ANALYSIS OF USAHP MERGER WITH MEXCO IN LOURDES, MEXICO

USAHP

Presentation by: Zachary Cannard, Ann Frasier, Christy Montgomery, and Tim Pennoyer

Summary of Case Study

Demographics of Lourdes

Pg. 113-116

Click here if embedded video does not show: http://www.youtube.com/watch?v=wqtSYxu9gPE

Factory Conditions of MEXCO

Never allocated much money for repairs

If it wasn’t broken they didn’t fix

Technicians developed their own ways to fix machinery to keep it in working order

Pg. 113-116

New Company (USAHP)

Salary scales based on job title and responsibilities

Hiring educated people for positions rather than families

Instituted safety standards

Held employees responsible

Pg. 113-116

Merger Mistakes

Lack of communication No explanations for the changes No clear reasons for the changes No communication about the formalization of the

selection and reward system

Hiring of outsiders created tension

Accountability regarding maintenance rather than trust

Pg. 113-116

Fixes

Realized new system wasn’t working

Leadership team formed Included members of all the production areas Formed sub-committees; all areas represented

Clearly stated objectives

Kept long-term key employees and found better suited places for them to work

Pg. 113-116

Lessons Learned

Do research on demographics prior to instituting changes

Perhaps send a team to observe prior to simply making changes effective

Listen to and learn from long time employees

Culture and customs matter

Pg. 113-116

Traditional Organizational Design Analysis of Case Study

Traditional Organizational Design

Clarifies responsibilities

Predictable

Feelings of stability and trust

Clear relationships (Conrad & Poole, p. 68-69)

Traditional Organizational Design

Bureaucracy and Structure

Specialized skills to be efficient and effective

Hierarchical – supervisors directly responsible

Centralized – major decisions made by positions at the top (Conrad & Poole, p. 69)

Traditional Organizational Design

Scientific

Accountability

Time motion studies

Increase productivity by being efficient

Atmosphere of cooperation and mutual gain (Conrad & Poole pgs 70-71)

Applied to USAHP Prior to Merger

They had very specialized workers

Hierarchical Pay and positions were defined

Decisions made at the top

New efficiencies implemented

Employees held accountable for new efficiencies

Applied to USAHP During Merger

Decisions were made by people unaware of the strong cultural organization of the company

Poorly communicated to the employees Changes implemented without explanation Standardization of positions and salaries

Hiring of staff that were from a vastly different socio-economic standing

Solutions

Recognized they were facing failure

Training

Rewards for commitment to new system

Rewards for meeting set goals

Leadership teams formed that included representation from all departments

Traditional Strategies of Rule-Reward

• Traditional approaches exemplify a managerial prerogative in which the chain of command is followed top-down (Allen & Judd, p. 161)

• Rule-reward systems succeed only if they are supported by effective communication (Conrad & Poole, p. 82)

• Rules must be clear enough to be easily understood and specific enough to give employees precise guidelines (Conrad & Poole, p. 83)

• Rule systems succeed only if they are supplemented by a credible reward system (Conrad & Poole, p. 83)

USAHP During Merger

USAHP completely revised the selection and reward system of the former MEXCO.

It based its rule system off of “continuous improvement” and constant monitoring of statistics, but it did not clearly define the criterion.

USAHP management assumed because Mexico largely has a culture of supporting a top-down approach they would accept the new rules.

…but they failed to clearly communicate and provide specific guidelines

Traditional Strategies of Rule-Reward

Employees must be persuaded that the reward system is fair, based on performance, rather than friendship.

If employees see the reward system as fair, their job satisfaction is higher and distributive justice is present.

Procedural justice will be present if the employees see the process utilized to allocate rewards as fair and trust in the organization will be higher

Supervisors use persuasive strategies, such as communicating information about the system, to convince subordinates the system is just (Conrad & Poole, p. 84)

USAHP During Merger

Assumed that MEXCO was a traditional organization and failed to notice the relational and cultural aspects.

Employees did not see the reward system as fair or just and many voiced dissatisfaction.

The former “familia” basis for promotion and salary was replaced by the hierarchal structure and need for credentials and statistics

Management failed to be persuasive or communicate resulting in chaos

What could the company have done in the beginning stages of the merger to recognize these obstacles?

Solutions

Recognized they were facing failure

Rewards for commitment to new system

Rewards for meeting set goals

Training with clear guidelines

Leadership teams formed that included representation from all departments

Traditional Strategies

It has been proposed that job satisfaction has favorable consequences on work achievement, job enrichment, and a higher quality social context (Staw, Sutton & Pelled, p. 53)

Knowing the requirements of clear communication and precision regarding rules and rewards, what strategies would you implement to define the rule-reward system of your organization?

There has been a sharp increase in Japanese management systems and employee involvement based off of traditional strategies (Wageman & Baker, p. 139)

How does the ever changing role of organizations utilize these strategies in today’s economy? What obstacles present themselves?

Cultural Organizational Design Analysis of Case Study

Cultural Organizational Design

Humans are emotional beings. Feelings of connectedness and community are important aspects of an organization (Conrad & Poole, p.156)

Employees make strategic choices based on their individual beliefs, values, and sense-making processes (Conrad & Poole, p. 156)

Employees form communication sub-cultures with people who share their views (Conrad & Poole, p. 157)

Sub-cultures are fluid and ever-changing

Cultural Strategies of Motivation, Control, and Surveillance

Ways organizations encourage employees to identify and see themselves within an

organization. (Conrad & Poole, p. 158)

Socializing Assumptions Externalization, Objectification, and Internalization

Reinforcing Assumptions

Regulating Emotions

Cultural Strategies of Motivation, Control, and Surveillance

Ways organizations encourage employees to identify and see themselves within an

organization. (Conrad & Poole, p. 158)

Symbolism Metaphors, stories, myths, rituals, and ceremonies

Expressions of cultural assumptions Reproduce cultural assumptions Conrad & Poole, 2005, p. 163

Cultural Strategy Applied to Merged USAHP

Two different organizational cultures combined USAHP & MEXCO

Different hiring strategies, salaries, workforce base, etc.

Two different people cultures within the newly combined organization Lourdes State & Azteca State

Different foods, entertainment, sports, etc.

Two different national cultures comprised both organizations USA & Mexico

The New Changes

Running the merged Lourdes plant in similar fashion to plants in the U.S.

New specialized workforce Brought in from outside the region, instead of

improving current education of employees. Firing overpaid managers.

New values Previously, “Fairness” based on tenure and loyalty, not

qualifications.“Active Management” System based on

Japanese managerial practices “Continuous Improvement” Constant Performance Monitoring

Where They Went Wrong

Wrong assumptions in relation to how the culture would receive changes Cultural management and planned cultural change

are exceptionally difficult ( Conrad & Poole, p. 157)

Cultural Solutions to USAHP

Getting key cultural members onboard to changes before making them.

Anticipatory Socialization: Feeding employee perceptions of a culture strong in

human relations, values, and open systems to raise levels of readiness for change. (Jones, Jimmieson, & Griffiths, 2005, p. 361)

Using cultural symbolism to foster change.Use Warren’s (2004) three strategies for

cultural sensitivity : compliance-gaining, rhetoric, and cultural analysis. (p.

361)

Relational Organizational Design Analysis of Case Study

Relational Organizational Design

  A response in opposition to traditional strategies that lost effectiveness over time

Prime example: Hawthorne Studies Study showed positive correlation between workers

productivity and perceived interest level of management (Wrege, 1976, p.31)

Relational Organizational Design (cont.)

Overlapping Groups vs. Independent Divisions Likert (1958) argued that units with this management

style were more productive, felt more team spirit, and were more motivated

Decentralization Decisions are not just made by senior management Lower level employees are empowered (Conrad & Poole, 2005, p.110).

Relational Strategies of Motivation, Control, and Surveillance

Relational Motivation: Maslow’s Theory of Motivation For a deeper dive on this topic, click here

Methods Beyond Money Doing bigger things

Participatory Decision Making (PDM) Employee is more satisfied when PDM is implemented

(Schaubroeck, & Jennings, 1991, p.49)

Relational Solutions to USAHP

Set up informal communication networks Potential result: “spur collaboration and unlock value”

(Bryan, Matson & Weiss, 2007, p.44).

Telling, Selling, and Delegating Hersey-Blanchard situational leadership

Person-Centered Communication (PCC) Positive correlation discovered between PCC and job

satisfaction (Fix and Sias, 2006)

The Take Away…

Would the problems have been similar if the laid-back MEXCO had acquired USAHP instead?

How can the lessons learned by USAHP help you with a change within your own organization? Have you recognized cultural aspects? Have you clearly communicated? Have you gained employee buy in?

Links for Continued Exploration

http://www.neiassociates.org/connolly.pdf Excellent paper on the cultural aspect of

organizations

http://www.pbs.org/ampu/crosscult.html This link contains: Six Fundamental Patterns of

Cultural Differenceshttp://www.youtube.com/watch?v=BrJTf97Ev8o

Cross-cultural training video

http://econ-www.mit.edu/files/3117 Paper on the pitfalls of participatory programs

References

Allen, J., & Judd, B. (DATE). Participation in decision-making and job Satisfaction: Ideal and reality  for male and female university faculty in the United States. Human Communication. 10, 157- 180

Bryan, L. L., Matson, E., & Weiss, L. M. (2007). Harnessing the power of informal employee networks. McKinsey Quarterly, (4), 44-55. Retrieved from EBSCOhost.

Conrad, C., & Poole, M. (2005). Strategic organizational communication. Belmont, CA: Wadsworth.

Fix, B., & Sias, P. M. (2006). Person-centered communication, leader-member exchange, and employee job satisfaction. Communication Research Reports, 23(1), 35-44. doi:10.1080/17464090500535855

Freeman, R., & McVea, J. (2001) A stakeholder approach to strategic management. In M.A. Hitt, R.E. Freeman & J.S. Harrison (Eds.), The Blackwell Handbook of Strategic Management. (pp. 189-207). Hoboken, NJ: Wiley, John & Sons, Inc.

Henderson, J. (1993). Strategic alignment. Ibm Systems Journal. I1, V32. Retrieved from http://www.dl.acm.org.

Hersey, P. and Blanchard, K. H. (1969). Life cycle theory of leadership. Training and Development Journal, 23 (5), 26,34.

Hunt, J. & Weintraub, J. (2006). The coaching organization. Thousand Oaks, CA: Sage.

Jones, R. A., Jimmieson, N. L., & Griffiths, A. (2005). The impact of organizational culture and reshaping capabilities on change implementation success: The mediating role of readiness for change. Journal of Management Studies. 42. 361-386.

References

Likert, R. (1958). MEASURING Organizational performance. Harvard Business Review, 36(2), 41-50. Retrieved from EBSCOhost.

Miles, R., Snow, C., Meyer, A. & Coleman, H. (1978) Organizational strategy, structure and process. The Academy of Management Review. 3. Retrieved from http://www.jstor.org.

Schaubroeck, J., & Jennings, K. R. (1991). A longitudinal investigation of factors mediating the participative decision making job satisfaction linkage. Multivariate Behavioral Research, 26(1), 49. Retrieved from EBSCOhost.

Wageman, R., & Baker, G. (1997). Incentives and cooperation: The organizational strategy, structure and process. The Academy of Management Review. 3. Retrieved from http://www.jstor.org.

Warren, T. L. (2004). Increasing user acceptance of technical information in cross-cultural communication. Journal of Technical Writing & Communication, 34(4), 249-264. Retrieved from EBSCOhost.

Wrege, C. D. (1976). Solving Mayo's Mystery: The first complete account of the origin of the Hawthorne studies-the forgotten contributions of C. E. Snow and H. Hibarger. Academy of Management Proceedings (00650668), 12-16. doi:10.5465/AMBPP.1976.4975490