University of the West of

Scotland

Master of Business Administration

International Business

Chathura Deshapriya Mataraarachchi

Managing People in Digital Organizations

Table of Contents Page No

1. Conflict Management and Organizational Communication ............................................... 3

2. Emotional Intelligence and Change Management ............................................................ 5
3. Three Leadership Theories ............................................................................................... 7
4. Organizational Culture ...................................................................................................... 9
5. Team Work Impact on Business Results ..........................................................................10
6. Vuca’s Importnace……………………………………………………………………………….12
6. Conclusion and Recommendations...................................................................................13

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Board Paper

In the name of: The Board of Directors

From: Human Resources & Administration Director

Date: February 25th, 2022

Subject: Impact analysis of a proposed combination of a clothes firm and a construction company

Executive Synopsis

MAS Intimates - Linea Clothing, a clothes manufacturing firm situated in Kandy, is seeking a merger with
Subasinghe Contractors (PVT) LTD, a construction and heavy haulage company based in Galle.

This Bord paper addresses the issues that may occur during the transition phase.

Important Considerations

This Board paper is divided into five major debate sections.

Segment 1: Individual and group dynamics, conflict resolution, and communication within the combined group.

Segment 2 Examines the significance of Emotional Intelligence in the digitization of the merging firm.

Segment 3 Leadership theories applicable to the combined organization's integration process, as well as
critiques of them

Segmant 4 Changes in organizational cultures in the current setting with the application of the Work from
Home (WFH) concept

Segment 5: How teamwork might effect the performance of a combined firm in a nation with a high level of
volatility.

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Executive Summary

This article covered the merger of a clothing firm (MAS Intimates - Linea Clothing) with a construction
company in Galle Subasinghe Contractors (PVT) LTD .

The investigation found that the merger might have an effect on both individual and collective behavior inside
organizations. When workers are anxious and confronted with difficult conditions, they engage in poor
individual behavior that wreaks havoc on the workflow such as mergers, since they adversely affect their social
and emotional requirements, as outlined in Maslow's hierarchy of needs. Hierarchy of requirements It has a
detrimental effect on the organization's overall activities and on the development of connections with
employees in a combined organization contribute to the formation of dysfunctional teams and disputes.
Organizational Communication is crucial in mitigating the detrimental effect on both the person and the group.
Behavior, particularly conflict. Employees suffer as a result of the merging organization's digital
transformation.to adapt to several changes. As a consequence, senior managers must possess emotional
intelligence. Empathizing with others, staff to adopt effective change management techniques.
Transformational leadership is the most effective kind of leadership for persuading workers to embrace the
merger and confront the problems that will inevitably arise throughout the merger. Clothing as well as
construction Businesses demand on-site operations and provide only a limited number of remote job
opportunities. system for the administrative department's help. In general, combining two diverse
organizations has been beneficial posing a greater risk than combining two businesses in the same sector.

Introduction

In the business sector, a merger is the joining of two firms to create a single entity. (MAS Intimates - Linea
Clothing) , a garment manufacturing business headquartered in Kandy, is in the process of merging with in
Galle Subasinghe Contractors (PVT) LTD a construction company based in Galle. They aspire to use digitization
to become a key player in both the apparel and construction sectors.

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Management of Conflicts and Organizational Communication

The goal of this article is to assess various approaches to mergers in order to have a better understanding of
the real process and result of the planned merger between a clothes business in Kandy and a construction firm
in Galle The construction business caters to the local market, has a high male-female ratio, employs a greater
number of contract workers, and each project is a long-term commitment. By contrast, garment firms are
dominated by women, export-oriented, with a higher percentage of permanent staff and a preference for
short-term project expenditures

According to Maslow's Hierarchy of Requirements, unfulfilled needs help to explain why people exhibit
aberrant behavior patterns. The uncertainty created by a merger or acquisition may increase employee stress
levels and signal risk to the acquired organization's personnel. This has an effect on their performance and may
result in increased employee turnover even when layoffs are not planned

A formal group is defined as a specified work group established by the organizational structure and hierarchies
based on their specialty duties. Formal groups include marketing, finance, and human resource management
(Estrada, et al., 2010). However, informal groupings may be formed inside organizations as a result of
individual commonalities. When formal and informal groups within an organization work together well and
communicate effectively, an organization's workflow becomes more efficient, hence lowering organizational
disputes. These are organizations that collaborate and communicate in two directions ( Killing, 2012).

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Group Dynamics

The term "group dynamics" refers to the way members of a group interact. When the group dynamics are
positive, the group works successfully together. Team building is a broad term that encompasses a variety of
activities aimed at strengthening social bonds and defining roles within teams.The six facets of team
development include role clarity, trust, job satisfaction, commitment to the company, motivation, and
empowerment. Failure to address any of these components results in dysfunctional behavior. Dysfunctional
behavior is defined as "abnormal or weakened functioning" within or between groups. Poor functioning is
characterized as behavior or relationships that are ineffective and have negative, damaging components, such
as ineffective communication or frequent conflict

Bruce Tuckman’s model of team

developmentThe term "conflict"
refers to a dispute between
organizations. Conflicts between
groups have an effect on individual
employee behavior as well. When a
company merges, many official and
informal groupings arise inside the
merging party. Both organizations
have distinct cultures and work processes that clash. Additionally, each organization has formed its own
informal groups. When a merger occurs, disputes between these informal and formal groups occur as a result
of the disarray, which may have a detrimental effect on the individual employee behavior in each organization
(Estrada, et al., 2010). Three frequent types of conflict in businesses are relationship conflict, task conflict, and
value conflict. While open communication, cooperation, and respect all contribute to conflict resolution,
certain approaches of conflict resolution need their resolution .

Exon's merger with Mobil was a success. However, both businesses are headquartered in the United States of
America and are the country's top and second-largest oil producers, respectively. Operating in the same
industry was critical to the success of this merger (Das & Kumar, 2010). Another successful merger was Pfizer
(pharmaceutical) and Warner-Lambert (pharmaceutical). Both businesses benefited from one another. Pfizer
was able to extend established cancer, endocrine, and gastrointestinal medications as a consequence of the
merger with Warner-Lambert, which boosted both businesses' bottom lines. Thus, for a merger to be
successful, both companies' potential growth and profitability must be increased. Each business should
provide value to the other .The term "organizational communication" relates to the movement of information
and communication inside businesses.

Effective communication during the merger process aids workers in adapting to their new working
circumstances. Continuous communication with workers is required during the merger preparation process,
throughout the merger, and after the merger. Due to the nature of business, communication patterns between

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the two organizations may vary. However, the combined company's senior management should establish an
effective bottom-up and top-down communication system to assist workers in adjusting to the merger. The
final success of the merger is contingent upon how well workers adapt to and accept the newly amalgamated
firm. To a fair degree, two-way communication avoids official and informal group disputes in the newly
amalgamated organization.

As previously mentioned, the above principle holds true for a newly joined organization since new workers will
be working under new management and in a new culture.

Emotional Intelligence and the Ability to Manage Change

Both the garment and construction sectors rely heavily on digitalization.

Digitalization improves the productivity and efficiency of organizations. However, the introduction of
digitalization needs a change management procedure to ensure appropriate integration into the newly
amalgamated organization ( Killing, 2012). There are three phases of change, according to Lewin's change
management model: unfreeze, change, and freeze. Digitalization creates significant structural changes to the
amalgamated organization, which may cause extra employee discomfort and confusion. They may already be
confronted with disputes arising from the merger of two firms in the fashion and construction sectors that are
diametrically opposed (Schulz, 2014).

Figure 2 - Lewin's Model of Change

Management

Emotional intelligence (EI) is the capacity

for comprehending, regulating, and
managing one's own emotions, successfully
communicating them, resolving disputes, overcoming obstacles, relieving stress, and empathizing with others
(Albrecht, 2012). Significant changes are occurring inside and outside the organization during and after the
merger, creating an unstressed environment for workers as a result of the new rules and procedures.
Digitalization may alter the bulk of their normal job, necessitating a higher degree of adaptability in order to
combat merging chaos. Because change management entails managing workers' and management's various
psychological states, EI is critical. When an organization develops a high degree of EI in its workers, it
successfully helps the change management process by controlling both top management and employee
emotions. EI coaches organizational leaders, i.e. the top management of both firms, on how to discover and
develop talent in order to build successful teams. Building successful teams requires deftly overcoming change
resistance. Additionally, the amalgamated organization should choose senior executives to serve as change
agents. Employees with a high EI score have a high degree of self-awareness and social awareness. Thus, they
can comprehend and manage their own emotions and sentiments while also comprehending and controlling
those of others. As a result, they excel in

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problem solving and defining courses of action, as their EI level keeps them informed (Cartwright & Cooper,
2012).

However, when a combined organization includes a large number of individuals with high EI levels, it makes it
easier to execute change quickly and without encountering opposition. These types of workers, in particular,
recognize that change is unavoidable and that there is a continuing need to update their abilities to conduct
and think differently in order to be successful in the future (Agoben, 2018). As a consequence, they embrace
the practice of continual learning in order to improve their skills, capacities, and competences, with
digitalization providing a new chance for learning. Thus, they embrace contemporary change and digitization in
order to become more helpful, productive, and efficient in producing the desired outcomes for the newly
united organization (Albrecht, 2012).

When both workers and top management have a higher EI, decision-making and relationship development are
facilitated. Increased self-awareness and social awareness enable better informed decision-making about the
conditions surrounding the digitization

process. Due to a lack of self-awareness and social awareness, workers with low EI tend to react to each
circumstance based on their immediate emotions (Agoben, 2018). Relationship development is critical
throughout the change management process, much more so in a recently combined organization. The garment
and construction sectors operate differently. Employees should develop formal and informal connections to
better understand these distinct processes in order to avoid disputes and maximize the merger's benefits. The
change implementation process necessitates the development of a strong connection between the workers of
the two firms, which can only occur via EI. As a result, EI is critical for change management and decision-
making (Suppiah & Sandhu , 2011).

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Three Theories of Leadership

The theory of the great man

The nineteenth-century great man hypothesis asserted that leaders are born with intrinsic traits. During the
nineteenth century, the majority of charismatic leaders were characterized as born leaders, including Adolf
Hitler and Martin Luther King (Albrecht, 2012). According to this view, leaders are born with the inherent
characteristics of confidence, intellect, bravery, charm, intuition, and speaking ability that distinguish them
from the rest of their group or society's members. This notion asserts that leaders cannot be developed by
constant practice and learning (Macey, et al., 2011). The bulk of leaders in Sri Lanka and Asia are examples of
outstanding men. The philosophy of the great man is critical for a newly joined organization (Shields, et al.,
2015). The merging organization can identify a leader who was born with innate leadership traits and the
capacity to influence others. These executives are good at persuading staff to accept changes (Suppiah
&Sandhu , 2011).

However, there are considerable disadvantages that might jeopardize the combination. Even if the newly
combined organization identified a top executive with intrinsic leadership traits, their leadership style may be
misinterpreted by an employee of the other merged party (Albrecht, 2012). While workers in one organization
may be persuaded of a certain senior management member's attributes, the other party to the merger may
not be convinced, which may generate complications (Suppiah & Sandhu , 2011). Additionally, the great man
idea precludes the emergence of female leaders as a result of male dominance. Nurturing such a culture in a
freshly combined firm is not appropriate (Cartwright & Cooper, 2012).

According to this notion, leaders believe in rewarding and penalizing people in order to motivate them to work
toward predetermined objectives. Positive behaviors are rewarded, while bad behaviors are penalized.
However, in a result-oriented hierarchical organization, incentives and sanctions are imposed (Suppiah &
Sandhu , 2011). This is another excellent leadership style for the newly amalgamated organization. Offering
important incentives to workers, such as increased pay scales and advancement chances inside the new
organization, stimulates them (Cartwright & Cooper, 2012).

Additionally, an organization might establish new rules and processes, as well as fines, to avoid disorder and
improper behavior. The transactional leadership style enables an organization to establish measurable
objectives for workers that are directly tied to the change management process and merger (Albrecht, 2012). It
contributes to staff motivation to embrace change and the new merger as a means of 5

Increasing their monetary and non-monetary rewards. This is an effective and straightforward strategy that
requires little work to use during times of change, including as mergers and acquisitions ( Killing, 2012).

However, the primary disadvantage of transactional leadership is that it is governed by rigid rules, processes,
and objectives. These rigid guidelines and objectives stifle employee creativity and innovation ( Killing, 2012).

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Employees are unable to deviate from their assigned tasks and focus on innovative and creative novel ideas
that could provide a competitive edge for the new merger as a result of the reward and penalty system.
Penalties are a significant impediment to experimenting with novel ideas (Suppiah &Sandhu , 2011).

The philosophy of
transformational leadership

The transformation leadership

idea is widely acknowledged as
the most successful and
positive leadership style for
developing rapport between
leader and follower. Through
their passion and enthusiasm,
transformational leaders serve
as a role model for employees,
motivating and inspiring them (Albrecht, 2012). While transactional leadership is effective at managing the
situation via incentives and punishments, transformational leadership is effective at gaining long-term
commitment to the newly amalgamated company's goals and objectives (Suppiah & Sandhu , 2011). The
organization should strive to generate transformative leaders who can ensure the new merger's long-term
viability. It decreases staff turnover and enhances employee engagement, which enables the change
management process to run smoothly throughout the merger's phases. Additionally, any change management
process is effective when transformational leaders are at the helm ( Deitz, et al., 2010).

However, the primary disadvantage of transformational leaders is that they require workers to give their all to
their job, neglecting their personal responsibilities (Albrecht, 2012). The increasing workload may raise the
likelihood of employee burnout. Additionally, in rare circumstances, followers may encounter a transformative
leader who coerces them into accepting their beliefs (Shields, et al., 2015).

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Organizational Culture

A company's culture is defined by a set of common values, assumptions, and beliefs that guide employees'
behavior. The organizational culture (Agoben, 2018) determines the organization's identity.

Organizational Culture - Figure 3 (Agoben, 2018)

organizational culture consists of six components that work in concert to create the organization's distinctive
character. As a consequence of COVID-19, pandemic
organizations' rituals and routines, organizational
structures and control systems have been considerably
altered by the adoption of work-from-home activities
(Schulz, 2014). The COVID-19 epidemic ushers in a new era
of virtual labor, in which organizational rituals and routines
are replaced by virtual platforms (SpencerOatey, 2008). For
instance, prior to the pandemic, the standard was for
workers to go to work dressed in a formal dress code in
order to accomplish their tasks.

However, the new normal workplace is a virtual

environment in which workers work from home, generally in casual attire, without ever meeting (Weeks,
2018). Technological advancements, particularly the use of virtual working applications like as zoom, emails,
instant messaging, and a variety of other digital software platforms, have made this a must (Agoben, 2018).

Nevertheless, some researchers contend that the virtual office structure dilutes corporate culture. Often,
organizational culture occurs inside the setting of the organization, where workers create official and informal
groups (Agoben, 2018). The virtual working environment has decoupled workers from the organizational
culture to such a degree that they may forget about existing regulations and procedures, particularly those
pertaining to workplace behavior (Cartwright & Cooper, 2012). Thus, distancing oneself from official and
informal groups that foster and grow the organizational culture results in the culture gradually deteriorating.
Within a collection of individuals, whether it is a firm or a nation, a culture endures ( Deitz, et al., 2010).
Employees' primary attention in new work-from-home practices is on their job function. External actions that
contribute to the formation and maintenance of organizational cultures, such as formal The dress code, rules,
procedures, formal workplace, meetings, informal gatherings, and training, i.e., tales and symbols, are no
longer occurring as they once did ( Killing, 2012). As a result, individuals in work from home situations do not
have appropriate engagement with the six factors that comprise the organizational culture

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Team Work Impact on Business Results

The business environment is dynamic, unpredictable, complicated, and unclear at the moment (VUCA). In
today's world, organizations must contend with unanticipated external environmental changes. This is a given
for every firm functioning in the modern day. As a consequence, organizations must continually upgrade their
current systems while avoiding old legacy technologies and leadership styles in order to compete in this VUCA
business environment (Agoben, 2018). As stated throughout this study, teams within an organization, whether
official or informal, contribute to the development of organizational culture. The organizational culture is
fostered by workers who work informally and officially in various teams (Das & Kumar, 2010). Their group
dynamics have an effect on both good and bad employee behavior. A merger is a chaotic scenario in which the
organizational structure, culture, and whole operation undergo substantial changes. In such a significant event,
establishing a successful formal team is critical to achieving the merger's goals (Estrada, et al., 2010).

Tuckman's team model (Figure 3) states that organizations' formal teams evolve through the phases of
forming, storming, norming, and performing. These four steps are followed by the departmental team ( Killing,
2012). However, the use of temporary project management teams results in the fifth stage of adjournment
(Estrada, et al., 2010). According to Tuckman, although the model seems to advance linearly, development
might regress based on the events affecting the team members, and communication tactics must be used. At
times, a team may get stuck in a specific stage, unable to progress toward accomplishing the established goals
(Shields, et al., 2015).

Tuckman's Team Model - Figure 4 (Cartwright & Cooper, 2012)

Thus, it is critical to establish progressive performing teams

that are productive and highly responsive to the constantly
changing business environment throughout the new merger
(Agoben, 2018). The VUCA business environment requires
teams to continually adapt to changing environmental
settings, which necessitates dynamic skills, competences, and
capabilities (Cartwright & Cooper, 2012). As the new merger's
top management, it is required to facilitate 9

11
the development of workers' skills and abilities necessary for competitiveness in this VUCA environment
(Estrada et al., 2010).

Teamwork is critical for increasing employee engagement and encouraging them to accept more responsibility
for decision-making and process management. When workers are given greater power, their morale improves,
enabling them to handle changes successfully before and after the merger. Increased morale, in particular,
reduces staff turnover (Estrada et al., 2010). Additionally, it enhances employee feeling of belonging and
recognition inside the united organization. Employees, in particular, should be trained to recognize individual
and team successes.

Collaboration fosters the development of connections and trust between workers of the two firms. This is
critical since both businesses operate in distinct sectors (Agoben, 2018). Collaboration and mutual
understanding improved as a result of the partnership. Employees, in particular, should be encouraged to
establish informal teams that supplement the work of official teams ( Deitz, et al., 2010).

When individuals exercise power and develop strong connections, organizations increase their ability to adapt
to the organizational changes necessitated by the external environment's VUCA. Along with the merger, the
current VUCA business climate requires workers to make proactive choices rather than waiting for orders from
upper management (Albrecht, 2012). When workers are empowered, they are more equipped to seek out
present and future market trends that might aid in strategic decision-making. However, when workers are
proactive, senior management must take their comments into account when developing organizational
strategy. Thus. Teams are critical to the operation of a combined organization (Estrada, et al., 2010).

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Theory of the Cultural Iceberg

This thesis, developed by Edward T. Hall in 1976, asserts that the unseen organizational culture is more
profound than the apparent organizational culture. Aspects like as dress code, general work environment,
processes and procedures constitute the visible culture, while shared values, beliefs, attitudes, and
competitiveness, among other things, make the unseen culture.

During the period of remote working or working from home, the visible culture has changed dramatically, with
the dress code or general work atmosphere no longer being tied to the final product. Given the present trend
of working from home, the invisible culture has also evolved.

Figure 10: The Theory of the Cultural Iceberg (1976, Edward T Hall) Culture that is visible Culture that is unseen

The dress code and overall surroundings are

insignificant in terms of getting the job done.

Because there is little physical connection,

shared ideals among coworkers may seem
distant.

The old approach of working to a set schedule

has been altered, resulting in considerably
more flexible and ongoing work
arrangements.

Competition will be reduced since everyone

will be focused on attaining their objectives because they do not believe they have an audience to be
acknowledged, which will have an impact on the corporate goals.

It is unavoidable that organizational cultures will evolve in order to adapt to changes in the environment in
order to survive in the business. However, once such a shift occurs from working from home, the benefits of
doing so should be promoted and rewarded in order to reap the most value while harmonizing company goals
and objectives. Minimizing disadvantages or developing new ways to overcome disadvantages in a way that
contributes to an organization's goal and vision should also be pursued.

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Changes in organizational cultures in the current setting as a result of the introduction of the Work from
Home (WFH) concept

With the present worldwide pandemic, conventional techniques of attending to work have undergone severe
changes in a very short period of time. Many of the knowledge-based workforce has adapted to this
transformation all over the globe, resulting in extraordinary achievements that were previously considered to
be unreachable by remote working methods combined with technical breakthroughs.

The organizational culture of Sri Lanka has also changed as a result of the COVID issue, with many workers now
working from home. Employees in the IT industry, in particular, have been doing their tasks remotely during
the epidemic and will continue to do so. This shift in culture has resulted in both individual and organizational
benefits and drawbacks.

It would be more or less the same for them to work from home if two distinct firms of various industries and
headquartered in two different geographical places merged and worked remotely from each other. Employees
in the amalgamated group may still communicate online despite the fact that they are geographically
separated. They should be provided with the necessary facilities to connect, yet they may still carry out their
obligations while working from home.

Image - Two Benefits of Working From Home Working from Home Has Its Drawbacks

Long commutes to work may be avoided.

Personal resources may be required.

Flexibility in working conditions

Work-life balance will suffer as a result.

Cost-cutting benefits

Not all tasks can be completed virtually.

Employee retention has improved.

Less engagement with coworkers Familiar surroundings

Problems with technology

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VUCA's Importance

The VUCA period is here. "VUCA" means "volatile, uncertain, and complex". The letters C and A represent
complexity and ambiguity, respectively. Based on Warren Bennis and Burt Nanus' leadership concepts, VUCA
was founded in 1987. It helped define the post-Cold War world in the early 1990s. Many corporate executives
have questioned VUCA since then.

Volatility is the rapidity of change.

Without forethought, uncertainty is defined.

Complexity The degree of causality.

Possible misinterpretation - ambiguity

The acronym VUCA stands for visibility, anticipation, preparation, evolution, and response. Increasingly,
businesses work in a complicated, fast-paced environment.
Businesses that adjust quickly will survive. Corporate
leaders must devise strategies that adapt to changing
conditions. A VUCA climate requires CEOs and their firms
to adapt and thrive.

Even a tiny company unit faces a difficult environment.

Due to the increasing number of technology users,
stakeholders' expectations are shifting. They must
respond quickly as leaders. To be resilient and respond
rapidly to any unpredictable scenario, we need leaders
who can foster a flexible and responsive culture inside their businesses. Due to the uncertain
nature of the future, leaders must be ready to face challenges at any time.

In the early hours of April 21, 2019, an eastern assault hit Sri Lanka. The worst strike since the conclusion of
the civil war. Following the first assault, the county went into reverse. In the aftermath, villages and Colombo
were all affected. Affected businesses included those in the tourist sector. Less severe symptoms of the Easter
assault remain.

The global economy was also affected by Covid 19. Leaders must adapt rapidly to change in the following two
circumstances. Business success goes to those who can modify the most quickly.

"VUCA is not a slogan! An approach to problem-solving in a digital, dynamic environment."

Expert in VUCA Waltraud Glaes

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Final Thoughts and Recommendations

1. Combining two diverse organizations has a higher risk than merging two businesses in the same sector.

Thus, the first worry that emerges during a merger is the influence of the merger on individual and group
dynamics, which might result in conflict. Additionally, maintaining organizational communications between the
two businesses helps minimize disputes and promotes a streamlined process that is not confusing to workers.

2. Group dynamics influence individual behavior inside an organization. Thus, group dynamics may contribute
to both a favorable work environment and organizational conflict at the individual and group levels.

3. Employees have varying levels of industry experience, which increases the likelihood of conflict. Thus,
communication inside the organization is critical during such mergers, and efficient communication throughout
the merger process assists workers in adjusting to their new working circumstances. As a result, excellent
communication is critical.

4. Preserve the matrix of good relationships

5. Transformational leadership is the most effective type of leadership for persuading people to embrace the
merger and tackle the obstacles that will inevitably arise throughout the merger.

6. Should have a robust framework for rapidly transitioning to a work-from-home model in response to
present and future contextual needs

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