Topic 9 - The role of workers + Migrant workers + expatriate assignments

Summary

The role of workers

Recently, especially on countries such as Germany, the workers have had an increasing participation on the decision making process on the companies due to the fact that the labor unions in those countries are unified nationally and have gained more power due to this unity. In fact, in some cases, the employees and their representatives and the senior directives have the same power on the decision making process and the workers become as important as the stakeholders. This is the principle of Co-determination.

Image taken from http://xroads.virginia.edu/~ma98/pollklas/thesis/cod.html. Accessed on October 18th 2010.

Regarding the co-determination and the unionization, the employees are not just union members since their participation in the company goes beyond their labor activities by being part of the board of directives, having the same voting rights than the directors. Additionally, they also have the ability to influence the firm’s decisions and the distribution of profits.

Image taken from http://www.bryangbrown.com/editorial12.html. Accessed on October 18th 2010.

This co-determination makes that the workers have more empowerment than in countries where the labor unions are more divided and these unions protect more the rights and interests of the workers. Additionally, they may prefer business diversification in order to avoid a firm default in order to reduce risk and may also contradict the owners’ interests and objective to make them a more collective goal instead of a focused goal.

Migrant workers

A migrant is a person who moves freely from one country to another, for reasons of personal convenience and without intervention of an external compelling factor. However, one should consider the fact that in this definition the “freely” expression refers to the fact that they are not violently forced to leave, but probably the economic and/or social conditions of the home country make a person to choose to leave in order to have better conditions for him/her and his/her family.

Image taken from http://www.cartoonstock.com/newscartoons/directory/m/migrant_workers.asp. Accessed on October 18th 2010.

But, in order to understand the concept of migrant worker, there must be a distinction between migrant and immigrant, since the first one has a temporary residence and the second one looks for a permanent one. The categories of migrants are mainly:

· Job seekers, who look for a better work.

· Students who are looking for better educational opportunities.

· Family members of migrants who want to be reunited with family members, but they are not as influential for this subject, since they travel for a very short time period and they don’t affect directly a company.

The types of migrants could be classified as:

· Migrant workers: person who is to be engaged in a remunerated activity in a State different from his/her nationality.

· Special cases: such as students and trainees, refugees and Stateless people and people employed by a State but who live outside its territory.

The role of workers

Based on the required reading and the class presentation about this topic, please answer the following question:

Analyze the potential implications of the Co-determination principles over the organization’s decision making process from the perspectives of the managers and the employees.

Required reading: Piette, Jean-Jacques. 2004. “Understanding Management German style”. Les Amis de L’ecole de Paris.

Image taken from http://www.smud.org/en/board/Pages/brdmtgs.aspx. Accessed on October 18th 2010.

Managers’ perspective

· More time would be required to take decisions, since there are more people involved in the decision-making process and having everybody agree with a choice will take more time.

· Since most of the Unions are conformed by workers who have just a high school degree or a technical degree, they might want to take some decisions that are financially impossible to achieve to the company, and if the company doesn’t take into account those wishes, then a powerful Union might cause some troubles to them.

· Due to the fact that strikes are not allowed in some countries that apply the co-determination, therefore the workers won’t leave their jobs to claim their rights since they have an important representation on the board of directors and the productivity will not decrease as a result of a massive strike.

· A powerful Union might impose some policies that are not easily achievable to the company; such as a high salary rise, huge improvements to the work conditions, among others; and those policies might ruin the company if there is a critic environment.

Employees’ perspective

· Since, in order to have consensus the board of directors must take into consideration the position of the unions, some arbitrary decisions will be abolished and the workers view will be considered when taking some decisions and their welfare will be taken into account.

· They might give some opinions and thoughts about the productive, and even managerial, processes; which give them more chances to increase their position in the company.

· Since strikes are not allowed in some countries that apply the co-determination, they won’t need to leave their jobs if they are not agree with the union’s point of view and, therefore, they are not forced to make strikes if they want to keep working. That’s why the workers have a representation in the board of directors, to have a voice there in order to protect their rights.

Resources

• Class presentations: The role of workers, Migrant workers and Expatriate assignments.

• Piette, Jean-Jacques. 2004. "Understanding management German style". Les amis de L'ecole de Paris.
  

Topic 8 - Merging OC

Summary

The most important objective when creating successful acquisitions is the value creation. However, the real value is not created unless capabilities are transferred and the employees from the two organizations that are part of the acquisition team up to create the expected benefits and the unpredicted opportunities. The will and skills of the managers of the companies to work and teaming with a common future oriented goal are the requirements for this collaboration to rely on. Acquiring involvement of the people involved without risking or compromising the strategic tasks of the company is the key to integration.Image taken from http://venturebeat.com/2010/08/05/new-report-q2-sees-uptick-in-blockbuster-ma/ Accessed on October 11th 2010.


In order to avoid any type of dissatisfaction from the employees, managers have attempted to find similar organizational cultures and management styles since it could undermine merging and acquisitions’ performance. In contrast, managing cultural differences is more realistic and easier to obtain, additionally; it has been a more successful strategy in an integration process than finding the “ideal culture fit”.

Image taken from http://www.paddypowertrader.com/blog/index.php/financial-concepts-explained/mergers-and-acquisitions-explained/ Accessed on October 11th 2010.


An effective integration can be defined as the combination of firms into a single unity or group, generating joint efforts to fulfill the goals of the new organization, but this combination is often blocked by the challenges of nationality and perceived cultural differences. Contrary to an obvious choice of picking people with the same culture, believes and nationality; international mergers are more likely to bring together employees with different values and beliefs about the work place because merging implies the reconstruction of a new social identity.

Two organizational integration variables are particularly relevant in the acquisition process: the motive for the acquisition (such as the strategic fit and decision making process) and the process of implementation (including the acculturation process). The acculturative process describes the cultural changes resulting from the interaction of one organizational culture with another. A basic acculturative process occurs between the conflictive subgroup desires for cultural differentiation and organizational forces for integration. The reason for an acquisition is important because it will influence the degree of required interaction between members of each organization.

Image taken fromhttp://www.northern.edu/Academics/Departments/International_Programs/Intensive%20English%20Program/Pages/default.aspx Accessed on October 11th 2010.

Many organizational alliances fail to meet expectations because of difficulties in the acculturation process which would compromise the knowledge transfer and learning to occur. In order to avoid this situation, the success of a particular integration strategy depends mainly on the manager’s ability to reconcile the need for strategic interdependence between the two firms and the need for organizational autonomy.

Summary taken from: Alzira Salama, Wayne Holland, Gerald Vinten, (2003) "Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies – Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo", Journal of European Industrial Training, Vol. 27 Iss: 6, pp.313 – 321.

Based on the required reading for this module, list and explain - using evidence from the cases presented in the reading - the main challenges and opportunities arising in processes of mergers and acquisitions from an organizational culture perspective. Include at least 3 challenges and 3 opportunities. Required reading: Alzira Salama, Wayne Holland, Gerald Vinten, (2003) "Challenges and Opportunities in Mergers and Acquisitions: Three International Case Studies – Deutsche Bank-Bankers Trust; British Petroleum-Amoco; Ford-Volvo", Journal of European Industrial Training, Vol. 27 Iss: 6, pp.313 – 321.

Challenges in the process of mergers and acquisitions
• As stated in the chapter, the international mergers are expected to unite people with different values and believes about the workplace and this merging implies that a new culture must be created from the mixing of the two previous ones, since a country’s ideologies and relation systems increase the national distinctiveness of organizations. In the case of British Petroleum and Amoco, the BP managers worked in an Integration process that would assure that the people would guarantee a successful merging process. They focused on combining two head offices and merging two operating divisions. In the post-merger phase, the BP managers created several steps in order to successfully integrate those companies: the integrating duplicated areas (explaining how would be the decision on the common assets, the cost of each unit produced, the benchmarking and the desired future situation), the establishment of the management for the new company (creating opportunities for personnel in both companies), the integrating systems (to uncover the best practices inside each organization) and the building of a new corporate culture for the future organization (socialize BP’s operating philosophy and mix it with their counterparts from Amoco).
Image taken from http://arsnotoria.blogspot.com/2010/05/british-petroleum-now-bp-amocos-mafia.html Accessed on October 11th 2010.

• The acculturative process that describes the cultural changes resulting from the interaction of one organizational culture with another, since many organizational alliances can’t achieve their goals due to the hard and difficult acculturation process that could compromise the knowledge transfer and learning. In the case of Volvo and Ford, one can notice the high difference in both companies’ organizational practices, since in the first one they were decentralized and teamwork oriented and in the second one they were highly centralized and individualistic. The acculturation process in this acquisition had several steps in order to be successful, such as the recognition by Volvo that now they won’t have the same representation in the production line, the designing of a new organizational structure by dividing the Ford line and the Volvo line and the due-diligence period and the post-acquisition strategies on a six-month period focused mainly on potential financial synergies.

• The manager’s ability to reconcile the need for strategic interdependence between the two firms and the need for organizational autonomy. In the case of Deutsche Bank and Bankers Trust, the crucial successful action taken by the top management of Deutsche Bank was the way they used the adequate time used between the announcement of the deal and the closing of it. Also, during the due-diligence period, DB top management decided to undertake a cultural assessment exercise to minimize a culture clash between the two banks.
Image taken from http://www.stockwatch.in/deutsche-bank-picks-20-stake-mumbaibased-rama-cylinders-21780 Accessed on October 11th 2010.

Opportunities in the process of mergers and acquisitions
• The acquisition of new competences and knowledge.
• The creation of value by the transferring of capabilities and skills when people from both organizations collaborate to create the expected benefits.
• Differences in organizational culture and practices create unique learning opportunities for the partner firms.

In the case of Deutsche Bank and Bankers Trust, the good timing and integration strategies contributed to the acquisition success. Additionally, good communication from management to the employees allowed to avoid any type of cultural conflict and kept their name without losing the sense of belonging (Deutsche Bank-Alex Brown Investment Bank).

In the case of British Petroleum and Amoco, they uncovered the best practices inside each organization. For instance, BP performance management process was considered the best one in terms of generating a more efficient performance and the Amoco business model was adopted when allocating capital.

In the case of Volvo and Ford, there was created a new organizational structure to cover more areas due to the specialization. Ford Motor Company established two major divisions: Premium Automotive Group and Ford Cars. Ford focused on the traditional products with their Ford Cars division and Volvo focused on premium products, such as Jaguar, Land-Rover, Aston Martin, Lincoln and Volvo.
Image taken from http://www.cartuningcentral.com/tag/volvo Accessed on October 11th 2010