In mergers, two organizations operate as partners where each has a specific role to play. This plan introduces challenges while coming up with a management structure that can help run the new entity smoothly. In the merger between GreenHealth and Cranberry, management had to face the issue of harmonizing the workforce based on the newly developed structure. This paper uses Balogun and Hope Hailey’s Change Kaleidoscope model, Johnson’s Cultural Web model, and other academic theories to analyze and describe the various changes that were adopted in the merger between GreenHealth and Cranberry.
Balogun and Hope Hailey’s Change Kaleidoscope Model
In 2002, Balogun and Hope Hailey’s introduced the Kaleidoscope model for the conceptualization of change within an organization. The model presents organizations with a comprehensive framework for conducting analysis of various factors that are critical in the implementation of organizational change. It has two rings, namely outer and inner rings, as shown in fig.1 below.
The outer ring has important contextual factors for the successful implementation of change. The factors either enhance or hinder the adoption of change. Hailey and Balogun (2002, p. 154) reveal that the inner ring contains various components of implementation, which are influenced by agents of change. These factors are shown in the model in fig.1. Time defines how quickly the desired change is required. For organizations in crisis, rapid change is required in the possible shortest time compared to organizations that desire to implement organizational change to achieve strategic development initiatives in the long term.
Although the exact time was not stipulated for the formation of a merger between GreenHealth and Cranberry, the organizations were not in crisis. However, they endeavored to help one another to achieve strategic growth in different markets from 2012 through 2013. Reducing costs through the formation of the merger was perhaps one of the most important strategic objectives that led to the formation of the merger between GreenHealth and Cranberry. Consequently, despite the inexistence of organizational crisis, the team in charge of the formation of the merger had to work for 24 hours seven days a week (Metropolitan University 2014, p.2).
In the initial stages of the organizational change, the definition of organization scope of change is very important upon deploying the Balogun and Hailey’s Kaleidoscope model. The scope entails the degree of the desired change. The change implementation team responds to the interrogative of whether the desired change only affects a part of the organization or the entire organization. For the merger between GreeHealth and Cranberry, although the change led to the alteration of managerial structures together with the downsizing of the workforce to avoid duplication of responsibilities, the organizations collaborate in selling products.
This implies that the existing product lines for both organizations were not altered. Nevertheless, both organizations were entirely affected by a change in terms of location of places of work to ensure fairness for employees of both organizations so that some did not have to commute to work while others commuted on a daily basis.
Preservation defines various aspects of organizations that require retention during and after the implementation of change. This may include various practices of an organization, its assets, and its traits (Hailey & Balogun 2002, p.155). People form an important asset that an organization utilizes to achieve its competitive advantage. Both GreenHealth and Cranberry retained their employees, although they offered a voluntary retirement scheme as one of the downsizing efforts. The products offered by both organizations were also protected and preserved. Metropolitan University (2014) confirms that the most preferred choice of the name for the merger was GreenHealth-Cranberry to retain the brand names and products (p.3).
However, opportunities for the creation of new products especially men’s skincare products were important after the formation of the merger. Changing the organization culture to adopt new ways of doing things was important at GreenHealth. However, Metropolitan University (2014) informs that people at the organization were used to doing things in the same way for the last 100 years (p.2). For Cranberry, preservation of the culture of looking for new ways of doing things better was always necessary since it ensured the creativity and innovation capacity of the organizations.
Before the merger, the changing environment for GreenHealth and Cranberry was characterized by immense tension in terms of the employees’ views, norms, beliefs, and attitudes towards the change. Bruno, the CEO for GreenHealth, admits that rumors spread over speculation that the chosen CEO would extend more favors on employees who were formerly working for Cranberry (Metropolitan University 2014, p.2). People also associated the merger with high rates of redundancies. At Cranberry, the changing environment was more welcoming to embrace change. Unlike GreenHealth, people were used to changing. They had less diversity in terms of understanding the purpose of the organizations. Indeed, all people could state well the mission of the organization besides being motivated to work towards its achievement.
According to Balogun and Hailey’s Kaleidoscope model, success in organizational change also depends on the existence of capable change implementation personnel. Before the formation of the merger between GreenHealth and Cranberry, a striking task involved assessing capability to implement change in both organizations. Consistent with this concern, Jensen (2011) claims that during the process of planning for organizational change, there is a need to evaluate the capability of an organization to implement the desired change before change implementation begins. The assessment for this need led to the retiring of Marcus while Carol assumed the responsibility of the CEO of the merger. Bruno assumed the roles and responsibilities of the CFO (Metropolitan University 2014, p.2).
The Kaleidoscope change model requires organizations to evaluate their capacity to implement change. Capacity refers to the magnitude of cash, time, and human capital resources are invested by an organization to drive successfully the desired change (Hailey & Balogun 2002, p.155). While the cash resources required to implement the merger between GreenHealth and Cranberry are not discussed by Metropolitan University (2014), both organizations employ 1500 people (Metropolitan University 2014, p.4). In terms of time, the organization fitted the top management and developed the managerial structure by the end of March 2012. This signifies the urgency of the need to expedite the merger formation process in the effort to reduce costs and/or enhance the competitive advantage for organizations coming together to form a merger.
Power and readiness to embrace change define the last two important aspects of organizational change under the Kaleidoscope change model. Readiness for organizational change is evaluated from the context of employee preparedness to adopt change. Cranberry’s employees were not used to change. They were unprepared for it. GreenHealth employees recognized that change was important for continued organizational growth through seeking new ways of ensuring that the organization archived its mission.
Unlike in GreenHealth, Cranberry’s employees were committed and motivated in embracing organizational change. However, embracing change through a merger attracted challenges in both organizations, especially by noting that the main objectives for forming the merger were to reduce costs by 20 percent. This goal was to be achieved via estate reductions, and more importantly, savings of expenditure on staff (Metropolitan University 2014, p.3). Consequently, it was natural for people to resist this change. They were unsure of who would be rendered redundant and/or useful.
The merger process for GreenHealth and Cranberry began by listing the top management teams followed by various managerial personnel in the UK, the RoW, and the US business segments. This strategy helped in creating posts for the allocation of power in the merger. Considering power structure during organizational change is important. It helps in determining skills and attributes for leaders who are steering the change process together with the threshold of discretion of the units that require a change within an organization (Hailey & Balogun 2002, p.157). Leaders in the merger between GreenHealth and Cranberry needed skills to propel the merger to higher profitability levels by utilizing people in creating and placing products of the merger in the marketplace competitively.
Johnson’s Cultural Web Model
To ensure that all stakeholders of an organization focus on common goals and objectives, it is important that they subscribe to a common way of thinking, interaction, values, and norms. organizational norms, values, and ways of thinking define an organizational culture, which needs to be aligned with the business of an organization (Hedlund 2004, p.19). Elements of organizational culture constitute some basic assumptions that can aid in enhancing the success of the organization when adopted and observed by all stakeholders, especially the diverse workforce. In fact, organizational culture is the only aspect of an organization, which cannot be duplicated or copied by another organization.
It constitutes various aspects. To help study these aspects, Johnson and Scholes identified various aspects that describe and/or influence the culture that a given organization adopts. The aspects include control systems, the structures of an organization, power structures, symbols, routine and the symbol of an organization, myths, and stories. They interact to form a paradigm as shown in fig. 2 below.
People tell different stories about an organization. They shape and/or build its reputation. Before the merger between GreenHealth and Cranberry, GreenHealth’s power of control was vested in its owners who also happened to be members of one family. As Bruno informs, the control structure was bureaucratic in the sense that compliance with the management of ideas and decisions was mandatory. Bruno admits that Marcus was incredibly dictatorial and secretive. He had groups of employees who he considered his favorites (Metropolitan University 2014, p.2). Before the merger, Cranberry’s stories were directly opposed to those of GreenHealth. Employees were given opportunities to engage in decision-making processes.
Carol asserts that innovation and creativity at Cranberry were highly encouraged. For this reason, he says that the organization valued people who were creative with ambition and passion to achieve success (Metropolitan University 2014, p.2). Therefore, probabilities exist that the top management does not always possess the very best ideas. Hence, to run the organization effectively and efficiently, the contributions of employees in decision-making processes were highly valued before the merger. After merging, GreenHealth-Cranberry emulated the best practices that were utilized by Cranberry to achieve its growth within a short time. The idea of family ownership and a dictatorial form of control was no longer in existence. People became the most important sources of success in the merged entity.
Symbols describe the formal representation of any company. They may include company logos, official dress codes, and office layouts and decorations among other things, which help create visual images of the organization (Johnson, Whittington & Scholes, 2012, p.31). Before the merger, upon entering GreenHealth, the image of old age came out. The average age of employees was 45 years. There was also an old plague although the organization’s main building was new (Metropolitan University 2014, p.2). This scenario contrasted the symbol of Cranberry. The company employed young and energetic people as a way of suggesting its youthfulness.
Indeed, Bruno reveals that his business is young and that it employs people with lots of valid talents (Metropolitan University 2014, p.2). In both organizations, their logos reflected the product lines of each of the organizations. Upon the formation of the GreenHealth-Cranberry merger, no changes were made to the products. The logo of the organization reflected products that the merger traded in as the symbol of change. The change occurred in the symbol of the organization in terms of the appeal of its employees. The mix of young and old people created the image of an organization employing people of all ages.
Different organizations have different powers and organizational structures. Power structure defines the real power pockets within an organization (Johnson, Whittington & Scholes 2012, p.57). Before the merger, power in GreenHealth Company was vested in the organization’s top management. Marcus influenced all decisions in the organization in his area of jurisdiction. People were not allowed to object to him. Metropolitan University (2014) observes that the people who got the largest share of bonuses and/or with high probabilities of their idea being incorporated in the decision-making process in the organization are only those who never opposed him or whose ideas corresponded to his way of thought.
The organizational structure was hierarchical and dictatorial. For Cranberry, employees and the top management influenced decision-making processes equally, thus suggesting a democratic organizational structure that reveals why the organization employed young and talented people to achieve its success. Such people were able to come up with the most innovative and creative ideas. In the new power structure deal for the GreenHealth-Cranberry merger, Marcus was forced to retire. The move implied that dictatorship and bureaucracy were not part of the merger’s power and organizational structure.
In Johnson and Scholes’ organizational cultural web, control systems refer to the processes that are deployed to monitor what takes place in an organization. Before the merger, Cranberry deployed various system controls such as inventory control and sales control through online systems. The company also gathered customer feedback data and employee data, which upon analysis helped control the operations of the organization such as re-development of products. GreenHealth only relied on sales controls. After the merger was formed, Cranberry’s control systems stood superior compared to GreenHealth. Hence, GreenHealth-Cranberry adopted many of its control systems.
Rituals and routines define the anticipated behavior of all people in an organization. At GreenHealth, people were anticipated to report working in time, produce the usual products in the usual way, and place them in the market in the usual way. Cranberry required people to come up with new ways of doing things every day. This practice was adopted after the formation of GreenHealth-Cranberry in a bid to re-innovate and come up with new product lines. Thus, change became a norm that GreenHealth employees were not accustomed to embracing.
Academic Theories of Change
There are several academic theories such as human resource theories that explain human resource challenges during the formation of mergers and theories on organizational cultural change during the configuration of mergers and acquisitions. Both sets of theories contend that any change presents many challenges partly because people are normally resistant to change as evidenced by the case of the merger between GreenHealth and Cranberry. This section critically analyses the cultural change at GreenHealth and Cranberry before and after the formation of the merger.
Cultural issues emerge after the formation of mergers Boselie (2005, p. 80). GreenHealth Company was an independent firm whose operations were unrelated to those of Cranberry. Merging any two cultures can be very challenging (Huczynsky & Buchanan 2007, p. 98).
This assertion persists despite the possibility of the two firms dealing with the same product categories. The new management must develop a new set of strategies for developing a new culture within new settings. When two organizations merge, just like in the case of GreenHealth and Cranberry, both firms’ vision, mission, and values must change (Huczynsky & Buchanan 2007). Mergers result in a sudden increase in the asset base and market coverage that had not been anticipated in the near future. Changing the statement helps in changing the overall culture of an organization (Biswas 2011, p. 99).
According to Baruch (2008, p. 430), changing the overall culture of the organization helps the firm in the smooth implementation of policies. It creates equal platforms where all employees learn a new culture. The former employees of GreenHealth and Cranberry needed to face equal changes in an environment with a new culture that was unknown to any of them. Otherwise, there might be some discontent on one side while there is contentment that nears laziness combined with pride on the other side (Cardel 1998, p. 39). However, Cranberry’s practices and approaches of doing things were more adopted in the merger in relation to those of GreenHealth.
The group whose most of its cultural aspects are retained on the formation of a merger feels superior. Besides, it lacks the urge to know beyond its current knowledge. This situation massively reduces its performance within a new firm. The group whose most of its cultural aspects are ignored feels despised. Instead of learning the new culture that is presented to it, it may develop hatred towards it by always associating it with the other firm. Such cases may translate to rifts within the merger.
Arthur (2008) asserts that instead of employees working together in such instances as a culture that is set to help the firm achieve its goals, employees will be using this culture as the basis of their disagreements. Therefore, in the formation of mergers, the likelihood of the emergence of cultural conflicts needs to be considered. Unfortunately, this strategy was not the case in the GreenHealth-Cranberry merger.
Developing a completely new culture helps firms achieve their combined strategic objectives. Bringing employees together makes them feel that they share the same goals and challenges in learning a new culture. As GreenHealth-Cranberry merger’s employees struggle to learn the new culture, they will help each other irrespective of the company that employed them before. Hence, they can forget the fact that they were employees of different organizations. This perception can have a positive impact on the merger.
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