University of the West of

Scotland

Master of Business Administration

International Business

Pathum Jayawardena
K22MG132

Managing People in Digital Organizations

Table of Contents Page No

01. Executive Summary……………………………………………………………………….………….…. 02

02. Introduction……………………………………………………………………………………….… 02

03. Critical Behavior…………….….……………………………………………………………………….... 03

04. Importance of Emotional Intelligence in Change Management ……………………. 07

05. Leadership in a Merged Organization ……………………………………………………….….. 10

06. Organizational Culture………..…………………………………………………………………….….. 13

07. Remote Work ……………………………….………………………………………………………………… 15

08. VUCA Challenge ……………………….…………………………………………………………………… 16

09. Conclusion……………………………………… ……………………………………………... 18

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Executive Summary

Kandy-based Expand Clothing is looking to expand its market presence by merging with Galle-based AJ
Construction (Pvt) Ltd to form a more diversified holding company. This board paper seeks to examine the
many potential issues that may arise before, during, and after a merger, as well as the pros and cons of the
combined entity.

All total, there are five sections to this board paper.

The transition is introduced in Section 1, followed by a discussion of potential individual and group responses
in Section 2. Key behaviors have been investigated in relation to conflict management and business
communication.

Emotional intelligence is the subject of Section 02's analysis, which places special focus on its application to the
management of change.

In Section 03, we take a deeper dive into leadership by discussing three different leadership theories to help
the MD in his or her selection process. The potential merger's success will depend on the leadership of its
participants.

This section analyzes the cultural factors of HCA and SC, as well as the cultural dimensions of organizations.

Dissecting the influence of "VUCA" factors on the two companies, with special focus on mitigating their
negative effects, is the topic of Section 05.

Combining HCA and SC is a fantastic option for the holding company to broaden its customer base and better
meet the market's limitless opportunities.

02. Introduction

When it comes to clothing manufacturing in Sri Lanka, no one does it better than Expand Clothing, which also
happens to be the undisputed leader in the Kandy apparel sector. Large quantities of men's and women's
clothing are created after extensive planning, printing, and sewing. Located in the city of Galle, Sri Lanka, AJ
Construction (Pvt) Ltd is a reputable and well-established construction firm. Established in 2001, the firm has
grown to become an industry leader in the fields of architectural planning, building, and repair. This requires a
crew that is both knowledgeable and capable. Since the ROW was successful in vaccinating against Covid 19,
people have been able to go back to their normal lives, which has increased demand for garment exports. In
order to deal with macroeconomic challenges and push Sri Lanka into an unrivaled strategic position on the
global stage, the present government has provided support to the industrial sector in a variety of ways.
Considering these factors, HCA and SC want to merge to create shareholder value via attractive financial
advantages. For this purpose, the two firms will form Hill Country Group (Pvt) Ltd, with HCA owning a 60%
controlling stake, and will propose employees from both companies, or hire new employees with the
necessary skills, to work for the holding company. The holding company is composed of four non-functional
divisions, each of which is headed by a managing director.

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03. Critical Behaviors

3.1Individual Behaviors

Its employees are its most valuable asset. What they do for the business ultimately determines its growth or
contraction. Impact of environmental factors on workers. Facial emotions vary from one circumstance to the
next. One of the most significant shifts that might occur is the merging of two companies. It will have an
impact on productivity and efficiency in the workplace. When people are confused about who you are and how
you operate, it may lead to low morale, high turnover, and subpar results. What gets done in a group is the
sum total of everyone's efforts. Thus, the actions of the company's workers have a direct impact on the
business's bottom line. There is a correlation between bad HR management and the failure of 60% of mergers
and acquisitions (Barros 2003). As a result, understanding the function of human resource management during
a failed merger is crucial. Coworkers are likely to exhibit a wide range of opinions, perspectives, and styles.
Because of the cultural differences and their lack of interest, they will also feel that they no longer want to
work there. This means HRM has a responsibility to ensure the satisfaction of all employees before to and after
the merger.

Now more than ever, creative leadership is crucial. What it takes to be a successful leader is the ability to
effectively communicate with others and foster the growth of new leaders. Having open lines of
communication boosts morale and productivity. Therefore, organizations may be able to attract and retain top
talent by investing in training and development programs that boost employee enthusiasm for their jobs and
commitment to the company. To advance in one's career, it's important to have a clear path for leadership
transition at all levels of the organization. Even those who normally aren't very motivated will find themselves
working harder as a result of this. Staff members must develop coping mechanisms to mitigate the disruption
that a merger causes.

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Group Dynamics

The term "group dynamics" refers to the study of how the roles and activities of individuals within a group
affect those individuals and the group as a whole. When there is harmony within a team, it benefits the
business as a whole since conflicts and dysfunctions decrease. Likewise, when they work together toward a
common goal, trust will be at an all-time high. Both CEOs exhibit outstanding leadership inside their companies
because of the dominance of their DISC traits.

Collaboration is a cornerstone value of both organizations. Powerful group dynamics, therefore, exert
considerable impact when members are working together to achieve a common goal. A high level of employee
participation in both companies has resulted in closer bonds amongst workers. Simply put, because their
leaders are making sure that everyone is working toward the same goal. Managers may cultivate high-
performing teams by getting to know their employees well and using tools like the "Belbin Model," which can
assist team members become more self-aware of their skills.

Tuckman's stages of group development

In a newly merged company, as was said before, new workers will be working under new management and in
a new culture.

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Conflict Management

Most people view conflict negatively, which makes avoiding it a natural instinct. On the other hand, conflicts
may be healthy in that they force people to think critically and question accepted norms. In order to determine
the best method for handling conflicts, "Thomas and Kilmann" suggested a two-factor analysis of assertiveness
and cooperation.

Above, I said that Dominant and Conscientious DISC types are the best choices. Each of these people profiles
places a premium on their professional and personal success. Therefore, competing and cooperative conflict
management styles are the most common, as measured by the Thomas-Kilmann conflict mode instrument.
Everyone's profiles have the option to choose the conflict style of collaborating.

Numerous conflicts, especially in the formation and storming phases, are to be expected in holding companies
due to their less people-focused traits and significantly different activities. To ensure that the relationship and
the holding company's primary goals are not threatened, it is crucial to instruct them on how to adapt their
strategy accordingly. Model of Conflict Resolution after Thomas Kilmann

There are five types of conflict

settlement, as shown in the
diagram.

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 Interpersonal Communication in Organizations

Reaching goals with the full understanding of team members requires constant and open lines of
communication. Everyone should be allowed to open out to one another and share their thoughts freely.
If workers can talk to one another freely about their feelings, they will feel more connected to the
company as a whole. Employees from two different industries and cultural backgrounds will now have to
collaborate as a result of the merger. In this situation, candid and open communication between the
group members is crucial.

Without complete transparency on the alterations, employees from both companies will be forced to
operate under a cloud of doubt. Employees will become unsatisfied if this situation persists for an
extended period of time, and the organization will be unable to achieve its goals. Therefore, top-level
management should tailor their approach to communicating with each tier by the tier's linguistic and
cultural competence.

Ex:-

• Executive and above - Emails, memos, and meetings (CEO, Department Heads, Supervisors)

• Non-executives - Letters, Announcements, Suggestions Box, and Notice Board (Machine operators,
Cleaners, Drivers)

The aforementioned strategies may be used to improve communication across different departments and
between different levels within an organization. It is crucial that all of these approaches be crystal clear,
exact, and delivered promptly. Any other interpretation renders the message meaningless.

The Importance of Emotional Intelligence in Change Management

Corporate transformation leaders should be aware of how digitalization will affect various job types. In this
case, preemptive measures are limited to those that correct the problem. It may be difficult for some group
members to voice their concerns. To really know oneself, one must be able to empathize with others and see
the world through their eyes.

For effective management of the digital transformation, the Lewin's change model might be used.

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Lewin's change model

Unfreezing

Because of their inexperience with the new system, workers may first reject change. Every decision they make
will be informed by a careful weighing of pros and disadvantages. Therefore, it is essential that both new and
veteran staff be well-versed on the company's stance on environmental problems from the get-go. Then,
please elaborate on how the holding company may benefit from investing in a digital firm. Worker benefits
and the need of the shift should be clearly communicated. Since most employees are not executives,
convincing them that they need a detailed explanation of the change process now would be challenging.

Changing

At this nascent stage of digitalization, workers are aware of the change. Due to the nature of metamorphosis,
this is the most difficult phase. Employees' body language may betray their inner turmoil, stress, and guilt.
Because a cultural shift is now occurring. Emotional problems among workers may be avoided with the use of
EQ-related strategies. Provide training and support until staff members feel at ease with the new digitalization
paradigm. There's a demand for EQ training.

Refreezing

The obligation is on employers to prevent a return to the old routine on the part of their staff. Incentives and
rewards for good conduct among workers are warranted because of the positive influence it has on the
company's ability to successfully navigate the digitization process. Employees' emotional intelligence helps
them feel and understand what is going on at this level.

At all times, but particularly in times of change, the ability to read and respond to others' emotions at work is
essential. Improves teamwork, collaboration, and dispute resolution in a company.

Consolidated Organizational Leadership

In the behavioral leadership theory, leaders are made, not born. According to this idea, there are two distinct
categories of subordinates, distinguished by their actions. Theory X management holds that employees have
no interest in or motivation to carry out their duties. They need to take on a more demanding and assertive
leadership style if they are going to achieve their aims. Theory Y managers, on the other hand, have a positive
outlook on their employees and use a participative style of management.

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McGregor Theory X and Theory Y

Certain employees, especially in the construction and clothing industries, are unable to flee their duties even if
they so want. Most of them work on assembly lines or with heavy construction equipment, so they have to
follow the rules. Some people are content with where they are in life and have no interest in changing careers
because they lack ambition. While most individuals thrive under close supervision, there are others who thrive
more in an independent setting.

Douglas McGregor proposed the X and Y model in 1960. Two widely held beliefs on employee behavior in the
workplace are discussed here. Both the negative and the positive are represented by the letters 'X' and 'Y,'
respectively. According to McGregor, there are several assumptions behind managers' perspectives on
employee characteristics.

It's clear that X types of individuals have negative attributes whereas Y types have positive ones. A merger will
allow you to hire both sorts of
employees. One group is quite
rigid about avoiding making
these kind of modifications
because of their inherent
resistance to change. Therefore,
they choose to maintain the
same work routine. It's their
jobs, not their careers, that
they're most worried about.
Thus, it is important to identify
these individuals and work to
win them over prior to, during,
and after the merger process.
Younger generations, those born after 1980, are diametrically opposed to the baby boomers. They have a
strong sense of independence and responsibility, as well as a great deal of self-confidence and self-discipline.
They work hard on their own, thus employees of this sort are easy to replace following a merger. Finding out
who each group of employees is comprised of is crucial prior to a merger.

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Company culture

Company culture is the manifestation of an organization's core values and beliefs. What sets a company apart
from others are its beliefs, ideas, strategies, and policies.

What follows is a diagram depicting the origins, components, and outcomes of culture.

HCA and SC's cultures have not changed under the Holding Company's watch. Covid 19 altered the culture of
every company.

Providing the back-office staff with mobile devices such as smartphones, laptops, and tablets was one strategy
to encourage remote work.

The school's dress code or uniforms have been updated.

Here we have point three. There has to be shift work for frontline and field employees as well.

a secure and reliable layout The office is equipped with hand sanitizers, face masks, sinks, and faucets.

Those who have been immunized are expected to report to work as scheduled.

There is also a means of transportation to and from the workplace.

4.1.1 Edgar Schein's work environment

Employees, as they deal with both external and internal integration difficulties, form fundamental beliefs
about the company's culture, argues Edgar Schein. One's thoughts, feelings, and perceptions are all on display
for others to view.

Integrating employee values into corporate culture is the natural next step. That's what defines the culture of
the company. Organizational culture may be influenced by a number of factors, including principles, norms,
shared values, problem-solving strategies, and mental models.

When two businesses combine, the staff of both must adapt to new ways of thinking and doing things. The
merger will show them that there is more to the tale than they first believed.

The intangible but crucial assumptions about an employee. They may not have intended it, but they have
unintentionally altered the company's norms and customs. After a few months have passed after the merger,
workers have noticed a shift in morale. There were certain key values that weren't there in earlier drafts. The
similar concept might be used to the tip of corporate culture transformation. Many people think this is a
terrific company because of the perks, the culture, and the stories they've heard. However, it's possible that
external signs don't reveal all.

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The Iceberg of Culture

A merger is the coming together of two civilizations, each with its own history and traditions. Each of our two
companies has a Sri Lankan origin; one is based in Kandy and the other in Galle. The Cultures of Kandy and
Galle Are Vastly Distinct from One Another

Table -01

Type Kandy Galle

Language Sinhala / English /Tamil Sinhala / English /Tamil – Many Accents and Different
Pronunciations

Food Rice & Curry, Vegan Mainly Seafood, Fastfood

Meals

Behavior Modest Direct and Aggressive

/Simple/Backwards

Cloths Ladies – Osariya, Saree, Saree, Skirt & blouse, Jeans

Skirt & blouse, Jeans
Men – National Kit, Shirt, Trouser, T-Shirts
Men – National Kit, Shirt,
Trouser, T-Shirts

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4.1 Remote Work

Almost every business now allows employees to execute their jobs remotely thanks to the introduction of
Covid 19. It's unlikely that more than a few of companies would gain from this strategy. Companies in the
information technology and advertising sectors, as well as the academic community, have been early adopters
of this approach. The opposite is true for manufacturers, bankers, and public servants, all of whom are
hindered in their work. There were some who stayed at their desks and others who were told they could work
from home. Maintaining a consistent company culture when working remotely or from home may be
challenging.

When we talk about a firm having a "remote work culture," we're referring to its digital culture, which helps
employees stay connected via common goals, interests, and experiences even when they're physically
separated. When a robust remote work culture is established, employees feel a sense of belonging that is not
limited by their location. Companies need to put in place the appropriate protocols to make working from
home more tolerable for their employees. The following are necessary for a more flexible, remote-friendly
workplace: technology; a willingness to adapt; a growth mindset

There is a lot of importance placed on remote culture as a method of avoiding the negative effects of working
apart physically and fostering the long-term success of the business. It might be difficult to run a construction
firm and a clothing factory on the same digital platform. IT, human resources, research and development, and
marketing are all examples of back-office tasks that may be done remotely.

People may prefer working from home since they won't have to deal with the cultural shock of working with
others.

Benefits of telework include: more convenient scheduling; reduced costs and wasted time; more time spent
with loved ones; higher employee retention rates; higher output rates; higher morale; shorter absenteeism
rates; and a less stressful work environment

Employees who work from home sometimes feel lonely and unsupervised, and there's always the chance of
sensitive material falling into the wrong hands. Furthermore, not all jobs are suited to being done remotely.
employee morale

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5. The Imperative of VUCA

Currently, we are living in a VUCA world. The three words that make up the acronym "VUCA" — "volatile,
uncertain, and complex" — describe the current global environment. In contrast, both the letter A and the
letter C stand for fuzziness and intricacy, respectively. Based on their ideas of leadership, Warren Bennis and
Burt Nanus coined the abbreviation (made-up term) VUCA in 1987. The US Army's war college set the tone for
the post-Cold War era in the early 1990s. The concept of VUCA has subsequently been debated by business
leaders all around the world.

When things are changing quickly, we say that they are volatile.

Uncertainty is often characterized by a failure to plan forward.

the extent to which a cause-and-effect link exists.

The potential for misunderstanding. ambiguity

VUCA is an often-used abbreviation that stands for "vulnerability, uncertainty, complexity, and complexity." It's
becoming more and more difficult to keep up with the rapid speed of change in the business sector. In order to
survive, businesses need to be adaptable and fast to change with the times. CEOs in the business sector need
leadership styles that can change with the circumstances. Within this framework, CEOs and their companies
should be evaluated based on their ability to adapt to and thrive in a volatile, uncertain, complex, and
ambiguous (VUCA) setting.

Even if we isolate a single little company unit, we still have to deal with a complex external environment.
Stakeholders' expectations change as the population's exposure to technology expands, reflecting the
increased values that people place on it. In their authoritative roles, they are obligated to act quickly. In order
to ensure that employees can continue to be resilient and effective even when faced with the unexpected,
business leaders must foster a culture of adaptation and responsiveness inside their organizations. As a result,
leaders must be resilient enough to deal with adversity at any moment.

Sri Lanka was in deep trouble after a big invasion from the east on April 21, 2019. When compared to other
strikes since the end of the civil war in 2009, this one is by far the greatest. Everything in the county seemed to
stop working after the first attack. As a result, people all around Colombo and its suburbs felt the effects.

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Services catering to tourists were impacted particularly badly. Even if things have gotten better, the Easter
attack will have lasting effects for quite some time.

Additionally, Covid 19 affected economies all around the world. When you combine the two factors above, it's
clear that leaders need to be nimble. Whoever can adjust to new circumstances and circumstances more
quickly will be more successful in business.

As opposed to popular belief, I do not consider VUCA to be only a buzzword. It's a style of thinking and dealing
with problems in today's ever-shifting digital landscape.

Waltraud Glaeser is an expert in this field.

When employees work together, businesses may thrive.

Teamwork is the process of coordinating the efforts of several people to accomplish a certain goal. It's a must-
have for every company that wants to thrive.

Expert in group dynamics, Meredith Belbin has conducted many studies. There are nine objectives that must
be met before a team can be declared successful.

Team members should be encouraged to strengthen their shaping skills.

Executor - One who carries out one's duties

Third, someone who always gets the job done on time

The coordinator was able to allocate tasks, take feedback, and make adjustments.

Fifth, stress the need of teamwork to the staff.

The sixth action is to investigate other resources to see what else is out there.

New ideas may be planted in the minds of students in a fun and tangible manner.

Ineffective motivators and emotionally immature people may be detected and evaluated with the use of
monitoring.

Experts are those who know their stuff, give it their all, and are unwavering in their convictions.

When one organization merges with another, it often has to restructure its teams in order to continue working
toward its objectives. Before the merger, everyone worked together as a team, and it's critical that same
mentality continues after the two companies have become one. After a merger, workers will automatically
think they have been demoted and lost all power over their employment. Due to people's natural reluctance
to adapt to new circumstances, forming new teams is a challenging task. Managers, for the firm's sake, need to
learn about and cultivate effective teams.

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