University of the West of

Scotland

Master of Business Administration

International Business

Sirini Wijesinghe

Managing People in Digital Organizations

Table of Contents Page No

01. Executive Summary……………………………………………………………………….………….…. 02

02. Introduction……………………………………………………………………………………….… 02

03. Critical Behavior…………….….……………………………………………………………………….... 03

04. Importance of Emotional Intelligence in Change Management ……………………. 07

05. Leadership in a Merged Organization ……………………………………………………….….. 10

06. Organizational Culture………..…………………………………………………………………….….. 13

07. Remote Work ……………………………….………………………………………………………………… 15

08. VUCA Challenge ……………………….…………………………………………………………………… 16

09. Conclusion……………………………………… ……………………………………………... 18

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Executive Summary

Island Clothing Kandy (Pvt) Ltd located in Kandy, intends to combine with Aie Construction (Pvt) Ltd situated in
Galle, to increase their market share by diversifying the business as a holding company. The goal of this board
paper is to investigate numerous areas of concern before to, during, and after a merger, as well as analyze the
benefits and drawbacks of the firm idea.

This board paper has five parts.

Section 01 provides a brief overview of the shift before diving into various individual and communal solutions.
Conflict resolution and corporate communication have been explored in conjunction with important behaviors.

Section 02 examines emotional intelligence in detail, with an emphasis on its relevance in change
management.

Section 03 covers three leadership theories for a more in-depth look at leadership in support of the MD's
hiring process. A strong leader will be critical to the possible merger's success.

Section 04: Analyzing Organizational Cultural Dimensions and the Culturally Diverse Factors of HCA and SC

Section 05 Analyzing the effect of "VUCA" variables on both firms and paying close attention to reducing the
negative impact of the "VUCA" elements.

Overall, combining HCA and SC is a great alternative for the holding company to expand its market base and
effectively tackle the market's unending prospects.

02. Introduction

Island Clothing Kandy (Pvt) Ltd is a market leader in the Kandy apparel industry as well as in garment
production in Sri Lanka. Clothing for men and women is designed, printed, and manufactured in big numbers.

Aie Construction (Pvt) Ltd is a well-known and experienced construction company based in Galle, Sri Lanka.
The company, which was founded in 2001, specializes in building design, construction, maintenance, and
rehabilitation. This involves a personnel that is well-trained and experienced.

People returning to regular life have raised demand for garment exports as the ROW has been successful in its
Covid 19 vaccination efforts. The current administration has aided the industrial sector in a number of ways in
order to handle macroeconomic issues and help Sri Lanka reach an unequaled strategic position in the globe.
Taking these aspects into consideration, HCA and SC intend to unite in order to generate shareholder value via
appealing financial benefits. To do this, the two companies will create a holding company called Hill Country
Group (Pvt) Ltd, with HCA having a 60 percent controlling share, and suggest personnel from each business or
recruit new workers with suitable characteristics to work for the holding company as required. The holding will
largely consist of four divisions, each supervised by a managing director, and will not be operational.

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03. Critical Behaviors

3.1Individual Behaviors

Human capital is the most important thing a company has. They decide whether the company grows or shrinks
because of what they do for the company. Employees' reactions to different types of stimuli. Faces change
their expressions depending on the situation they are in. A company merger is one of the most important
changes that could happen. It will also have an effect on how well workers do their jobs and how well they do
their jobs. Demotivation, high turnover, and poor performance will come from not knowing who you are and
how you work. In the end, an organization's output is made up of all of its members' work. As a result, a
company's success is directly linked to how its employees act. 60% of mergers and acquisitions don't work out
because of poor HR management, a study says (Barros 2003). Thus, knowing HRM's role in a bad merger is
important. Employees who work together will have different views, attitudes, and behaviors. Another thing:
They'll feel like they don't want their jobs anymore because of how different the culture is and how much they
don't care. As a result, the HRM must make sure that everyone is happy both before and after the merger.

Leadership innovation is very

important now. This is what it takes to be a good leader: good communication skills and the development of
future leaders. Communication improves the mood and the work done. As a result, training and development
may help businesses find and keep the best people while also improving work satisfaction and loyalty. Having a
plan for succession at all levels will help employees reach their professional goals. This will make even people
who don't have a lot of motivation work harder. Employees must be able to handle the effects of a merger
better.

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Group Dynamics

Group dynamics discusses how individual team members' positions and actions impact other team members
and the group as a whole. When a good group dynamic occurs, it has a beneficial influence on the organization
by lowering disputes and dysfunctions. At the same time, trust will be at an all-time high as they strive toward
a shared choice. Both CEOs have dominant DISC qualities, which leads in strong leadership inside their
respective firms.

Teamwork is a critical concept for both firms. As a consequence, when they are working toward a shared
objective, powerful group dynamics have a big influence. Employee engagement is high in both organizations,
which leads to stronger team ties. Because both groups are striving toward the same objective and are closely
monitored by their leaders.

The "Belbin Model" may help team members realize their own capabilities, and managers can develop high-
performing teams when they have a clear grasp of the team members.

Tuckman's stages of group development

As previously stated, the preceding premise applies to a new combined firm since new employees will be
working under new management and in a new culture.

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Conflict Management

Conflict is typically perceived negatively, necessitating the urge to avoid it. Conflicts, on the other hand, may
be useful for stimulating discussion and challenge. "Thomas and Kilmann" proposed two variables to examine
assertiveness and cooperativeness before deciding on a conflict management technique.

As stated above, the recommended DISC profiles are dominance and conscientiousness. Both of these profiles
place a high importance on their jobs and on themselves. As a consequence, the most popular conflict
management styles, according to the Thomas-Kilmann conflict mode instrument, are competing and
cooperating. Collaborating is a conflict style shared by all profiles.

Because of their less people-focused characteristics and drastically varied operations, holding corporations are
predicted to have numerous disagreements, particularly during the creation and storming stages. It is vital to
teach them to switch between tactics depending on the situation, so that neither the relationship nor the
holding company's core objectives are jeopardized. Thomas Kilmann Conflict Model

There are five types of

conflict settlement, as
shown in the diagram.

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 Interpersonal Communication in Organizations

It is critical to have clear communication when reaching objectives with the team members'
comprehension. Every member should feel at comfortable with one another and be able to express their
ideas with one another. Employees will be able to emotionally connect to one another if they have open
channels of communication. As a consequence of the merger, employees from two distinct sectors and
cultures will work together. It is vital in this scenario for the members to communicate openly and
honestly with one another.

Employees from both firms will work with uncertainty if they do not have a clear knowledge of the
changes. if this goes on for a lengthy period of time Employees will be dissatisfied, and the company will
fail to accomplish its objectives. As a consequence, senior management should choose the most
appropriate communication technique for each level depending on their ability to comprehend and speak
the language.

Ex:-

• Executive and above - Emails, memos, and meetings (CEO, Department Heads, Supervisors)

• Non-executives - Letters, Announcements, Suggestions Box, and Notice Board (Machine operators,
Cleaners, Drivers)

The tactics outlined above may be used to achieve top-to-bottom, bottom-to-top, and cross-functional
communication. Any of these methods should be extremely clear, precise, and timely. Otherwise, the
message will be useless.

The Importance of Emotional Intelligence in Change Management

The holding company's change executives should understand the effect of digitization on each employment
category. So, only remedial actions may be done ahead of time. Some members may struggle to convey their
issues. Empathy and understanding from their perspective are so essential to know oneself well.

The Lewin's change model may be utilized to manage the digitization process.

Lewin's change model

Unfreezing

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Employees may first resist change due to unfamiliarity with the new system. They will constantly weigh their
benefits and drawbacks. For this reason, both employees should be educated about their company's position
and environmental issues from the start. Then explain why a digital business is required to acquire competitive
advantages for the holding company. The advantages to workers and the need of the change should also be
effectively articulated. Given that the majority of workers are non-executives, persuading them that a clear
picture of the transformation process is critical at this time would be difficult.

Changing

Employees understand the shift at this early level of digitization. This is the most challenging stage since it
involves transformation. Employees' nonverbal communication may reflect anxiety, worry, and guilt. Because a
new cultural change is underway. To prevent employee emotions from developing, EQ factors should be
employed. Until employees are comfortable with the new digitalization paradigm, it is necessary to give
training and assistance. Help with EQ is needed here.

Refreezing

Employers must ensure that employees do not revert to the former norm. Positive employee behavior should
be acknowledged and recognized since it directly impacts the company's capacity to effectively traverse the
digitalization process. Emotional intelligence helps workers comprehend and feel at this level.

In the workplace, Emotional intelligence is critical, especially during times of upheaval. It promotes
organizational communication, management, relationships, and conflict management.

Consolidated Organizational Leadership

According to the behavioral leadership concept, leaders are developed via training and growth, not by birth.
Subordinates are classified into two types according to this principle depending on their behaviour. According
to theory X management, subordinates are inherently demotivated and reluctant to do their assigned jobs. To
accomplish goals, they should adopt a more demanding and forceful style of leadership. On the other hand,
Theory Y managers have a good attitude toward their staff and lead them democratically.

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McGregor Theory X and Theory Y

Due to the nature of the garment and construction sectors, some workers are unable, even if they desire to, to
escape their obligations. They
must comply to the rule since
the bulk of them operate on a
manufacturing line or with a big
construction equipment. Certain
individuals choose to remain
within the present system and
are uninterested in professional
advancement because they are
satisfied with their current job
or are demotivated. However,
some people prefer to work
alone, working diligently and
doing well even while
unsupervised.

In 1960, Douglas McGregor came up with the "X and Y" idea. In this part, it talks about two popular ideas
about how people act at work. The letter 'X' stands for the negative side, and the letter 'Y' stands for the
positive side. The way managers think about the personalities of people, says McGregor, is based on a lot of
assumptions.

As you can see, X people have bad traits, and Y people have good traits. As a result of a merger, you will be
able to get both types of staff. Because of their natural reluctance to change, one group of people is very strict
about not making these kinds of changes. As a result, they want to stay with the same work schedule as
before. They are more concerned about their jobs than they are about their careers. As a result, during a
merger, we need to know or find these people and try to get them to agree with us. People in the Y generation
are the complete opposite. They want to be free, crave responsibility, and have a lot of self-confidence and
self-control. People who work for this type of company are easier to replace after a merger because they work
hard on their own. As a result, it is important to figure out who both sets of workers are before merging.

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Culture is how an organization's values and beliefs are shown. The values, ideas, tactics, and policies of an
organization are what make it unique.

Culture's beginnings, elements, and effects are shown in the figure on the next page.

The Holding Company has no power over HCA or SC, so their cultures stay the same. Each organization's
culture was changed by the Covid 19 epidemic.

One way to get people in the back office to work from home was to give them phones and laptops and tablets.

02. The uniforms or dress codes of the school changed.

This is number three. Field and line staff should work shifts, too.

04. Design that is safe to use Work has sanitizers, masks, sinks, and faucets.

Employees who have been vaccinated must show up for work on time.

06. There is transportation to and from the job site, as well.

4.1.1 Edgar Schein's work environment

According to Edgar Schein, employees build core notions about corporate culture as they cope with external
and internal integration issues. Others can see what people believe, perceive, and feel.

Employee values are the next level of business culture. This determines organizational culture. Principles,
conventions, shared values, problem-solving methods, and thinking styles all affect organizational culture.

When a company merges, employees must learn new concepts and ideals. They'll see that there's more to the
story than you thought before the merger.

Employee's intangible yet significant assumed values. They have subconsciously created practices that impact
organizational culture. Employees observe a difference in attitude a few months following the merger. Several
values were absent in previous stages.' The same idea may be used to the iceberg of corporate culture change.
People believe this is a great firm because of the advantages, lifestyle, and anecdotes spoken about it.
Observable indications, however, may not tell the whole situation.

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The Iceberg of Culture

In a merger, it is two different types of cultures being get-together. In our case, one Company is from Kandy,
and the other one is from Galle. Major Differences between Kandy & Galle culture

Table -01

Type Kandy Galle

Language Sinhala / English /Tamil Sinhala / English /Tamil – Many Accents and Different
Pronunciations

Food Rice & Curry, Vegan Mainly Seafood, Fastfood

Meals

Behavior Modest Direct and Aggressive

/Simple/Backwards

Cloths Ladies – Osariya, Saree, Saree, Skirt & blouse, Jeans

Skirt & blouse, Jeans
Men – National Kit, Shirt, Trouser, T-Shirts
Men – National Kit, Shirt,

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 Trouser, T-Shirts

Adaptability Fast Adaptability Slower Pace of Adaptability

4.1 Remote Work

The bulk of companies have adopted the work-from-home idea with the release of Covid 19. Only a small
number of businesses can benefit from this approach. Businesses in the IT and advertising fields, as well as
educational institutions, have mostly embraced this strategy. Manufacturers, banks, and government officials,
on the other hand, are unable to perform their jobs to the fullest extent. Some employees were instructed to
work from home, while others remained at their desks as normal. When working from home or remotely, it
might be difficult to maintain the same corporate culture.

The term "remote work culture" refers to a company's digital culture, which enables workers to remain
connected via shared experiences, interests, and aspirations. This sensation of belonging transcends the
physical boundaries of the workplace when a strong remote work culture is developed. In order to foster a
more comfortable remote working environment, companies must establish the necessary rules and processes..
For a more remote-friendly workplace, we'll need these things: • Technology • Flexibility • A Growth Mindset

As a means of preventing long-distance isolation and contributing to the company's long-term success, remote
culture has a lot of weight. Using a digital platform to manage a garment factory and a construction company
at the same time might be challenging. However, back-office responsibilities like IT, HR, R&D and marketing
may all be performed remotely.

Working from home may be more convenient for folks since they won't be exposed to a different culture as
they would at an office.

• Scheduling flexibility • Cost/Time savings • More family time • Employee retention • Increased productivity •
Increased motivation • Convenience • Fewer sick absences

Employees who work from home report feelings of isolation, a lack of oversight, the risk of information
leaking, and the fact that not all occupations lend themselves well to remote work. The mood of the workforce

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5. The Imperative of VUCA

The VUCA era is arrived. Volatile, uncertain, and complex" is the acronym for VUCA. In contrast, the letter A
represents for ambiguity, while the letter C stands for complexity. In 1987, Warren Bennis and Burt Nanus
developed the acronym (artificial word) VUCA, based on their leadership theories. In the early 1990s, the US
Army's war college defined the post-Cold War world. VUCA has been contested by business executives from all
around the globe ever since.

Volatility may be described as a state in which change is occurring at a rapid pace.

Lack of foresight is one of the hallmarks of uncertainty.

Degree to which causal relationships are present.

The risk of being misunderstood. ambiguity

The acronym VUCA stands for "vulnerability, uncertainty, complexity, and complexity" and is widely used to
denote these concepts. It is increasingly impossible to keep up with the pace of change in the commercial
world. Businesses will only be able to stay afloat if they are flexible and quick to adjust to new situations.
Adaptable leadership methods are essential for CEOs in the corporate world. CEOs and their organizations
should be examined in this context for how they perceive and react to the difficulties of a VUCA environment,
as well as their capacity to adapt and survive any unfavorable event.

Even if we focus on a tiny business unit, the environment it operates in is complicated. As the number of
people using technology grows, stakeholders' expectations shift in line with the new values they hold vs. the
previous values they had. They have a duty to respond swiftly in their positions of authority. It is imperative
that business executives cultivate a culture of adaptability and responsiveness inside their businesses, so that
their teams can remain strong and agile even in the face of unforeseen events. Having the ability to handle
hardship at any time is essential for leaders since the future is mostly unknown.

After a massive attack from the east on April 21, 2019, Sri Lanka faced a major problem. Since the conclusion
of the civil war in 2009, this has been the largest strike. After the first assault, the whole county went into
reverse. The repercussions were far-reaching, affecting residents across Colombo and its surrounding areas.
Tourist-related companies were especially hard hit by the disaster. Although the situation has improved, the
long-term impacts of the Easter assault are still being felt.

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In addition, Covid 19 had a global economic effect. In light of the aforementioned two circumstances, leaders
must be able to react rapidly to change. In business, the one who adapts the quickest is the one who succeeds.

"I don't think VUCA is simply a catchphrase. It's a way to think about and solve challenges in a rapidly changing
digital environment."

It's Waltraud Glaeser's specialty.

How Collaboration Can Improve the Performance of a Company

Teamwork is defined as the collaborative activity of working with a group of individuals toward the
achievement of a common objective. It is crucial to the success of any organization.

Meredith Belbin has done substantial research on group interactions. A team's success is dependent on its
ability to complete nine tasks.

Encourage team members to grow and develop as shapers.

2. Executor - Fulfilling responsibilities

3. A finisher who is focused on meeting deadlines

The coordinator delegated, listened, and had the ability to alter the situation.

5. Encourage employees to work together as a team.

6. Resource Investigator - Look at other possibilities.

Planting is a great way to introduce new concepts.

Through the use of monitoring, ineffective motivators and emotionally immature individuals are identified and
assessed.

An expert is someone who is well-informed, dedicated, and committed to their own point of view.

Following a merger, reorganizing teams is necessary in order to achieve organizational goals. Prior to the
merger, both organizations functioned as teams, and it is vital that this organizational structure be maintained.
Employees will assume they have been demoted and that they no longer have control over their positions
immediately after a merger. People are apprehensive of change, which makes building new teams a difficult
endeavor. Managers must understand and develop productive teams in order to ensure the success of the
firm.

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