Mubiligi Priscilla Agasaro

912082515
MGT 301

MGT 300: Article 3.

This article assessed the response employees had regarding organizational mergers and

acquisitions. Mergers and acquisitions are strategic moves that firms can make to increase their

profitability through efficiency mainly. However, studies show that many firms do not get this

profitability. This begged the question: “Why?”. This study tried to answer the question by

evaluating the impact employees had on said post-merger profitability.

It was discovered that employees responded differently; positively or negatively, to

mergers depending on their personal and organizational valence. Personal valence has to do with

how one views their work and efforts rewarded whereas organizational valence has to do with

how they think a change in their effort will benefit the organization. These valences might affect

organizational identity, how one identifies with their membership in an organization, and

employee/organizational attachment, how attached/loyal one is to the organization. The study

developed three models to evaluate any correlation between these different concepts. The first

model stated that change in personal valence affected employee attachment whereas change in

organizational valence changed organizational identity. The second model said that an increase

in both valences after a merger would lead to a greater organizational identity and attachment

and a reduced turnover. The third model asserted that personal valence was the basis for any

change in organizational valence, identity, and attachment.

To test this, two surveys were conducted on employees who had just been part of merger

between two companies: Luxury Inc. and Standard Inc. The first survey was conducted three

months after the merger and the second survey was conducted a year later. There were 599

participants. These surveys measured the responses of participants on a 7-point Likert scale. The
Mubiligi Priscilla Agasaro
912082515
MGT 301

study measured employees’ organizational identity pre- and post-merger. Organizational

attachment including job satisfaction, intention to stay, voluntary turnover and absenteeism, was

another measure assessed. It also measured organizational and personal valence, looking

specifically at job security, job continuity, distributive justice, personal status among others.

The results of the study supported the first and second model of the hypothesis. It was

found that the overall status of an organization (organizational valence) and the employee’s

status/position within their organization (personal valence) affected the organizational

identification. If the status of the organization was in good standing and the individual’s position

was secured and safe, the organizational identity post-merger increased as well. This resulted in

proving the first model true as well. Personal valence affected employee attachment to the

organization while organizational valence influenced the organizational identity. These results

stirred some managerial implications.

Luxury Standard would have gained more, had the executives communicated better with

their employees. They should have discussed how the merger would affect the organization as

well as employees personally through their respective work roles, a two-pronged approach. The

executives had only focused on how the merger would be great for the newly combined

organization. The two-pronged approach would have improved employees’ response/reactions to

the merger, and it would have made them feel heard and feel more secure. I believe that this is

absolutely the best way of successfully conducting a merger. Reassuring employees and giving

them a voice will guarantee a firm’s success and profitability post-merger.