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In today’s rapidly developing world, companies should consistently change to meet customer requirements and remain competitive in the market. Mergers and acquisitions are often aimed to make a product or service more effective and useful for customers. In the given case study, Holiday Seekers Travel Agency and Small World Travel Agency are expected to merge, integrating the experience and strengths of both organizations.
The former is a large company with 50 branches, offering traditional travel services, and the latter is a small online company. This report discusses the impact of the merger and creation of the new Broaden Your Horizons company, including leadership, culture, communication, and sustainability issues to ensure that change will be implemented successfully.
Potential Impact of Change
To prepare the identified organizations for change, it is important to anticipate how the stakeholders will perceive this move, including investors, partners, employees, and customers. First, in analyzing the effectiveness of the companies’ merger, it is appropriate to evaluate the possible reaction of investors. Some may consider such a merger to be risky and unstable in the long term, which is likely to lead to reduced or a complete lack of cooperation (Cameron & Green 2015).
In this case, a detailed merger plan with a focus on the time frame and specific stages can be useful to convince investors to continue working together. Second, for partners—including hotels, airlines, transportation companies, and local tour organizations—the potential impact appears to be positive as they would have an opportunity to attract more customers. Because two companies will merge, their client base will increase, and profits are likely to grow significantly.
Employees comprise the most important category of stakeholders who will potentially be shocked, frustrated or even depressed by the upcoming change. The plan to decrease the number of branches implies that some employees will be affected by downsizing. Among the staff members in both companies, while some may have different reasons for not noticing the changes, a large number will experience professional dissatisfaction with the new working conditions.
The situation promises to be especially threatening to Holiday Seekers Travel Agency employees; the internal environment among personnel can be tense when people are waiting for rightsizing and dismissals. A high level of personal anxiety, generally affecting the psychological climate, can be expected. In their turn, the employees of Small World Travel Agency are likely to perceive the changes more calmly, taking them for granted or perhaps misunderstanding the reorganization. Therefore, the management and the personnel department should occupy a key position in developing the change plan.
Change stages are usually observed in the process of merging, including shock, defensive retreat, acknowledgment, and adaptation to change. Accordingly, a similar situation should be expected in this case: employees would follow stages illustrated by no risk-taking, anger, mourning, and finally, comfort with change (Cameron & Green 2015). The change managers assigned to implement the required merger should assist employees in passing through transitional stages.
The first stage, ending, should ensure that disidentification is expressed through letting the situation go. The second stage, the neutral zone, encourages considering the change from different perspectives and finding advantages as well as building energy for new conditions. The last stage, new beginnings, implies aligning a company’s vision with the opportunities that occur. Thus, change managers should accompany employees throughout the mentioned stages. Once the change has been planned, personnel evaluation should be conducted to identify talented and qualified employees.
Successfully applied in practice, staff assessment in terms of restructuration can create a favorable atmosphere in the creation of a new company. The purpose of staff assessment is to determine the current professional level along with personal and motivational characteristics as well as the potential of employees to perform tasks that will advance the company’s strategic development. Personnel assessment should be carried out at all stages, including planning, training, remuneration, and providing motivational incentives (Cameron & Green 2015).
Incurring minimal time and costs, this technique makes it possible to effectively assess the degree of an employee’s compliance with both individual goals and the overall nature of the company’s work. Such a strategy will allow making necessary dismissals and leaving only qualified employees who are committed to their work.
The customers who make up the target audience of the Broaden Your Horizons company are likely to perceive the merger in a positive light since they will be offered new options for booking, directions, and travel plans. Younger clients will definitely benefit from these opportunities, while people who do not use the Internet often may be confused to some extent. To clarify the situation and preserve customer loyalty, it is vital to explain to consumers that both traditional and online options will be available for their convenience.
Based on case study details specifying the need to retain only one of the CEOs, it seems rational to assign a leadership role to an outside change sponsor who will be able to make objective decisions by taking into account the new company’s goals and current issues (Hornstein 2015). This individual will not control the day-to-day processes but will focus on identifying change stages, monitoring progress, and making adjustments as necessary. Strategy, resources, and communications should be led by the selected change sponsor.
A change manager and several change agents should be chosen from among the senior and junior management of both companies to guide daily processes (Hornstein 2015). In addition, a change team should be created from employees having authority among both management and staff. These team members will act as role models; therefore, they should be selected properly and in a timely manner.
Considering that this case study presents a complicated situation, it is important to combine several leadership styles: in particular, transformational and visionary. A visionary leader pushes people toward a common vision since the point is not how to achieve the goal but to make the team understand the direction of the targeted change. According to Jick and Peiperl (2006), this style is best suited to seeking a new direction for a company’s development. In applying the role of a visionary leader, the change sponsor should vividly and vibrantly describe the goal of the project team or the entire organization to motivate and inspire employees.
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I recommend that this individual should understand that new ideas and innovations can arise suddenly. Therefore, the leader should look for sources of new information, opportunities, and improvements, thus promoting this idea in both organizations. The main characteristic of one of these leaders is empathy, which implies that methods, steps, and processes of leadership are accomplished only through assistance and openness to people (Hornstein 2015).
Most great and successful leaders have aspects of a particular vision. However, many companies do not have a mission or, at least, clearly formulated goals, which leads to employees feeling unmotivated. The advantage of the visionary leadership style is that it allows employees to search for new ways to solve problems and experiment with new ideas. Because failures are acceptable, employees can feel comfortable trying new approaches without the fear of being dismissed for making mistakes.
The first stages of the merger should be performed accompanied by a close review of existing values and goals, which is most relevant in terms of visionary leadership. However, further stages are likely to require more activity on the part of employees as well as their greater engagement in the new company’s affairs. In this regard, Tyssen, Wald, and Spieth (2014, p. 5) state that “transformational leadership is especially effective in projects with a high degree of novelty.”
I agree with these authors because transformational leadership focuses on changes in organizations, groups, and even people themselves. Transformational leaders motivate others to do more than they originally intended and, sometimes, even more than they thought possible. They should form a high set of expectations and manage to achieve more impressive performance and efficiency.
Most importantly, transformational leadership is distinguished by more dedicated and satisfied employees because such leaders empower their subordinates to act as leaders. Accordingly, employees are to be given relative freedom so that they can independently control their activities within delineated boundaries. They should be involved in the problem-solving process and learn new ways of working, thus contributing to increased productivity. Transformational leadership translates the needs of employees from a lower physiological level such as safety and reliability to a higher level, focusing on self-esteem and realization of potential (Tyssen, Wald & Spieth, 2014).
An important point is that lower-level needs should be met by means of decent wages and good working conditions. However, the transformational leader should also provide opportunities for individual growth and development for every employee. In this case, the leader will be expected to distribute tasks in such a manner as to raise employees’ skills and relate them to corporate goals, involving the workers in the change process.
Organizational culture is one of the most important aspects of a company, primarily determining what makes it different from others. The culture is promoted to one of the first places in management as it allows achieving employee commitment and effective production (Hickman & Silva 2018). The paramount task in shaping and maintaining culture is to support changes that are occurring in the company. Culture defines the basic values, norms of behavior, ideas, and attitudes that are to be shared by all members of the organization. At the same time, culture manifests itself in the policies and rules that determine the functioning of the organization and behavior of its employees and management as well as their perception of both the internal and the external environment.
The merger of two companies requires paying attention to the culture of each to ensure that employees will feel comfortable. The best solution is to integrate the two cultures based on developmental needs and employee preferences (Hickman & Silva 2018).
Obviously, some values will be reinvented, while others will be rejected as outdated. Since the change is largely affected by the forces of globalization that are bringing people closer and promoting an increased speed of life, it will also be necessary for the consolidated culture to adjust to these aspects of the business. In particular, travel agencies are becoming more customer-focused in their attempts to meet and even anticipate their clients’ requirements. For example, online services can provide customers with the most comfortable conditions to book a hotel or purchase a tour to the Bahamas. These issues should be kept in mind while preparing the culture for change.
The new company’s management should take an interest in the perception and acceptance of organizational culture by all employees, who should be aware of and accept the business’s mission, goals, norms, and traditions. Maintaining organizational culture in the process of implementing basic management functions is essential (Hickman & Silva 2018). Support or suppression of the behavior of personnel under established management practice exerts a significant influence on the organizational culture. The extent to which leadership encourages autonomy and initiative on the part of employees also matters.
Culture preparation implies that a leader is sufficiently competent to communicate with employees and management, delegate tasks, and resolve conflicts. The concept of emotional intelligence (EQ) offers an important topic of discussion as a way to clarify how empathy determines culture change. According to Goleman, EQ is the ability to be aware of others’ emotions and of the self in order to motivate and manage emotions when interacting with others (cited in Batool 2013).
Several of the components of this characteristic include self-awareness, self-regulation, empathy, social skill, and motivation. All communications point to the need to work with emotions. Even though emotional intelligence can be difficult to pinpoint, five main areas are involved. The change sponsor responsible for the merger should be conscious of his or her emotions, able to manage them effectively, capable of motivating self and others, and have the capacity to recognize other people’s emotions and to maintain relationships.
Practical recommendations for change agents might include organizing training for employees with the purpose of increasing their ability to fulfill the mission of the organization. In addition, collaborative exercises will enhance team cohesion and develop a meaningful approach to the work of each participant. In particular, training will boost the level of communication skills of employees, develop a positive attitude to change, and resolve organizational challenges as required. Change champions may be rewarded based on their performance, showing other employees that a proactive position toward change is valued by the company and that it leads to opportunities for professional development.
Change Model Identification
Since the combination of visionary and transformational leadership styles has been proposed, I suggest using Kotter’s eight-step model. According to this model, the best way to impress people is a clear demonstration of the problem. It is necessary to evoke emotions and feelings in employees so that they want to change; only then will the transformation be qualitative and successful (Cameron & Green 2015).
The first step implies creating an atmosphere of prompt action by examining the market situation, the company’s competitive position, real and potential crises, and favorable opportunities. The merger requires considering these issues for both companies, resulting in a focus on their common future. The second step is to form influential teams of reformers by way of combining the efforts of authoritative employees and agents of change who will encourage the activities of others. This team should be proactive, competent, and respected by the majority of employees to allow maintenance and growth of trust.
The third step is to create a vision: an image of the desired future in order to increase employee engagement. The change sponsor and managers are responsible for developing a strategy for achieving the vision. In this case, I recommend selecting a normative re-educative strategy that allows redefining values and cultural norms and ensuring commitment to new ones (Cameron & Green 2015). The fourth step states that a new vision should be promoted, using the availability of presentation, analogies, and examples of models by the team of new reformers. Next, it is necessary to shape conditions for the implementation of a new vision in life.
This part of the process can be performed by eliminating obstacles blocking new behavior, changing structures and responsibilities contrary to the new vision, and encouraging creativity and willingness to take risks. In the sixth step, the leaders should achieve immediate results through planning the required first steps as well as rewarding and promoting initial successes.
Consolidation of achievements and expanded transformations are noted among the goals of the seventh step. An atmosphere of trust in the new approach is likely to contribute to spreading successful experiences throughout the organization. Ultimately, the institutionalization of a new approach should include formalization of the rules of behavior, building a relationship between results and rewards, and creating conditions for the development of new qualities in employees. It is important to emphasize that exactly following a specified sequence of steps is unlikely to lead to success because a merger is a complex process.
Instead, Cameron and Green (2015) state that the process of accomplishing a merger should be continuously assessed to implement necessary changes to the model. To consolidate changes in corporate culture, two issues are especially important. The first is a clear demonstration that changes in attitudes, behavior, and thinking have actually improved the company’s work. Given the opportunity to draw their own conclusions, employees may not see the right relationships and may come to erroneous conclusions. To properly evaluate the results achieved, employees need appropriate guidance.
Communication of Change
Change communication is one more area that is vital in implementing a merger. According to Hickman and Silva (2018), proper change communication leads to low resistance and more rapid achievement of change goals. In the course of the restructuring, the existing branches and departments will most likely be transformed; some will merge, others will repurpose or set other tasks before them, and new divisions will appear. To save people, it is important to offer them a way to fit into the new structure. For some employees, this will take a very specific meaning, such as moving to another department or another position. In order not to transfer anyone by force, one recommendation would be to invite employees to choose new positions, causing a merger to be less stressful.
In order to make changes in the company, management may choose to adjust the company’s corporate values. For example, values such as professional flexibility, the desire to comprehend new facets in the profession, the willingness to master an adjacent specialty, or the desire to learn and discover new areas in the profession may be assigned a top priority. As part of the introduction process, leaders and managers should describe desired values, make colorful brochures, and distribute them to employees. In other words, they should prepare related presentation material and convey a consistent message.
All the changes that are expected in the company should be clearly described with the use of diagrams, tables, and infographics. The material should be clear, descriptive, and accessible so that employees may easily draw a picture of what will happen during and after the merger.
Innovation is the process of invading elements of a new culture into existing relationships, presenting a key reason for resistance to change in the implementation of a merger. The main factors in people’s resistance to change are a lack of understanding and trust, differences in the assessment of the situation, and low readiness for change (Hon, Bloom & Crant 2014). In the process of change, individuals often show resistance, which may have the following manifestations: direct sabotage of changes within the organization, delaying the beginning of changes, or the emergence of unforeseen difficulties. Such opposition leads to a slower process and an increase in costs compared to those anticipated in the change plan.
Resistance can be explicit, in the form of open criticism of projects and upcoming auctions, and hidden, accompanied by external agreement with changes. At the first stage, the main problem is to identify and overcome any initial resistance. It is vital to be able to make people adopt the new way of thinking necessary to effect change. Once a merger is implemented, it is critical to ensure that the change is permanent, making it formally and unofficially fixed and reflecting that employees embrace the change and that it has become part of the organization’s culture. The final stage of the change program involves evaluating consequences and effects. However, if goals are carefully defined and the ways to achieve them are clearly described, then assessment is possible.
The method of controlled resistance is an optimal variant that is acceptable in conditions of moderate urgency, but it also can bring a positive effect for a certain period of time. If the need for transformation increases, the method acquires a compulsory nature. Conversely, when management has a reserve of time, the method acquires adaptive features (Hon, Bloom & Crant 2014). When implementing this method, the processes of planning and implementing projects are to be carried out in parallel.
To reduce the level of resistance, top-level managers need to work on such issues as developing a sense of community in terms of goals among staff and create an atmosphere of trust in relations between managers and employees. If possible, a guarantee that change will not lead either to a reduction in staff or a decrease in wages can exert a significant positive influence. From the start, change agents should explain to and discuss with staff the reasons for upcoming changes and try to achieve universal recognition of the need for change. It is necessary to pay attention to the training of managers dealing with frequent negative reactions from employees.
While many managers and leaders may successfully identify and propose strategy implementation, when they encounter ineffective results, they are likely to conclude that a change attempt has failed. In order to remain successful, this merger should adopt the concept of perseverance elaborated by Kanter (cited in Tirmizi & Vogelsang 2017). The management and personnel department should hold regular meetings to resolve conflicts and problems as well as talk with staff about their experiences and any anxiety they may be feeling. In other words, these meetings should take into account negative emotions and experiences in order to solve problems.
It is beneficial to consult with employees on possible options for the implementation of changes, clearly demonstrating that their opinion can influence the course of upcoming events in many respects (Tirmizi & Vogelsang 2017). When forming a joint team, management should notify all staff about new openings in the company, which will facilitate identifying more capable managers interested in the success of the reorganization. Communicating compelling aspirations should be accompanied by building coalitions to engage employees.
In conclusion, this report provides recommendations for a merger between two organizations that will join to create the new Broaden Your Horizons company. As part of the process, leaders and managers should pay attention to the behavior of their subordinates in different situations and evaluate it within the framework of the corporate culture. The merger should be planned in advance, including resources, employee skills and knowledge, potential resistance, and other related issues. It is necessary to conduct additional personnel training to overcome all possible fears of transformation and encourage positive reactions.
It is proposed to develop a clear timetable for the whole process of change to convince stakeholders of the feasibility of the planned change. The integration of visionary and transformational leadership, as well as Kotter’s eight-step model, have been selected as the most appropriate for the given case. Ultimately, employee resistance and change maintenance issues are discussed, based on Kanter’s strategies, along with the need for enhanced communications throughout the new company.
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