1. In your opinion, what are the issues that will require special attention?

The diagnosis of Key Chemicals’ situation using the Causal Model of Organisational
Performance and Change(Burke-Litwin, 1992) brings out the fundamental connections
that establish the performance levels and influence the change process(Appendix-A). On
the basis of this model, the following issues relating to the acquisition of Eco-Pure come
to light.

1. External Environment
a. Suppliers: It should be ensured that the relations and the contracts with
existing suppliers are not jeopardised while carrying out this acquisitions.
b. Competitors: Once this information is public, it is possible that competitors
adopt a different strategy that might affect the marketing and pricing strategy
of Key Chemicals.
c. Labour unions: Resistance from the labour unions/employees due to
impending job losses should also be considered.
d. Market Sentiments/Shareholders: Overcoming resistance and gaining
confidence of shareholders and investors in the wake of recent failed
acquisitions will be a challenge that Key Chemicals cannot ignore.
2. Mission & Strategy
a. Job Security: It needs to be clarified whether the loss of jobs are a result of the
strategy to improve efficiency or is it a cost-cutting exercise. Is this action
aligned to the overall mission of the organisation?
b. Cross-selling: Integration of market knowledge, customer relations and
working styles will play a key role for Key Chemicals in order to be successful.
3. Leadership
a. Trust: It is pertinent to ensure that the new management wins the trust and
confidence of Eco-Pure employees. Many of the above mentioned issues are
dependent on a trusting relationship.
b. Retention of Marketing Director: How well is the marketing director able to
adapt to a different environment and change of management? It is also
important to ensure that he and the marketing department of Key Chemicals
work closely.
c. Communication: Effectively communicating the acquisitions and the hard facts
associated with it is a key element of leadership, and also one that is likely to
attract strong resistance.
4. Organisational Culture
a. VCI: One of the most important issues that Key Chemicals must consider is
Vision-Culture-Image alignment of the two companies. Gaps in VCI alignment
should be addressed as soon as possible to ensure a sustainable change.
 b. Integration: Conflicting cultures can create difficulties in integrating the
workers, which might cause greater problems in future and a slow down the
change process.
5. Management Practices.
6. Systems
a. Compensation: The planned compensation to employees who are being laid off
will have to be decided keeping in mind the company policies and guidelines
and its effect on the finances of the companies.
b. Equipment & Inventory Management: Relocation/disposal of equipment and
closure of depots should be economical and feasible.
7. Structure
a. Organisation structure: Is it necessary to alter the structure of the
organisation? How does the change affect the overall outcome? Is the benefit
of changing the structure more than the cost of doing so?
b. Cooperation: Interdepartmental cooperation and also the cooperation
amongst employees should be encouraged to promote skill/knowledge and
information sharing.
8. Work unit climate.
9. Task and individual roles: This issue relates mainly to the 15 member sales and
technical support team that is being retained and to the employees of the Eco-Pure
call centre who are being transferred to the Key Chemicals service centre. How these
persons are employed in this restructured organisation and how their skills are utilised
will explain the final outcome of the acquisition.
10. Motivation: Are the employees motivated and committed enough to achieve the
organisational goals? What are the rewards and benefits for the employees of Eco-
Pure and how will these succeed in retaining them and/or attracting best people?
11. Individual needs and values
a. Training and Knowledge transfer: Success in achieving the desired growth in
Denmark will depend on the extent of training imparted by and the amount of
knowledge shared by the Eco-Pure employees.
b. Job security: Apprehensions regarding job cuts might potentially escalate into
strong resistance from Eco-Pure employees and could jeopardise the proposed
acquisition.
12. Performance: Ultimately what matters to every organisation is the level of motivation
of the employees and the level of output that every individual can generate. Key
Chemicals needs to resort to employee involvement and ensure accountability to
make the employees feel proud to work for the company.

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2. Select one or more of these issues for detailed consideration and justify your choice.

Key Chemicals seems to be caught in the ‘trap of success’(Nadler and Shaw, 1995), based
on the number of successful acquisitions in the past. In this, the new team has clearly not
benefited from copying the same ‘cost-effective’ approach as before. In this case,
attention to the employees and the overall organisation of Eco-Pure is lacking and we can
say that Key Chemicals is following the Economic Strategy of change(Beer, 2001). This is
obvious from the fact that all the stakeholders have not been considered and that only
the top management of both companies are aware of the planned acquisition.

The key issues here are communication, motivation, job security, stakeholders, and
organisational structure. Key Chemicals needs to draw attention towards organisational
and cultural aspects(OD strategy, Beer, 2001) that help in sustaining the competitive
edge and high performance by creating the requisite capabilities in the organisation.
These include coordination and team work, commitment and trust, competence, open
communication and the capacity for constructive conflict; all found to be lacking in the
case of Key Chemicals. Doing this needs a more holistic approach to change management
by attempting to achieve a balance between economic as well as OD strategies for
change; also termed as the Combined Strategy. In applying the combined strategies,
Beer(2000) and Beer and Nohria(2000) have highlighted the issues that are effectively
addressed viz. Leadership, Focus,Process,Reward systems and Use of consultants.

Successfully tackling the above issues will ensure that the employees share specialised
knowledge and improve efficiency by providing practicable feedback to each other and
also to the top management, and to make the two organisations function cohesively.
Creation of strong synergy amongst the employees will govern the extent to which Key
Chemicals achieves its goal of growth in Denmark. Moreover, recognition of every
individual based on competencies will strengthen the level of trust and confidence of the
employees in the management. The prevalence of closed and top-down communication
will restrict collection of vital information, especially when the bridge between the
workers and the top management (middle-managerial staff) is being laid off, and
therefore it becomes even more important for Key Chemicals to establish a system that
promotes a bottom-up flow of information and feedback.

Furthermore, the Cultural Dimensions(Hofstede, 2005) provides insights into the cultural
differences of Key Chemicals. This aspect can significantly affect the outcome of the
acquisition, but apparently has been overlooked. Besides this, the Burke-Litwin Causal
model(Appendix A) shows that ‘culture’ is in the top half of the model, which refers to
transformational change, and that it has an influence on other elements of the
organisation. Differences in the VCI of the two companies were expected and we find

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that culture plays a major role since it can influence both the vision and stakeholder
image.

Returning to the OD strategy, it would be beneficial to consider the study conducted by

Hofstede(2005), which shows that Denmark and The Netherlands have varying Power
Distance Indices(PDI) (Denmark=18, The Netherlands=38). Although considerably lower
than the global mean PDI and amongst the lowest in the study, there still exists a
significant difference. This clearly indicates that Eco-Pure would have a considerably flat
hierarchical structure, while Key Chemicals would have differently aligned organisational
structure reflecting its PDI score. To balance the two cultures and to gain the necessary
understanding in order to homogenise the functioning of the two organisations, this issue
needs to be addressed in detail.

The Uncertainty Avoidance Index(UAI) also shows a significant difference between the
scores of the two profiles (Denmark=23, The Netherlands=53), and gives the impression
that the employees of Eco-Pure may be more tolerant towards uncertainties as compared
to their counterparts in Key Chemicals. This assumes importance when we consider the
fact that information on the acquisition has not been shared outside of the top
management. To illustrate this we could say that with The Netherlands enjoying a
considerably higher UAI score of 53, the employees of Key Chemicals may have greater
apprehensions pertaining to this acquisition and might provide resistance to the change
process.

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3. Identify and critically review those theories that could aid your understanding of the
issue(s) you have selected for special consideration.

We look at the process of Action Research(Lewin, 1946), which focuses on organisational

problems instead of a more generic approach to change management, we find a fairly
strong correlation with the typology of intervention(Cummings and Worley, 2001);
especially the Human process intervention and to a limited extent, the Techno-structural
intervention.

The action research model encompasses the processes of data gathering, feedback,
discussion, planning and action. It is a collaborative approach to problem solving in
organisations and puts theory into practice as it involves employee participation, sharing
of information and building a commitment for implementation of the designed action.
Contrary to traditional science, action research uses information as a tool to solve
immediate issues and does not restrict the situation with strict rules and regulations. It
guides the employees to be fully involved in the process without any inhibitions and to
reflect upon and observe their experiences from different perspectives. The information
gathered from such involvement will lead to generation of new ideas and concepts which
can further result in the development of practical and acceptable approaches to problem
solving.

In the case of Key Chemicals and Eco-Pure, we can adopt this by collecting information
from the employees of both companies through various methods suggested by
Cummings and Worley(2001), like interviews, questionnaires, performance data, and
from observations of routine operations. Not losing focus on establishing a collaboration
approach, all information is collated and fed back to the concerned employees and any
suggestions or opinions from employees are reviewed. This approach also facilitates that
doubts, if any, are clarified and that the cause and effect relationship is explained to
every stakeholder involved in this process. Once every issue has been addressed in a
similar manner and the relevant data have been diagnosed, the action research model
can be concluded with identifying the possible interventions and to put that plan into
action.

Cummings and Worley(2001) have suggested that the human process intervention can be
targeted at individuals or even at group processes and is basically associated with the
development of working relationships and the processes that will help people in the
organisation to improved communication, problem solving, decision making, and
interpersonal and inter-group relations. On the other hand, the techno-structural
intervention focuses on the structure, task methods and the work design in the
organisation. This intervention aims to achieve a more adaptive and cost efficient
organisational structure and addresses issues like grouping of activities, downsizing and

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re-engineering. We can link this to the action research model in that these changes in the
structure are often related to increase in employee involvement and enhancement of
their commitment and performance.

In the case of Key Chemicals, we may consider the shifting the call centre staff as a move
to integrate the organisation to work closely. Moreover, the removal of middle level
managers of Eco-Pure shortens the communication pipeline and promotes bottom-up
flow of information. Additionally, the 15 member team of sales and technical specialists
of Eco-Pure may be utilised to improve and supervise the quality of work and the
integration of the job designs.

As further justification, the human resource intervention and the strategic

intervention(Cummings and Worley, 2001) focus on the integration of personnel
practices and how they can be used to integrate the employees of the two organisations.
It is pertinent to note that the cultural dimensions(Hofstede, 2005) also relate to dealing
with the human resources of the organisation. These involve factors such as
performance management, job assignment, recruitment and retention, work-life balance,
managing diversity and employee wellness. Strategic intervention addresses the issues of
integrating and implementing strategic plans and achieving trans-organisational
development through encouraging participation.

Key Chemicals and Eco-Pure have certain obvious dissimilarities and it would be a very
important feature of this acquisition to plan the strategy on this new combine. Again,
based on the causal model(Burke-Litwin), we find that ‘Strategy’ falls in the top portion of
the model, which indicates that it is part of a transformational change and has the
potential to influence other elements. Here, we may mention that integrated strategic
change intervention and trans-organisational development intervention will help Key
Chemicals towards integrating strategic planning, operational and tactical actions and in
solving problems together with Eco-Pure in order to make this acquisition successful.

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4. Explain how these theories might inform the advice you will offer?

Appointment of a change manager, responsible for the implementation and the

supervision of the change strategy in relation to the planned acquisition, is
recommended. Considering existing cultural differences, the HR Managers could ideally
have filled this position, since both these individuals would have good knowledge about
their respective organisational cultures and about cultural dimensions(Hofstede, 2005),
and it would recommended that the HR manager of Eco-Pure be retained. Alternatively,
the Marketing Director of Eco-Pure, could team up with the HR Director/Manager of Key
Chemicals to act as change managers. In case of any apprehensions/oppositions it is
recommended that an external agent(change consultant) be hired. This can be a positive
move as it would create a sense amongst the employees of being independent and
unbiased. On the other hand there is a risk that the change agent may not be well-versed
with the organisational culture and the ways of working of the two companies and might
not produce optimal results.

Communicating the change to stakeholders and to assess the depth of intervention

required to implement the change assumes next priority. Depending on the criticality of
the situation, it should be decided to intervene at a level that produces enduring
solutions or at a level that is restricted by the resources of the client(Harrison,1970).
Timely and appropriate communication is a critical element of the implementation
process. Conducting workshops is a good way to initiate the change and create
acceptance amongst the employees. Working together will also lead to exchange of view
and sharing of cultures. It would also be beneficial to look back at the recent
unsuccessful acquisitions and consider them as case studies to bring out the flaws and
wrong footings, so as to avoid repeating the same in the case of Eco-Pure and also to
learn from the misdoings.

Resistance, cultural differences(cultural dimensions) and depth of intervention will help

in deciding the approach to deal with resistance. The six change approach(Kotter and
Schlesinger) deals with various methods of change, yet at the same time it also conveys
the meaning that the extent of force to be applied to implement the change will be
governed by the extent of resistance experienced(Lewin, 1951). Resistance during a
change process is unavoidable and the four reasons given by Kotter and
Schlesinger(1979) viz.Parochial self-interest, misunderstanding, low tolerance, and
different assessments, clearly reflect the key issues mentioned above(culture,
communication and tolerance). The reactions of the change manager will also depend on
the kind of employees and in that Theory X & Y(McGregor) helps in differentiating
between the ‘Hard’ Controlled approach and the ‘Soft’ Commitment maximising
approach. However, research shows that neglecting the ‘Hard’ approach can lead to

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failure and break down of the transformation process before the ‘Soft’ approach sets
in(Sirkin et.al HBR, Oct 2005).

For Key Chemicals to implement Kotter’s(1995) Checklist for leading change, we also
need to consider; Planning and creating short-term wins-to ensure that the sense of
urgency for change does not drift away; Consolidating improvements and producing still
more change-it is necessary to seek short-term gains to maintain focus and to keep the
stakeholders motivated to work harder towards the change; Institutionalising new
approaches-to consolidated changes, the benefits of the process must be demonstrated
and reinforced until they become an accepted as the culture.

According to the NHS Modernisation Agency (2002, p.12) sustainability is a state where
[new ways of working and improved outcomes become the norm” and where “the
thinking and attitudes behind them are fundamentally altered and the systems
surrounding them are transformed in support”](Hayes,2007). It is for the management of
Key Chemicals and the change managers to assess the extent of this benefit and how long
the change should be sustained. In order to benefit from sustained change and for
individuals to learn and grow, the implementation should be through creating challenges
and providing support to the personnel. With availability of necessary information and
the consultant’s advice, it will be the change managers and the management of Key
Chemicals who will be responsible to ensure stickability and spreadability of the change
process.

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Conclusion

In order to overcome the unavoidable resistance, the internal stakeholders should be

involved in the discussions and case studies mentioned above so that the grassroots level
issues are brought out and addressed accordingly. According to Edgar Schein, change
needs to alter the assumptions in order to impact the most intricate levels of the
organisational structure (adapted from Hatch and Schultz, 2008). Every change process
must aim to cover this ‘inward journey’ to the core of the organisation and later embark
on the ‘outward journey’ of affecting change on the external stakeholders. The change
managers must be versatile in deciding which mode of intervention to adopt. Generally, a
prescriptive mode is not recommended and change managers may switch between
supporting, challenging and information gathering depending on the situation.

In conclusion, we accept that there is no preset solution to the change process. It falls
upon the change manager(s) of Key Chemicals and Eco-Pure to analyse the kind of change
that needs to be sustained and also the desired extent to which this change must spread.
“Well begun is half done” is what the adage says and Buchanan et al(2007) reiterate that
sustainability depends upon what change managers do in the initial stages of the change
process. Ultimately it must be acknowledged that not all change can be spread
everywhere and must be maintained for only as long as it is beneficial to do so.

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 Appendix ‘A’

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References:

1. Beer, M. and Nohria, N. (2000), Breaking the Code of Change, Boston, MA: Harvard Business School
Press.
2. Buchanan, D.A., Fitzgerald, L. and Ketley, D. (2007), The sustainability and spread of organisational
change: Modernising healthcare, New York: Routledge
th
3. Cummings, T.G. and Worley, C.G. (2001), Organisational Development and Change, 7 edition,
Cincinnati, OH: South-Western
4. Hatch, M.J. and Schultz, M. (2008), Taking Brand Initiative: How Companies can align Strategy, Culture
st
and Identity through Corporate Branding, 1 edition, Jossey-Bass
nd
5. Hayes, J. (2007)- The Theory and Practice of Change Management, 2 Edition, Palgrave-Macmillan
nd
6. Hofstede, G. (2005), Cultures and Organizations: Software of the Mind, 2 (Revised) Edition, McGraw-
Hill Professional
7. McGregor, D. (1960), Theory X and Theory Y, in D.S. Pugh (ed.), Organisation Theory: Selected Readings,
London: Penguin
8. Nadler, D., Shaw, R. And Walton, A.E. (1995), Discontinuous Change, San Francisco: Jossey-Bass
9. NHS Modernisation Agency (2002), Improving Leaders’ Guide to Sustainability and Spread, Ipswich:
Ancient House Printing Group

Journals and Articles:

1. Beer, M. (2001), How to develop an organisation capable of sustained high performance: Embrace the
drive for results-capability development paradox. Organisational Dynamics 29s (4), pp. 233-247
2. Burke, W.W. and Litwin, G.H.(1992) A causal model of organisational performance and change, Journal
of Management, 18 (3), pp. 523-545
3. Harold L. Sirkin, Perry Keenan, Alan Jackson, The Hard Side of Change Management, HBR, October 2005
4. Harrison, R. (1970), Choosing the Depth of Organisational Interventions, Journal of Applied Behavioural
Science, 6 (2), pp.182-202
5. Kotter J.P. (1995), Leading Change: Why Transformation Efforts Fail, HBR, 73 (2), pp. 59-68
6. Kotter, J.P. and Schlesinger, M. (1979), Choosing Strategies for Change, HBR, 57 (2), pp. 106-114
7. Lewin, K. (1946) ‘Action Research and Minority Problems’, Journal of Social Issues, 2 (4) pp. 34-46.
8. Lewin, K. (1951), Field Theory in Social Science, New York: Harper & Row

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