Acquisition is a continual process, not an event (Carpenter & Sanders, 2007). It seemed to be a win-win situation when Watkins International acquired Brownloaf MacTaggart (BM), which until the acquisition in 1988 had been a prestigious small consultancy practice. However, a series of organizational problems arose after BM became one division of the international corporate empire. The shift means sudden changes in management styles and enterprise institution. As a consequence of inappropriate integration, the former BM staffs encountered a clash with Watkins’ culture and values.
Furthermore, the firm seems to lack in sophisticated goal setting and reward policies under the undetermined leadership. This essay will attempt to analyse several crucial organizational issues in this case and identify conceivable influence if the problems are not addressed appropriately. 2. Organizational Issues in the Case 2. 1Integration and Organizational Culture Despite optimistic expectations, mergers and acquisitions occasionally fail, in part because managers neglect cultural issues, which are rarely considered until serious problems arise.
Schein (1985) defined organizational culture as: “A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration which has worked well enough to be consider valid. ” According to Schein’s Three Levels of Culture model, implicit assumptions and underlying values manifest staff’s behaviour on the surface level. The typical management consultant in Watkins is ambitious, experienced and academically excellent (from a reputable British business school), while the typical BM consultant has a lower level of education, usually majored in engineering.
The different personal experiences and characters shape different social behaviours and then generate the culture in an organization. On the aspect of individuals, employees in BM division are less well qualified and have lower motivation. Arguably, a climate of self-proclaimed inferiority and anti-intellectualism flourished in BM, through excessive drinking and a negative work attitude. On the aspect of organizations, the former somewhat discursive enterprise culture made it difficult for BM staff, and even the partners to adapt a fiercely competitive environment in Watkins.
Hence, BM presented a distinctive style that unaccustomed to the organizational climate within Watkins. A specific integration plan including culture integration should have been worked out and thoroughly executed at the very beginning of this acquisition. Attributable to a lack of employee training, the BM staff felt confused when they moved into an increasingly automated and tightly regulated office from a relatively small personal one.
Marks and Mirvis (1985) have argued that, compared staff response to a merger of acquisition to a death or a bereavement, in the way it is denied it to begin with, before later expression of anger at leadership and allowance of biases to create conflict in the workplace. For instance, old concepts inherited from a small independent firm made it a tough task to introduce firm-wide standardised practices in BM division. Moreover, cultural problem is also one of the reasons of low work motivation and poor corporate governance. . 2Reward Policies and Motivation Generally speaking, motivation is a necessary condition for high performance in business organizations. It is of vital importance for enterprises to set up a system which combine performance with reward or punishment to motivate the staff. A significant Organizational Behaviour theory is that of Expectancy by Vroom (1964), who states that the motive of an individual rely on how much he or she believes that effort and dependable performance will lead to reward.
Namely, if there is no chance of attaining the reward then there is low motivation the staff will be willing to work hard. In BM Division, motivation and well-being of the employees were infrequently considered by top-level managers. Moreover, Porter-Lawler model (1968) demonstrates that individuals must feel that the marginal effort is required to increase productivity matches up to the expectation that he or she will be relatively rewarded. Nevertheless, there is no evidence showing that BM staff’s more effective and efficient work performances tend to make them achieve higher bonus.
Besides conventional reward policies, some long-term needs are usually reconsidered by employees, especially young staff. Maslow’s hierarchy of Needs (1954) theory shows that an individual is ready to pursue growth needs (such as self-actualisation and self-actualisation) after deficiency needs (deficiency needs and safety) have been satisfied. In a general way, individuals will not be motivated and energetic on their work if their high-level needs are hopeless to be satisfied.
In reality, BM Division did not provide staff with a promising career future, because partners preferred to hire young staff and just simply ‘burn them out’ before they were taken placed by some new employees. What was worse, promotion was rare in BM, for instance, only one person was promoted from senior consultant to managing consultant in the past fifteen years. 2. 3Leadership and Power Effective leaders need broad vision and enough energy to deal with multifarious issues in an organization.
According to Fiedler’s Contingency Model (1981), the leader’s effectiveness is determined by the interaction of the leader’s style of behaviour and the favourableness of the situational characteristics. To be more specific, the most favourable situation is when leader-member relations are harmonious, the task is highly structured, and the leader has a strong position power. However, there was little mention of interaction between partners and consultants in BM Division. A new quality management system became a bureaucratic trial, due to the autocratic way of leading and a lack of timely communication.
Although the partners owned a strong position power, BM was stuck with a high power distance index (Hofstede, 1980) which leads to their failure of influence on the activities of goal setting and goal achievement. The structure of BM serves only to alienate the lower level staff and create a divide between the higher levels, who command different levels of respect. Furthermore, the irrational allocation of assignments within BM should also be addressed immediately before damage is done to the company image. Another issue about leadership at BM is the traits of leaders.
Conger and Kanugo (Conger & Kanungo, 1987) argues that the emergence of leadership is a phenomenon based on situational factors or a trait approach. Some academics (Judge, et al. , 2002) believe that extraversion and openness are key traits for successful leaders. However, in BM, the partners were lack of the quality of openness, being portrayed as a somewhat cunning and cavalier character. 3. Potential Consequences Organizational culture change is an inconceivable mission when the managers of an enterprise are not in strong agreement to do so.
If the current conflict between two cultures in Watkins remains unaltered, two consequences might occur. Firstly, is ‘separation’, which means neither of Watkins nor BM makes any changes to accommodate another one, and they continue with their present values. Hence, the Watkins consultants will continue their tradition of hard work and motivation, while the BM staff will continue to be isolated from the rest of the company. Under the circumstances, none of the two organizations could benefit from the combination.
As Cartwright and Cooper (Cartwright & Cooper, 1993) have argued, low morale, poor work quality and declining financial performance are possible outcomes, since the employees are unable to communicate effectively or do not trust each other. The second response would be ‘marginalization’, where BM could hardly become a core division of Watkins and might even be split or sold. Issues like unreasonable or unfair reward policies might lead to negative feelings within the workplace.
As Locke (2004) has mentioned, it is more useful for companies to have no bonus system in place at all than one that is fundamentally unsound. If the issue of motivation is not addressed, the sluggish atmosphere would continue diffusing, and the staff would be more perfunctory on their work. Consequently, BM might have to witness a decline in its turnover in the future. On the aspect of BM employees, if the employees are not rewarded by internal promotion, a serious problem of succession would arise after the senior consultants quit or retire.
If the leadership situation in BM remains unchanged, the negative influences are obvious. As the leaders do not partake in a transformational style of management, problems in the organization will not be reconsidered and resolved. In this sense, without an effective leadership, neither the culture nor the motivation of the staff could be addressed. 4. Conclusion In conclusion, this essay has investigated three main organizational issues in BM case and discussed some potential results if no proper actions are taken.
Whilst it is not difficult to see the disadvantages in the case, particularly from a cultural and motivational point of view, without major changes in leadership, nothing can be solved. Watkins should reconsider the culture integration issue insightfully and prudently, and exercise strict control over recruitment as well as human resource management. Furthermore, by setting clear and agreeable team goal and reward policies, staff would work together to achieve a level of revenue for the firm, thus eliminating disunity and inefficiency. Hopefully with the theories mentioned above and the suggestions put forward, BM can maximize its potential.
