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Contemporary Management

Question:

Discuss about the Contemporary Management.

Answer:

Introduction 

Business integration refers to the process when two or more organizations enter into an association for the establishment of a new business venture (Cartwright & Cooper, 2014). The effective usage of this particular provides various benefits to the organizations like the conglomeration of business resources, improvement of the prospects of the business and others. However, it can be a very challenging one for a particular business enterprise as well since it is seen that the concerned organization needs to take into consideration diverse kinds of factors for the same (Argyris, 2017). One of the most common problems or the issues that the various organizations face during the process of business integration is the fact that they often tend to lose some of the best talents or employees because of their inability to satisfy the expectations of all these employees (Reiche et al., 2016). For example, it is often seen that during such a process there are employees from both the organizations involved who wish to gain the top management positions (Reiche et al., 2016). However, it is not always possible for the organizations involved in the process to gratify the wishes almost all the employees and this inevitability leads to a high attrition rate during such a process (Galpin & Herndon, 2014). Thus, it can be said that the effectiveness of the process of integration undertaken by two organizations depends on the extent to which they are being able to resolve this particular issues. The report discusses about this particular problem or issues that the business organizations during business integration in the particular context of the “Who goes, Who stays?” which was published in the Harvard Business Review.

Conflicting Values 

The case study “Who goes, Who stays?” published in the Harvard Business Review describes the process of integration that the pharmaceutical organizations BioHealth Labs and DeWaal Pharmaceuticals are undergoing for the establishment of the venture which will be called by the name of DeWaal BioHealth (Light, 2001). It is pertinent to note that both of these organizations are reputed for providing quality cost effective drugs to the customers and it is this particular factor which has enabled both the organizations to earn a considerable amount of success in the recent times (Light, 2001). The primary idea behind this new venture is to consolidate the diverse drugs provided by both the organizations so as to offer the kind of medicines to the customers which are likely to help them in a significant manner (Light, 2001).

The venture holds prominent business opportunities for both the organizations and is likely to help both the organizations in a significant manner. However, the major conflicting value which is involved in the case study is the fact that the top performing employees from both the organizations want to be on the management team of the new pharmaceutical venture (Light, 2001). Furthermore, it is seen that both the organizations involved in the process has some very talented individuals who have not only proved their merit and value over the years but at the same time have also contributed in a positive towards the success of the concerned organization (Light, 2001). Thus, it is obvious that the deserving employees from both the organizations would be hoping to get preference in the concerned venture. However, the inability of the concerned organizations to provide the deserved employees this opportunity is likely to cause dissatisfaction among the employees.

Recent researches have shown that the factor of job satisfaction is important since it is not only directly related to the entity of the job productivity of the employees but at the same time with the concept of employee turnover (Brueller, Carmeli & Markman, 2018). For example, it is seen that the employees who are more satisfied with the organization with which they are work are more likely to stay with the concerned organization. Furthermore, they are also likely to perform in a much more effective manner in comparison to the employees who are dissatisfied (Brueller, Carmeli & Markman, 2018). Thus, it becomes all the important for the concerned organizations to gratify the wishes of the employees of their organization since it likely to affect not only the performance level of the employees but also the turnover of the organization as well.

Process Adopted 

Tarba et al. (2016) are of the opinion that during the process of integration the organizations need to select the employees for the top management positions of the new venture on the basis of their competencies, skills, talent. In addition to these, the organizations also need to take into effective consideration the contribution that they have made in the past towards the growth of the concerned organizations (Tarba et al., 2016). However, Cooke (2016) is of the opinion that majority of times the organizations fail to take this particular aspect and often in a bid to have the maximum amount of power within the new venture tend to bargain or negotiate for the appointment of the management positions from their own organization. This is likely to affect the new business venture in an adverse manner from the perspective of the management of the same but also from the factor of the employee turnover as well. For example, if incompetent employees are selected for the top management positions then this can adversely affect the prospects of the concerned venture in an adverse manner. In addition to this, it can make the deserving employees from both the employees involved in the process dissatisfied and thereby make them take the decision of leaving the respective organization.

The organizations involved in the case study for the appointment of the employees to the top management position have taken into consideration only the aspect of power and not the process which would benefit the employees and also the concerned venture as well (Light, 2001). For example, in the case study it is seen that both Steve and Kaspar are involved in a process of negotiation so as to gain the majority of the power in the new venture that they are going to establish (Light, 2001). It is pertinent to note that without even checking the competencies, skill sets, talents, contribution of the employees and other aspects the two CEOs decide the positions that would be given to the employees of the organizations to which they belong. For example, during the process of negotiation, the two CEOs come to the conclusion that Kaspar and his employees would get the “HR, operations in Europe, and global marketing” positions in the new venture whereas Steve and his employees would have “COO, CFO, and head of R&D” (Light, 2001).

As already mentioned this particular decision was arrived at by the concerned individuals solely on the basis of the power politics and not from the perspective of the future growth or other aspects of the venture that they are trying to establish. Furthermore, in the two organizations involved in the process it is seen that there are some very talented as well as deserving employees like Alison and others who have already proved their worth in the past and have been assets for their organization (Light, 2001). Thus, it is natural that in the event of expansion they would hope that they would get the benefit since they have worked hard for the cause of the organization in the past. However, Zhang et al. (2015) is of the opinion that the process of random selection adopted by the two organizations is not only likely to dissatisfy their employees like Alison and others but at the same time would make their leave the concerned organization because of the aspect of lack of future growth options that are available to them. Furthermore, this particular decision even fails to take into effective consideration the culture which is being followed in the two organizations and the culture that the two CEOs want to inculcate in the new venture that they are trying to establish. Thus, it can be that the process of selection adopted by the two organizations is not only ineffective from the perspective of the new business venture but also from the perspective of the employees as well.

Conflicting values and its resolution

Greve and Zhang (2017) suggests that the business enterprises for the process of staffing need to take into effective consideration two important factors, namely, the future of the newly established venture and also the gratification level of the employees as well. Graebner et al. (2017) hold the viewpoint that during the process of integration the organizations need to select the kind of candidates who would be able to manage the diverse affairs of the new venture in a much more effective manner. However, most of the time it is seen that as in the case under discussion here that the organizations select the employees for the top management positions solely on the basis of the power politics or on the basis of the factor of individual gains (Angwin et al., 2016). It is pertinent to note that this particular aspect significantly hampers the future prospects of the new venture and can even hamper the growth of the concerned venture as well (Angwin et al., 2016). Thus, it would be much more beneficial for the organizations if they select the candidates for the top management designations solely on the basis of the competencies as well as the talent of the candidates rather than on the basis of power politics.

The organizations at the same time need to take into effective consideration the perspective of the employees as well for the process of the selection of the right kind of candidates for the top management designations of the new business venture (Eckardt, Skaggs & Lepak, 2018). For example, in the case study under discussion here the attrition of deserving employees like Alison and other due to dissatisfaction would affect the growth rate of the organizations in a significant manner. Scholars are of the viewpoint that the deserving as well as the hard working employees of any organization expect that during the process of expansion they would have the growth opportunities (Angwin et al., 2016). However, when during the process of expansion the organizations fail to cater to this particular expectation of the employees then this obviously causes dissatisfaction among them and this leads to the high rate of attrition which the process of integration often entails with it (Kansal & Chandani, 2014). To overcome this particular aspect the organizations need to take into effective consideration the perspective of the employees as well and select the most deserving employees for the top management designations of the new ventures solely on the basis of the merits and also the competencies of the employees (Kansal & Chandani, 2014). The effective usage of these two recommendations will help the concerned organizations and also the business venture that they are trying to establish in a significant manner.

Selection Process

The organizations under discussion here need to take the help of an adequate selection process which will not only enable them to select the kind of candidates but would also enable them to retain the deserving employees as well (Tarique, Briscoe & Schuler, 2015). The organizations thus need to focus on the idea of providing equal kind of opportunities to all the employees from both the organizations for the required selection process. Furthermore, the use of such a process apart from providing equal amount of opportunities would at the same time be not only beneficial for the new business venture but would also help them to retain the existing employees of their organization as well (Tarique, Briscoe & Schuler, 2015).

The organizations under discussion here can devise a three step selection process wherein all the employees from both the organizations would have the opportunity to participate. For example, the first step in the process would obviously be to convey the much needed as well as required information to the employees. The next step would be the stage of initial screening and also the step of interviewing the shortlisted candidates. The final stage would be the stage wherein the final candidates would be selected on the basis of the kind of performance that they have given in the interview and also on the basis of their competencies, skill sets, their past contributions to their organizations and other factors. The effective use of such a process would not only enable the concerned venture to get some of the best employees from both the organizations to manage its diverse affairs but at the same time would help the two organizations in reducing the number of attrition because of dissatisfaction in a significant manner (Deschamps & Lee, 2015).

Effectiveness of the method 

The major problem that the organizations face during the process of merger and acquisitions or integration is the problem of the high attrition rate that they face (Brueller, Carmeli & Markman, 2018). One of the major reasons for the high rate of attrition is the dissatisfaction that the employees face when their expectations regarding growth are not fulfilled during such a process (Brueller, Carmeli & Markman, 2018). Furthermore, this high level of attrition not only affects the overall performance of the concerned enterprise but at the same time affects the growth prospects of the enterprise as well. It is precisely in this particular context that the above mentioned method for the selection of the employees becomes very important (Zhang et al., 2015). For example, the effective use of the above given method would help the organizations to not only retain some of the best employees that they have at their disposal but at the same time would help them to select the kind of candidates who would contribute in a significant manner towards the growth of the concerned venture (Zhang et al., 2015). Furthermore, this would also improve the organizational culture of the concerned venture by inculcating the kind of culture wherein all the employees would get equal amount of growth opportunity and thus would be encouraged to give their best performance (Cooke, 2016). In addition to these, it would also help in the process of effective management of the new business venture since the individuals who have prior experience in the management field would be given the opportunity to manage the affairs of the organization (Cooke, 2016). Thus, it is likely that the effective use of this particular process would help the concerned organization in a significant manner.

Conclusion

To sum up, the process of integration for the expansion of business no doubt provides diverse kinds of benefits to the organizations however at the same time it is seen that there are some negative aspects of the process as well. For example, it is seen that during the process of integration the organizations often end up losing some of the best employees that they have because of the inability of the organizations to fulfill their expectations. Furthermore, it is seen that during integration for the staffing of the top management designations the organizations instead of taking into perspective the prospects of the venture and also the expectations of the employees staff the positions on the basis of power politics and others. This hampers the prospects of the business venture in a significant manner and also enhances the rate of attrition. Thus, it becomes important for the organizations to take into effective consideration the prospects of the new venture and also the perspective of the employees.

References

Angwin, D. N., Mellahi, K., Gomes, E., & Peter, E. (2016). How communication approaches impact mergers and acquisitions outcomes. The International Journal of Human Resource Management, 27(20), 2370-2397. Retrieved from https://www.tandfonline.com/doi/abs/10.1080/09585192.2014.985330

Argyris, C. (2017). Integrating the Individual and the Organization. Routledge. Retrieved from https://www.taylorfrancis.com/books/9781351512176

Brueller, N. N., Carmeli, A., & Markman, G. D. (2018). Linking merger and acquisition strategies to postmerger integration: a configurational perspective of human resource management. Journal of Management, 44(5), 1793-1818. Retrieved from http://journals.sagepub.com/doi/abs/10.1177/0149206315626270

Cartwright, S., & Cooper, C. L. (2014). Mergers and acquisitions: The human factor. Butterworth-Heinemann. Retrieved from https://books.google.co.in/books?hl=en&lr=&id=mw6jBQAAQBAJ&oi=fnd&pg=PP1&dq=staffing+problem+during+merger+and+acquisition&ots=c99zDmfCrN&sig=2URVvlY6uCl3GkYqXTPTGLsTKj4#v=onepage&q&f=false

Cooke, F. L. (2016). Human resource management in the context of mergers and acquisitions. In Mergers and Acquisitions in Practice (pp. 136-151). Routledge. Retrieved from https://www.taylorfrancis.com/books/e/9781317659563/chapters/10.4324%2F9781315766140-13

Deschamps, E., & Lee, J. J. (2015). Internationalization as mergers and acquisitions: Senior international officers’ entrepreneurial strategies and activities in public universities. Journal of Studies in International Education, 19(2), 122-139. Retrieved from http://journals.sagepub.com/doi/abs/10.1177/1028315314538284

Eckardt, R., Skaggs, B. C., & Lepak, D. P. (2018). An examination of the firm-level performance impact of cluster hiring in knowledge-intensive firms. Academy of Management Journal, 61(3), 919-944. Retrieved from https://journals.aom.org/doi/abs/10.5465/amj.2016.0601

Galpin, T. J., & Herndon, M. (2014). The complete guide to mergers and acquisitions: Process tools to support M&A integration at every level. John Wiley & Sons. Retrieved from https://books.google.co.in/books?hl=en&lr=&id=_17BAwAAQBAJ&oi=fnd&pg=PR17&dq=staffing+problem+during+merger+and+acquisition&ots=c7DnScy2Sx&sig=h6MgkGiuKkumyuG0DsKWvHsnYq8#v=onepage&q=staffing%20problem%20during%20merger%20and%20acquisition&f=false

Graebner, M. E., Heimeriks, K. H., Huy, Q. N., & Vaara, E. (2017). The process of postmerger integration: A review and agenda for future research. Academy of Management Annals, 11(1), 1-32. Retrieved from https://journals.aom.org/doi/abs/10.5465/annals.2014.0078

Greve, H. R., & Man Zhang, C. (2017). Institutional logics and power sources: Merger and acquisition decisions. Academy of Management Journal, 60(2), 671-694. Retrieved from https://journals.aom.org/doi/abs/10.5465/amj.2015.0698

Kansal, S., & Chandani, A. (2014). Effective management of change during merger and acquisition. Procedia Economics and Finance, 11, 208-217. Retrieved from https://www.sciencedirect.com/science/article/pii/S2212567114001890

Light, D. A. (2001). Who goes, who stays?. Harvard Business Review, 79(1), 35-41. Retrieved from https://europepmc.org/abstract/med/11189461

Reiche, B. S., Stahl, G. K., Mendenhall, M. E., & Oddou, G. R. (Eds.). (2016). Readings and cases in international human resource management. Taylor & Francis. Retrieved from https://books.google.co.in/books?hl=en&lr=&id=KjolDwAAQBAJ&oi=fnd&pg=PP1&dq=staffing+problem+during+merger+and+acquisition&ots=BZHBM0nYAN&sig=qTwoBOLIgHbHgbjwhufCHAFbrJU#v=onepage&q=staffing%20problem%20during%20merger%20and%20acquisition&f=false

Tarba, S. Y., Cooper, C. L., Sarala, R. M., & Ahammad, M. F. (2016). Mergers and acquisitions in practice: a state-of-art and future directions. In Mergers and Acquisitions in Practice (pp. 15-18). Routledge. Retrieved from https://www.taylorfrancis.com/books/e/9781317659563/chapters/10.4324%2F9781315766140-7

Tarique, I., Briscoe, D. R., & Schuler, R. S. (2015). International human resource management: Policies and practices for multinational enterprises. Routledge. Retrieved from https://www.taylorfrancis.com/books/9781134643530

Zhang, J., Ahammad, M. F., Tarba, S., Cooper, C. L., Glaister, K. W., & Wang, J. (2015). The effect of leadership style on talent retention during merger and acquisition integration: Evidence from China. The International Journal of Human Resource Management, 26(7), 1021-1050. Retrieved from https://www.tandfonline.com/doi/abs/10.1080/09585192.2014.908316

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