. 2.1.1 Anger an# resistance Anger and resistance would be portrayed by internal conflicts, sticks, turnover, ineffective .ob performance etc. Page 5 of 12

2.1.10 %eluctant acceptance %he time taken by the employees to get use to the new culture, value;belief system, management and processors. 2.1.11 2n#erstan#ing At this stage the employees are willing to accept the new changes resulted by the merger.

It is evident that Apria group has not understood this stages and issues properly before going through with the merger. %he employee motivation, morale and commitment is the key source that makes a merger successful. As motivated employees would be willing to accept change and be effective and efficient when carrying out their tasks. %he conflicting relationship between the Apria group employees effected team work, interdepartmental coordination, customer orientation, distorted communication, non compliance to code of practices etc. %his situation could have been completely avoided or managed if Apria gave ear to the challenges and difficulties faced by employees during the transition process and it would have been a better approach for company to encourage employee participation in designing "2 strategies for the merging company on order to bypass avoidable conflicts.

2.2 Question 3o 2 4i$en the problem in the e5ample cite# in the case6 what actions coul# be ta'en to create better organizational culture7
Organizational culture is a sub.ect which has been studied and defined by numerous authors. %he importance of assessing a firms organizational culture emerged due to globalization, increase in number of mergers and ac7uisitions, companies adopting market orientation etc. %he most accurate definition was proposed by %orrington and "all 5/<<(6, where they defined organizational culture as the characteristic, spirit and belief of an organization demonstrated in terms of norms and values that are generally upheld about how people should behave and treat each other, the nature of working relationships that should be developed and attitudes

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to change . %he authors also critically argued that these norms are deep, taken for granted and are often known by employees without being properly understood. 3evelopment of a sound organizational culture re7uires the company to align its culture with its strategies, goals and ob.ectives. -ollowing are some factors that illustrate the strategic importance of developing organizational culture, having an aligned and integrated culture is vital in achieving a high level of productivity. An effective organization culture would include employees who have shared vision, purpose, values goals and commitment that is essential in maintaining strong culture. 3ennison 5/<=06, reveled if an organization possesses >strong culture by e!hibiting a well4integrated and effective set of specific values, beliefs, and behavior patterns, then it will perform at a higher level of productivity. %he performance of an employee would depend on the encouragement, support and direction and the working relationship he;she develops with colleague and peers. %his in turn results in the employee being motivated and committed to contribute to the organization by being performance oriented ,which leads to effectiveness and efficiency in fulfilling tasks, responsibilities and duties. 9roductivity would be an outcome of employee performance and could be achieved through the organizational employees working as a team to enhance productivity. An effective method of keeping employees aligned with the values and the goals of the organization is by developing a culture which encourages employees to focus on higher purpose for their work. 2.2.1 Organization +tructure an# )urpose %he development of a well structured organizational culture is of primary importance in improving overall business performance. As mentioned earlier enhanced productivity through development of organizational culture is merely one of the factors that affect business performance. Marcoulides and "eck 5/<<?6, proposed a framework which could be by organizations when determining elements of a firms culture that lead to overall business performance. %he Apria could follow them in order to create a better organizational culture. 2.2.2 Organizational +tructure Page 7 of 12

3eveloping a strong administrative hierarchy and sound processors would reflect how a company is able to ma!imize effective resource utilization which impact the performance of product and service output. %he Apria merger failed as the management didn:t pay emphasis of having an integrated structure which in turn affected the overall performance of the company. Mergers such as "ewlett49ackard emerged as successful as the company was able to develop a common structure which clearly defined the organizational purpose.

2.2.( Organizational 8alues %he values of a firm will determine the way in which the firm designs strategies to serve its customers and ma!imize customer satisfaction. %he performance of the organization through understanding firms value will reflect the way in which the emphasis is placed on risk taking, productivity and efficiency and ability to improve new outputs and improving e!cising products and services which in turn enables them to achieve competitive positioning and market positioning. As highlighted in the framework organizational values have direct effect on climate, task organization and employee attitudes which lead to the attainment of overall performance. %he values of the organization is variable that effects managerial decisions as the structure, strategies to improve organization tasks and processors, strategies to improve work environment would be analyzed and implemented by consideration of organizational values. 2.2.* 9as' organization %ask organization involves analyzing the types of methods used to recruit and select new employees, the 7uality and methods used to evaluate employee performance and the criteria to determine salaries and benefits are strongly related to organizational performance. %his also illustrates the management commitment towards enhancing organizational performance by developing effective strategies to recruit, evaluate and compensate employees. 2.2., Organization climate %he organizational climate is defined by the perceptions of its employees in terms if the working conditions. %he perception of 7uality of interactions and effectiveness of communications across organizational levels and Page 8 of 12

the level of authority given to employee would be indicators that determine a firm:s culture. %he organization climate also acts as a source of motivation for employee performance which results in improved performance.

2.2.- :or'er attitu#es an# goals 2esearch carried out by Marcoulides and "eck 5/<<?6, indicated that attitudes, perceptions and individual goals would depend the values and climate of the organization. %his variable will perceive the way in which employees perform at an individual level which contributes to overall organizational performance. 2.2./ Abilit" to maintain sustainable competiti$e a#$antage %he culture of a firm is considered the most critical component of a company:s transition from good to great. Mergers are formed between similar industrial players with an ob.ective of being more competitive in a global scale to reduce the impact of threat created by competitors. @arious strategies and tactics are taken to develop competitive advantage and positioning of the market place. "owever, research has indicated that cultural development and nurturing is the primary strategy that could ensure sustainable results in the long run. 2.2.0 Culture;s Criteria

*ulture must be valuable and it should assist the firm in developing strategies and forming behaviors that improve employee productivity, resulting in superior financial performance.

Organization culture must enable companies to develop strategies that add economic and monetary firm

*ulture must be created as rare and distinctive by having attributes and characteristics that are not common to the cultures of large number of other firms. A firm:s culture is one of the several attributes that differentiate firms form one another.

*ulture must be imperfectly imitable and without this the firm cannot gain competitive advantage as positioning them as uni7ue.

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%he degree of adoptability would depend on how the employees of a particular firm are able to change their behavior in order to respond and take proactive action when going head on with these changes. #y developing a culture which includes knowledge and information sharing, participative management, these companies are therefore more willing to try innovative approaches in better meeting their employees: needs. "2 practices that emphasize company information sharing, participative management and formal grievance procedures will help to facilitate the needed internal change initiatives. -urthermore, to be really adaptive, skill development becomes critical to ad.ust to changing business demand. ,hile appraisal systems have to be applied consistently to attain effective business performance, the conte!t of appraisal needs to be adaptive. Appraisal systems that impose rigid performance e!pectations can turn into a barrier to aligned e!pectation and delivery of performance. 9erceived fle!ibility and fairness in performance management systems will result in better4motivated employees and improved business outcomes.

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(.0 :rapping it up Ao, we can now see that the Apria Merger could not get its desired success due to the incompatible merger as it itself was by its nature. Moreover putting far too emphasis on the profitability and finance issues rather than on the resolving the "2 issues, is never a good recipe for a successful merger. #y knowing what makes mergers succeed, keeping an eye on the human issues as well as the financials, and using appropriate tools, companies can make mergers work.

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Appen#i5 1. "uman 2esource Management 5/Bth Edition), Robert L. Mathis & John H. Jackson 2. www.en.wikipedia.org/wiki/Merge_(revision_contro ) ?. #loomberg #usiness Cews, Cational Assn. for "ome *are, Omnicomp &roup. 0. httpD;;articles.latimes.com (. %he $os Angeles %imes 1. httpD;;www.thefreelibrary.com E. httpD;;www.ukessays.com

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