Change Management

In an organization, structural change can be caused by numerous factors. One of them is acquisition. This is the process in which a corporation purchases most, if not all, of a different company’s ownership stake with an intent to assume control over the target business. When two organizations merge, the staff roles and responsibilities are also changed since the formal relationship of the corporation is altered.

General Information on Mergers

In the contemporary corporate environment, mergers as growth strategies appear to be in vogue. This trend seems to be powered by the visible associations between different rich and famous celebrities around the world. The largest occurred and expected mergers in the recent times include the ones between Yahoo and AOL, EBay and PayPal, Danaher with Pall Corporation, and Intel with Altera among others.

In the UK, during the 2014/2015 financial period, Computer Sciences Corp (CSC) merged with Xchanging Plc at a cost of four hundred and eighty pounds (Finnegan). Other massive mergers and acquisitions recorded in the past years include Vodafone’s AirTouch’s acquisition of Mannesmann corporation in 1999 that was settled at a cost of one hundred and seventy-two million dollars. In 2000, AOL acquired the Time Warner Corporation at a cost of one hundred and sixty-four million dollars. Ultimately, another example is that of AB InBev brewing corporation move to take over its rival UK based corporation SABMiller in November 2015 (CNBC). The settlement value for the merger was estimated to account for one hundred and twenty billion dollars.

In the organizational change management, merging with a different corporation leads to profound effects on the organizational structure of a business. It is undeniable that the deletion of the duplicating departments in the newly formed enterprise cuts down costs. Moreover, talents from both organizations can be attained and utilized in the obtained corporate structure. Nevertheless, various job functions are altered so that they can fit into the business model of the resulting company. The management positions and some of the departmental ones are eliminated. In general, there are three key structural changes that take place in a corporation. They occur due to job duplication, marketplace changes, and process changes.

Job Duplication

After a merger, the resulting corporation might have multiple top managers and executives. Often, such personnel can offer differing directives pertaining to the performance standards of all the staff. In such a case, the employees in one company may become frustrated while attempting to please the multiple executives. Furthermore, the workers might believe that opposing views held by multiple managers have an aim to attain what they want. In such a situation, the excess management positions have to be reduced in order to put all the departments in the organization in line using a proper individual manager.

Marketplace Changes

The market is always in constant transformation in reference to the products a company sells. Such alterations can be explained by the changes in the consumers’ tastes, fashions and preferences for various corporations’ goods. When two companies merge, various aspects of the resulting corporation’s products might also change. Some of the most common adjusted elements include packaging, branding, and pricing among others. In such an event, the structural changes of various departments in an organization take place in order to accommodate for such modifications of the goods.

Process Changes

The change in how a corporation performs its business as a result of a merger can also result in substantial structural transformations within a company. For instance, if a business entity initially permitted its departments to be autonomous, and this ends after a merger, there will be a need to have substantial structural changes within the organization. Furthermore, if a new department needs to be formed within the company aimed at addressing its demands, structural changes will also take place to accommodate the new group of workers. Additionally, if there exists a backlog of stored files in the enterprise and an archive department is deemed necessary, its creation will also cause a substantial alteration in the organizational structure.

Aldar Properties PJSC (Aldar) Corporation

On June 30, 2013, there was a big organizational structural change due to the merger that took place between Aldar Properties Corporation and its rival Sorouh Real Estate. This merger became effective on 27 June following the decision of the Ministry of Economy stated in the Ministerial Resolution 318 of the year 2013. The document approved the increment of the share capital of Aldar Properties as well as the adjustments to its Articles of Association. Moreover, the complete disbanding of the Sorouh Real Estate Corporation and the transfer of all its liabilities and assets to Aldar Properties was announced.

The Aldar Properties PJSC is a real estate development, investment, and management corporation which is based in Abu Dhabi, UAE. It was started in 2001, and since then, it has undertaken major projects such as the construction of the Al Jimi Shopping Center, Al Raha Beach, and the famous Yas Island.

I was employed by Aldar Corporation for ten months since September 1, 2012. My designated job title was the assistant leasing consultant. Thus, I experienced the effect of structural changes on my job responsibilities after the merger of the two corporations took place on June 30, 2013 first-hand.

While working in the corporation, I had seven principal obligations with regard to the company’s clients. Firstly, I was supposed to know the prevailing market conditions, current rental charges, knowledge of leasing terms, leasing details and all the relevant community policies. I was also responsible for helping clients to fill out their lease forms and collecting their rental deposits. I was trained to perform all these functions during the first two months after joining the corporation. Nevertheless, the scope and level of my responsibilities changed after the merger.

The merger of the two corporations was aimed at achieving three fundamental goals. First, the merged companies would benefit from a large pool of assets valued at forty-seven billion AED. Moreover, the new corporation would control the largest land bank in Abu Dhabi, whose ninety percent of assets are located in the investment zones. The new business would also enjoy a diversified asset portfolio, as well as a strong balance sheet. This would minimize the new corporation’s financial risk profile and guarantee growth in share capital to all the stakeholders.

Identification and Critique of the OD Intervention Process Used

Before the merger took place, Aldar followed an eight-step OD intervention process as illustrated in the figure 1. This was meant to prepare the staff members in the corporation for the transformation that would occur after the acquisition. The steps followed in the OD process included: opportunity identification, situational assessment, action planning, realization of the plan, a gathering of data, analysis of the results, offering feedback and implementation of the development. By using this approach, all the staff members knew of the imminent change that was expected. This way, they were able to start learning their new roles and responsibilities that they would have after the merger was completed.

Communication and Performance

The Aldar Corporation management team was immensely effective in communicating the impending structural organization changes in the company after the merger to the staff. This was done through the managers and staff meetings carried out bi-weekly, four months before the merger. In the gatherings, the executives explained the reasons for the merger and its benefits to the corporation. They also provided the employees with an integration plan, as well as a timeline for the move, so that the workers could feel that they were a part of the structural development process.

Resistance to Change

The efforts made by Aldar management team in enlightening the staff members about the changes due to the merger incredibly aided in avoiding employees’ resistance to transformations. By being incorporated into the decision-making process, the workers felt that they were a part of the change. Instead of worrying about the added responsibilities that they would have to fulfill, they viewed the merger as a chance for their career development. Some were excited about the prospects of attaining a better pay once they started working for the newly merged company after the acquisition.

Critical Analysis

Poor Data Collection Strategy in the OD Intervention Process

Although the organization used the OD intervention process for managing the effects of the change in the company, the process is subjective to criticism. The first remark concerns the data gathering stage of the OD intervention scheme. This step entailed collecting information from the staff members regarding their feelings on the structural changes within the organization. This is an important part of the process since all workers can state their personal concerns and worries associated with the transformations in the company. Unfortunately, at this stage, the corporation had a poor strategy.

The Aldar management team collected data on a group basis without paying attention to individual concerns of all employees. All the workers were asked a set of questions pertaining to the common issues likely to affect them by one member of the management team. Then, the group of all employees who attended the data gathering meetings at this stage would respond through a show of hands. This system of data gathering was more group than individual oriented. It shut out personal responses to issues that would affect people once the merger was complete. For instance, some staff members in the Aldar corporation might have been influenced by the change in the working hours after the acquisition.

Lack of Employees’ Reallocation Measures at the Change Development Stage

In most cases, acquisitions or mergers are associated with the problem of laying off the workers. This normally arises due to the structural changes in the working environment once the acquisition takes place. In such an event, it is imperative for the management team in a corporation to communicate with all the staff members regarding the possibility of job losses once a merger has occurred. The best remedies for such a situation should also be offered to the workers as a way of easing them into the change once the job loss problem appears.

In the Aldar corporation, appropriate preparation measures for workers pertaining to the problem of job loss were not carried out. Although all the employees were aware of the structural changes likely to occur after the merger, none of them had been informed that they might lose their work places. In addition, the managers in the corporation did not prepare adequate job reallocation measures in the event that some of the workers lost their job after the merger. This meant that some of them lost their employment and left with no other source of income.

Identification of the Actual and/or Planned Outcomes of the Change

The benefits and effectiveness of the actual outcomes of the structural changes within the organization can be accredited to the goals that Aldar sought to achieve when it merged with Sorouh. There were two principal consequences in the functioning of all the employees in the new corporation. First, there was a substantial rise in the remuneration set for all employees. All the staff members retained to work in the new corporation after the merger took place were added a salary bonus of forty percent. This was a substantial increment that resulted from the excellent market performance of the newly formed company.

The second outcome was the growth and diversification of the roles set forth for different employees in the corporation. For instance, for the acting assistant leasing consultant in the company, the duties and responsibilities rose from seven to twelve. Some of the new obligations included the maintenance of monthly commission records of all leases as well as renewals for the bonus purposes. They also included being in charge of the current resident files and distribution of company-issued notices to all of its stakeholders. An assistant leasing consultant was also required to pass the information about various real estate policies to the community.

The changes in the roles and responsibilities of the workers of all levels were effective because of two principal factors. First, the added remuneration package that accompanied the additional duties was attractive. It was a form of motivation that encouraged better work performance in the corporation. The second factor was the enhanced cooperation offered to all the staff members by the company’s management team. This made the employees in all the departments feel appreciated and recognized as essential components of the organization. As a result, this led to the better work performance from all the employees.

Identification of What the Organization Should Have Done Differently

As a way of ensuring the welfare of all the staff members in the corporation is protected, the company should have set job placement solutions for all the laid off workers when the merger occurred. Such measures should have included helping the affected workers in securing alternative employment in other organizations in the same industry. The company should also have issued all the redundant workers an early retrenchment package aimed at helping them out before they found another employment position. This way, even the retained workers would focus more on their work without constantly worrying about the fate of their employment in the event a similar structural change occurs in the future.

Additionally, the company should have enacted various employees’ motivation packages to reward the best performing workers in the organization. Such packages might include annual prize giving for the best employees during the corporation’s annual general meetings. Outstanding workers should also be given travel incentives as a motivation strategy aimed at encouraging the performance of all staff members in the organization. Employee motivation has a paramount role in all businesses. It ensures that all employees perform at their optimum levels while striving to achieve the corporation’s pre-set strategic goals and objectives.

Finally, the corporation should have offered sufficient training services to all the retained employees. After the merger had occurred, most of the staff members in the company were added various functions, roles and responsibilities to the existing ones. For instance, the assistant leasing consultant was given five additional duties after the merger. To ensure that high quality services were being performed by the corporation, it was essential to train all the workers receiving the additional job responsibilities. Such trainings should have been conducted by the competent managers in the organizations or other persons with vast understanding of as well as experience in the real estate sector.

The Main Findings of Research and Future Suggestions

From the above analysis, there are three primary factors that can cause changes to a corporation’s organizational structure. They include job duplication, marketplace changes, and process changes. Efficient measures must be undertaken by the corporation’s management team to ensure that substantial structural transformations within the company do not affect its general performance. For instance, one might follow the example demonstrated in the merger between Aldar corporation and Sirouh organization where the management team engaged the staff members into the whole process with regular meetings as a way of preparing them for change.

In the future, the company should try to implement organizational structural changes, trying not to affect any employee in the business. For instance, in the event there is a future merger or acquisition, the management team should try to provide work places for all employees in the concerned institutions in the new departments created. If there are some staff members that become unemployed after such a move, the management team should help the affected persons in attaining new job positions in different corporations working in the same sector of the economy. This will promote a good organization-employee relationship in the company and foster a positive working environment that is indispensable for the growth and development of the corporation.

Conclusion

In conclusion, structural changes in the company can result because of mergers between different corporations. The merger between Aldar Properties PJSC and Sorouh Real Estate caused numerous organizational transformations in the resulting corporation. The merger aimed at benefiting the resulting corporation with a large pool of assets valued at forty-seven billion AED. The new corporation also enjoyed the control over the largest land bank in Abu Dhabi whose ninety percent of assets are located in the investment zones. Ultimately, the merger minimized the new corporation’s financial risk profile and guaranteed growth in share capital to all the stakeholders. The examples of other mergers and acquisition in the last fifteen years include those between Facebook and Instagram, Facebook and WhatsApp, AB InBev brewing corporation and SABMiller Corporation, and Vodafone’s AirTouch’s and Mannesman among others.