Organizational Innovations and Overcoming Resistance in Mergers

This report examines the challenges and problems associated with organizational innovation and resistance, particularly within the context of a merger between two sectors of a business. The report begins by identifying the problem of redundant functions and duplicated resources, leading to a discussion of why the organization should innovate through a merger. It then explores the process of incremental innovation, the challenges faced during the merger, and strategies to address employee resistance. The report highlights the importance of careful planning, communication, and cultural considerations. The student report uses real-world examples to illustrate the concepts and provides references to support the analysis.

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ORGANIZATIONAL INNOVATIONS AND RESISTANCE
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1ORGANIZATIONAL INNOVATIONS AND RESISTANCE
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
What is the problem?.............................................................................................................2
Why organization should innovate?.......................................................................................3
Process of innovation.............................................................................................................3
Challenges..............................................................................................................................4
Prior before the change take place.........................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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Introduction
In order to survive in the competitive market an organization has to develop some
strategies, which will make it sustainable in the market. One such strategy is merger with
another organization to gain cost effectiveness, competitive advantage and penetrate easily in
the market. However, during this merger the employer faces several resistance from the
employees, which slows down the change and integration of firms. In this report, two sectors
of a business organization performing similar functions are merged with each other and the
resistance faced by the organization along their solutions is illustrated. The report is
structured in one single section starting with the problem faced by the organization, reason
for innovation, process of innovation applied, challenges faced during innovation, prior to the
change taking place and ending with the solution for the resistance.
Discussion
What is the problem?
An organization has two different sectors performing different functions. One of these
two sectors is responsible for providing scholarships to students from within the country and
another sector is responsible for providing scholarships to students who come from abroad.
Both the sectors have separate operating systems, finance department, human resource
departments and information technology departments. When seen from monetary point of
view, the cost of operating these sectors is alarming. The senior management team considers
this as an idle investment and exploitation of resources. Functions of both the sectors are
similar to each other such as managing the data and information of the students, maintaining
interpersonal relationships with the employees, managing employee’s payroll accounts and
providing salary that causes the exploitation of resources. Therefore, the most important
objective of an organization is to recognize and remove duplication of functions, which will

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help to minimize the application development effort used for supporting these similar
functions and minimizing the effort required for maintenance of those sectors (Kansal &
Chandani, 2014).
Why organization should innovate?
A merger is a legal agreement, which bonds two existing firms into a new firm (Bena
& Li, 2014). The best solution for the organization would be to combine both the sectors into
one through merger as their functions are similar. Combining the two sectors will help to
reduce the cost, as the number of employees required would be less now. For instance, in the
operations department instead of two departmental heads a single departmental head can
supervise and manage the whole department. The function of human resource department for
both the sector includes management of payroll, allowances, benefits and hiring of new
employees (Green, 2016). By merging up the two sectors, excess employees can be laid off
from the human resource department. Same goes with the other departments all the extra and
excess employees can be laid off thus exploitation of labor and manpower can be minimized.
When the employees of both the sectors will be working together, communication will be
much improvised with the help of a structured communication channel and there would be
any delay in sending and receiving messages. The elimination of overlapping functions and
termination of employees will maximize cost effectiveness and efficiency of the organization
by increasing the profit margins. A new work culture and policies can be created for the
remaining employees.
Process of innovation
When an organization is planning for innovation there are a lot of decisions needed to
be taken and the main decision includes choosing between the two different approaches as
innovation can be broadly classified into radical innovation and incremental innovation
(Garcia, 2015). Radical innovation refers to developing new technologies and new business

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models and delivering it in the market (Norman & Verganti, 2014). On contrary, incremental
innovation refers to bringing innovation in the prevailing business system and products in
order to make them affordable, better and faster (Norman & Verganti, 2014). Nowadays
incremental innovation has gained more prominence in the business field as it is much easier
to introduce any new development in the existing product to maintain sustainability in the
market and this method is lot less risky as it does not involve launching a completely new
product in the market (Souto, 2015). In this case, a merger occurs between two sectors of an
organization. One sector handling the scholarships for students, within the country and
another sector handles scholarships of students coming from abroad. Both of these sectors
have the same overlapping functions, which is merged to bring cost efficiency and enhance
the performance of the organization. This type of merger can be termed as incremental
innovation because incremental innovations can include innovation relating to cost reduction,
quality improvements or can sometimes be both. Therefore, the organization follows the
incremental process of innovation.
Challenges
The merger of the two sectors will help the organization in becoming more efficient,
powerful and profitable through eliminating redundancy of functions and gaining cost
efficiency. However, merger involves a lot of legal and financial issues to be dealt with and
along with it comes the resistance from the employees. As employee retrenchment will be
taking place on a larger scale during merger of the two sectors the employees face job
insecurity. Due to lack of proper communication of the change taking place, employees often
lose trust and encourage rumors within the organization which leads to slow integration. Post
merger when employees are laid off, the remaining employees feel demotivated and
discouraged in their work. They find it difficult to adapt in the new working environment,
new work culture and thus become disloyal and grow a lack of commitment towards the

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organization (Klonek, Lehmann-Willenbrock & Kauffeld, 2014). The two sectors have two
different work cultures after merger a clash or conflict may occur between employees of both
the sectors, which will lead increase in absenteeism, confusion, frustration and
dissatisfaction. Another major challenge faced by the organization during merger will be the
time factor. As how much it will take to successfully complete the merger, after minimizing
the resistance from employees, is unknown (Charoensukmongkol, 2017).
Prior before the change take place
For this major change to take place, all the possibilities for this merger are explored
beforehand. Firstly, the structure and culture of the organization is identified for both the
sectors to innovate something new in the existing process. The leadership style for the new
integrated sector is identified. The employees of the new team should be encouraged by the
senior managers for participating in the pre-merger work and coordinating successfully. The
barriers coming in the way of mergers should be identified and overcome successfully.
Proper planning should be done to minimize the resistance from the employees such as stress,
anxiety, low performance (Kansal & Chandani, 2014). A merger various legal paper works
which needs to be done carefully.

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Conclusion
Hence, from the above report it can be concluded that implementing a successful
merger is not an easy task as it not only involves integration of two different sectors but also
involves integration of people from these two sectors having different cultures, mindsets and
attitudes. While planning for an organizational change by merger the management should
analyze the cultural concerns of the employees, as they are the main resource of the
organization. The management team should communicate to the employees the positive effect
of merger through proper counseling and encourage them to believe in job security. An open
channel of communication should be practiced within the organization where employees can
give their ideas, suggestions and feedback to the senior management team, this will help in
reducing the rumors, fears and anxiety within the employees and make them more loyal and
committed towards the organization.

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References
Bena, J., & Li, K. (2014). Corporate innovations and mergers and acquisitions. The Journal
of Finance, 69(5), 1923-1960.
Charoensukmongkol, P. (2017). Contributions of mindfulness during post-merger
integration. Journal of Managerial Psychology.
Garcia, R. (2015). Types of innovation. Wiley Encyclopedia of Management, 1-9.
Green, M. B. (2016). Mergers and acquisitions. International Encyclopedia of Geography:
People, the Earth, Environment and Technology, 1-9.
Kansal, S., & Chandani, A. (2014). Effective management of change during merger and
acquisition. Procedia Economics and Finance, 11(3), 208-217.
Kansal, S., & Chandani, A. (2014). Effective management of change during merger and
acquisition. Procedia Economics and Finance, 11(3), 208-217.
Klonek, F. E., Lehmann-Willenbrock, N., & Kauffeld, S. (2014). Dynamics of resistance to
change: A sequential analysis of change agents in action. Journal of change
management, 14(3), 334-360.
Norman, D. A., & Verganti, R. (2014). Incremental and radical innovation: Design research
vs. technology and meaning change. Design issues, 30(1), 78-96.
Souto, J. E. (2015). Business model innovation and business concept innovation as the
context of incremental innovation and radical innovation. Tourism Management, 51,
142-155.