Evaluating Leadership in Healthscope's Organizational Change Report

This report examines the challenges Healthscope faces in managing employee resistance during a planned merger with a pharmaceutical company. The report explores issues such as employee engagement, the dilemma of fitting into a new organizational culture, and the impact of change-related self-efficacy. It analyzes the application of transformational leadership models to reduce employee resistance, emphasizing communication, emotional management, and the importance of understanding the underlying reasons for resistance. Furthermore, the report connects these challenges to Kurt Lewin's change management model, particularly the unfreeze stage, highlighting the need to foster willingness and compliance among employees. The report underscores the critical role of leadership in navigating organizational change and achieving successful mergers and acquisitions.

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Introduction
Healthscope is recognized as an Australian company which operates private hospitals,
medical centres and global pathology services (Healthscope.com.au., 2019). The organisation
has headquarter in Melbourne and executes its operations in medical as well as surgical hospitals
along with range of psychiatric and rehabilitation clinics. Recent reports have revealed that the
organization has been planning to purchase a smaller pharmaceutical company for expand its
healthcare base outside Australia (Warter and Warter., 2014). However, such a planned change
has led Healthscope to face certain degree of employee resistance with a lack of communication.
Galpin (2014) has noted that Healthscope being a well-established organization constitutes an
employee base which has strong attachment towards the company culture. As a result, employees
have been exhibiting significant level of resistance towards the change as they suppose it will
lead to a significant loss of team mentality. According to Angwin et al. (2016), as Healthscope
operates around 46 private hospitals it constitutes an employee base of new and well as tenured
employees. There can be observed critical issues and challenges which the organisation’s leaders
are facing because of loss of team mentality. Personnel engaged to Healthscope show great
concern regarding organizational culture. Such a well-established culture has led the organization
to develop a mentality which has led Healthscope to establish its brand. Meanwhile, authors have
claimed that merger and acquisitions can result to substantial rate of uncertainty and
misunderstanding among employees as they tend to wonder the way through which they will
position themselves in the merged organization (Chang, Chang and Wang, 2014). Kansal and
Chandani (2014) have claimed that at times of change especially related to M&A situation, it can
be challenging for employees to sustain their efficiency and productivity. The organizational
culture shows mounting evidence that wide range of factors tend to influence organizational

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change as generated during merger process. As a result, change which occurs as an outcome of
merger process tends to be imposed on organization’s leaders and is typically the pace of change
which inhibits the achievable re-structuring of the culture. The purpose of the report is to
evaluate the issue Healthscope is encountering while aiming to bring change by merging with
another pharmaceutical company. In addition to this, the paper will analyse the way leaders will
implement change management theory while planning to implement the change.
Discussion
Employee Engagement
Mirc (2014) has suggested that while the proportion of actively disengaged employees
rises similarly during a situation leading to merger and acquisition, process of restructuring or
policy alteration makes the section of extremely engaged employees to be disengaged during the
M&A situation. Furthermore, it has been noted that as Healthscope has been acquiring another
organization is easier on employees instead of facing acquisition. As a result, it tend to appear
that although process of M&A has the potential to influence level of employee engagement, but
also shows a propensity pose challenges to employees’ job and whether an employee is engaged
to acquiring organization or involved for the acquired organization (Reddy, 2015). On the other
hand, perceiving the level of engagement during M&A situation it has been observed that
empowerment and involvement are related to resistance to change. As a consequence
Healthscope while planning its organizational change leads to unconstructive resistance to
change. Christianson, Carlin and Warrick (2014) have noted that employee engagement has been
intrinsically associated with declined employee resistance towards change implementation. Junni
and Sarala (2014) have further mentioned that resistance to change implementation has been

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related to varied sets of barriers. At this juncture, Georgalis et al. (2015) have noted Healthscope
has been encountering certain project-related obstacles including process of direction,
transparency and confusion among employees as well planning strategy. Furthermore, several
challenges related to employee resistance tend to be associated with change implementation, thus
impacting level of employee contentment with the status quo. Drawing relevance to these
factors, Hornstein (2015) has noted that Healthscope with an aim of planned change
implementation has been encountering issues with organization structure, organizational cultural
patterns. Reports of Rafferty and Jimmieson (2017) have revealed that Healthscope has
previously faced critical change initiatives and environmental obstructions from its employees,
clients, suppliers in addition to other stakeholders. Thus, such an obstacle towards change
implementation has led the organization to have reduced employee engagement.
Dilemma to fit in to the newly merged organization
Fitting into a new organization depends on accepting newly developed corporate culture.
According to Aslam et al. (2016), such a new corporate culture is related to the theory of
acculturation as which highlights changes in groups which takes place as an outcome of contact
between cultural associations. Such a theory can be applied to the process of M&A because of
their inclusion of the amalgamation of dissimilar organizational cultures. However, while
applying theory of acculturation Healthscope has witnessed one issue during M&A situation
related to culture clash. Considering the case of Healthscope change implementation, it has been
noted that culture clash in their process of merger has been identified as a newly implemented
human resource management policy which critically influenced over half of Healthscope’s
employees (Healthscope.com.au, 2019). According to Chang, Chang and Wang (2014),
seniority-based pay which had been formerly enjoyed by employees of Healthscope has been

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abolished and remuneration has been associated with employee performance where employees
had to sacrifice their positions and title which has been seen as a form of threat to Healthscope
employees due to the declined significance and value of their role in the organization.
Furthermore, reports of Brueller, Carmeli and Markman (2018) have revealed that national
cultural divergences tend to have unconstructive impact on employees on post-merger
integration. Furthermore, at this juncture, Christianson, Carlin and Warrick (2014) have claimed
that the acquired employees of Healthscope have shown a potential to encounter critical issues
with acculturation pressure and demands depending on the way cultural variations and
divergences are to be perceived. Such a dependence shows significant reliance on implications
whether acquired employees have viewed their recently developed self representations as highly
dynamic. Thus, enhancing the level of integration and engagement within a recently merged
organization can be accomplished by elevating employees’ discernment that the newly merged
organization shows greater attractiveness in comparison to the organization they have been
previously engaged to (Blair & Sokol, 2014).
At this juncture, Sharif and Scandura (2014) have underlined that that change-related
self-efficacy has been understood as the perceived competence of employees to show required
efficiency towards the assigned role regardless of the issues related to desired change
implementation. Healthscope at this juncture, has further faced issues of uncertainty among
employees. Hornstein (2015) has opined that pre-merger owing to carefulness tends to remove
all the assessable factors within an organisation. Nonetheless, it is vital for organizations like
Healthscope efficiently conduct culture surveys in order to establish the regulations and norms
within both the organisations. According to Rafferty and Jimmieson (2017), cultural influences
tend to have the prospective to be extensive as well as influential. For example, there is an

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implication that processes of decision making at Healthscope can vary from that of the
pharmaceutical company which Healthscope is intending to acquire. On the other side,
Healthscope’s leadership approaches differentiate from the acquired organization. In addition to
this, considering employee resistance towards change with sentiments related to resistance to
change, feelings of self-efficacy were linked to greater adjustment to the change, greater
inclination towards accepting change in addition to highly dynamic engagement in job revamp
activities (Healthscope.com.au, 2019). On the other hand, according to Hornstein (2015),
employee appraisals of self-efficacy must constructively foresee the implementation of problem-
based coping techniques during the process of M&A bur tends to negatively predict the use of
evasion coping strategies.
Application of transformational leadership model in reducing Healthscope’s
employee’s resistance towards change
Leadership and innovation have been extensively associated to the attainment of change
innovation. Rafferty and Jimmieson (2017) have stated that it is specifically through application
of leadership approach that organizations can sincerely develop as well as execute desired
change implementation and further nurture culture that is adaptive towards the anticipated
change. Aslam et al. (2016) have claimed that leadership as a developing process serves
organizational environment as well as its cultural patterns. At this juncture, leaders of
Healthscope must develop the theory of transformational leadership through extensive process of
self-evaluation, learning, employee training and experience. As employee’s resistance is
identified as one of the situations which leaders have been encountering in organizations aiming
for change implementation (Alasadi & Askary, 2014). Organization leaders of companies such as
Healthscope must use their decision and strategic approach in order to determine the most

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efficient form of action along with transformational leadership style in order to deal with
employees who have been showing resistance and uncertainty towards the change. At this
juncture, leaders of Healthscope have utmost accountability to evaluate capable environment and
goals of the organization to establish the strategies which are suitable for merging the company
with pharmaceutical organization. Transformational leaders to implement smooth M&A
procedures must establish communication base with all its existing employees regarding
strategies which the company is aiming to establish for its planned change implementation.
According to authors, leaders applying transformational leadership model primarily gather
information from their external stakeholders in order to consider the avenue of change as an
opportunity rather than perceiving it as critical threat.
Alasadi and Askary (2014) furthermore have claimed transformational leaders have the
competence to effectively manage emotions of employees that involves physical as well as
material expression explaining complete political skills. Employees of Healthscope have been
experiencing significant level of confusion, perplexities, loss in addition to resentment and fear
which have gradually developed as critical form of resistance towards M&A procedure.
According to Matos Marques Simoes and Esposito (2014), when planned change implementation
typically results to continual learning opportunity whereby this learning involves these emotions.
However, transformational leaders distinguish underlying factors of employee resistance. At this
juncture, Healthscope leaders by applying charismatic leadership approach must recognize the
underlying reasons of employees’ resistance and uncertainty towards Healthscope’s planned
M&A process and their dilemma of fitting them to the new cultural pattern of the merged
organization (Appelbaum et al., 2015). As a consequence, behavioural patterns and approaches
of leaders in effectively managing employees’ issues and emotions tend to establish the

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achievement of M&A process or organizational accomplishment in changes. At this juncture,
transformational leaders are for that reason projected to constructively influence employees’
response towards the organizational change. Organizational leaders with transformational
leadership skills show great capacity to leverage the judgements and decisions towards planned
change development. Kuipers et al. (2014) have mentioned that leaders with transformational
leadership abilities reduce the resistance of employees towards change and positively direct
employees to the accurate path. For instance, Healthscope’s leaders approach related to positive
thinking and inclination towards risk taking approaches will bring the organization to a position
where it can positively merge with the pharmaceutical company without receiving any form of
resistance from employees.
Organizational change and Lewin's model
The concept of employee resistance to change has been credited to Kurt Lewin’s change
management model. Matos Marques Simoes and Esposito (2014) have noted that as
Healthscope’s planned change management process of M&A has been perceived as a kind of
chaos thus leading to a number of variables are changing, the change in organizations’ cultural
pattern, recurrent change as well as resistant to change has simultaneously created union of
change process. Such a change management process related to M&A process has not only
created challenges in prediction but also make regulation control unattainable.
Unfreeze Stage-At the unfreezing stage; Healthscope’s leaders must involve resistant employees
in enhancing the level of willingness and compliance towards M&A process by efficiently
cultivating within them an understanding that the acquired organization will bring constructive
business efficiency within the organization in comparison to its current organizational state

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(Appelbaum et al. 2015). This stage will mainly help the leaders or managers of organization to
offer knowledge and insights of the need for the implemented change and enhancing their
impetus for accepting the newly developed strategies of working in attaining improved and
constructive results. Thus, at this stage, change management leaders of Healthscope must
establish effective communication base that will serve decisive role in attaining the anticipated
support and employee participation in the process of Merger and Acquisition. Rafferty and
Jimmieson (2017) have noted that the unfreeze stage of Lewin’s model show the competence to
increase the group behaviours for change and further facilitates the increase of demands from the
end of organizational leaders intended for change at superior level. The Lewin’s change
management model thus proposes that the demands involving status quo tend to give rise to
minimum resistance and pressure in comparison to the demands implemented for change. As a
result, such a strategy of Lewin’s change management will act highly effectual for Healthscope
to successfully attain its planned M&A process (Hornstein, 2015).
Change Stage- It is imperative to note that employee participation during change management
tends to increase employees’ inclination towards decision making process. Such an involvement
consequently leverages the organization’s planned change development and employees’ benefits
and interests. Sharif and Scandura (2014) have noted that several underlying factors related to
power, knowledge, awareness, skill and rewards have the capacity to encourage employees to
involve in the change process. Considering Healthscope’s change management plan, it is vital for
its workforce to overcome resistance in organizational change. The change stage can further be
identified as the stage of transition or the stage of definite execution of alteration. In this
particular stage, Healthscope’s leaders and change managers can integrated the acceptance of
the newly developed ways of performing anticipated change development. According to Junni

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and Sarala (2014), the change stage of Lewin’s change management theory whereby employees
tend to be unfrozen, the actual change can be implemented.
Thus, change management leaders of Healthscope in this stage, must sincerely take into
consideration factors related to careful planning, effectual communication as well as persuading
the contribution and association of organizations' employees for implementing desired merge
with pharmaceutical company. However, it has been supposed that the change stage of transition
might pose challenges because of its increasing level of uncertainties or significant resistance
and dilemma of the employees regarding the outcomes of undergoing process of merger and
acquisition (Christianson, Carlin & Warrick, 2014). On the other hand, it has been mentioned
that this particular change process of Lewin model has the ability to change the behavioural
patterns or approach of department, organization and employees to the next new level. At this
stage, the level of employees’ participation will have greater level of productivity if employees
are authorized in power, job and accountability. Comprehensive studies of Sharif and Scandura
(2014) have noted that change stage of Lewin’s model mainly involves the role of leadership as
change agent for behavioural participation in responsibilities as well as social dimensions.
Furthermore, authors have mentioned that, knowledge or sharing of information at this juncture
typically implies sharing information in teams along with role applicable ideas as well as
suggestions between diverse levels of management within the organization. For Healthscope,
change implementation leaders with transformational leadership skills and encouraging approach
and transparency will improve the M&A process and permit employees to provide their
suggestions and further attain superior control over the change procedure (Christianson, Carlin &
Warrick, 2014).

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Refreezing Stage- The implementation of change mainly involves the current state of
organization which must be altered to the anticipated change. However, this change will not take
place at a rapid pace but will tend to occur concurrently. Brueller, Carmeli and Markman (2018)
in their studies have identified three vital activities for executing the change related to activity
planning, commitment development as well as change management structures. According to
Chang, Chang and Wang (2014), the activity planning crates a particular direction of
organizational change, proceedings, actions along with specific activities which are required to
take place for successful change. At this stage of unfreezing, Healthscope’s’ resistant employee
section will shift from the stage of changeover to a desired changed state which can be consistent
and thus regarded as the state of equilibrium. Lewin’s stage of refreezing has been identified as
the ultimate stage where individuals understand or internalize the recently developed ways of
functioning or change and acknowledge it as a normalized part of their employment and institute
new associations. However, taking into consideration the M&A process of Healthscope,
intensifying as well as reinforcing the new behavioural patterns, attitudes and changes in the way
of functioning, Healthscope’s resistant employee section must receive adequate recognition,
rewards and incentives and further should be offered constructive reinforcements for promoting
the policies or structures (Healthscope.com.au, 2019). Through these rewards and recognitions in
the refreezing stage, Healthscope will be able to strengthen the developed ways of working with
a newly merged organization with international expansion.
At this juncture, it is important to note that the role of the transformational leaders while
establishing and sustaining organizational culture have claimed that culture tends to be
dysfunctional due to planned or unplanned change implementation. Thus, it is the leaders’
responsibility to respond efficiently in order to facilitate the resistant or confused employees

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eliminate some of its cultural assumptions and further gather insights of alternative assumptions.
Brueller, Carmeli and Markman (2018) have identified that development of true transformational
leader facilitated culture may not be effectual if external realities should change. However, in the
case of Healthscope’s M&A process, the organization’s change initiators must propose resilient,
loosely implemented culture in the basis of a number of range of suppositions, and probably
linking the existence of a range of subcultures which might be constructive for the M&A
process.
Conclusion
Therefore, from the above discussion, it can be concluded, the effect of mergers and
acquisition of Healthscope along with its cultural patterns have shown the importance of
leadership approach. It has been noted that leaders applying transformational leadership
strategies have the capacity to select effective change management tactics in order to ease change
implementation and address outcomes for employees that will occur after the process of merger
and acquisition with another company. Furthermore, it is vital to note that that change in
Healthscope must persistently develop in order to make the anticipated change highly responsive
as well as receptive to attain utmost employee satisfaction and approval of all stakeholders who
will be involved in the process of M&A. In addition to this, organizations aiming for change
must increase its competence to successfully as well as efficiently facilitate employees to align
their perceptions and expectations with the organizations’ goals. Through, such an effective
process, the organization will be able to facilitate the dynamic collaboration of workers in the
organization’s goal attainment and the accomplishment of their individual aims and objectives.

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