Organizational Behavior
BUSA634
1025347
Assignment # 2
The Day They Announced the
Buyout
Introduction:
This case
mainly describes a change in the organization and its effect on the employees.
Besides that it describes the effects of decisions and ambiguity in
organizations and how this makes different effects on different people.
Case Facts:
-
Rolling Hills bank:
o
Small independent bank in
o Started with group of investors and single branch and grow up into 6 branches and 150 employees.
o Most of the new branches are small independent banks purchased by Rolling Hills bank.
o The bank become very profitable with high rank after it was under cease.
o After acquiring new bank, it retains most of the personnel and few of the corporate administrative personnel. This means that the bank has several employees who get used on different organizational cultures.
-
Rolling Hills bank board of
directors and share holders:
o Most of them are of the main group of investors.
o The main investors are board members during their free time.
o They are friends and share several social activities together.
o They wanted to have some free time and stated they are interested in selling the bank.
o Shareholders didn’t receive much returns and dividend from their stocks.
-
California state bank:
o
Small independent bank in
o It has 14 branches and 250 employees.
o It has not an internal service center or data processing department, this was one of the banks problems specially that the bank size could be considered average if it has such departments.
o It grew up the same way as Rolling Hills did but with faster rate.
o They wanted to keep all branches of Rolling Hills open and retain individuals working there.
o They wanted to keep the service center and data processing department.
o They will not need many of the administrative staff.
-
Diane:
o Began work at Rolling Hills as a temporary employee during her study at college.
o Her father helped her and provided her with the needed administrative help. He also helped her in understanding how things are happening and what is going to happen.
o She becomes a clerk that assists various departments and reporting to the presidents secretary.
o She is a fast learner and asks lot of questions.
o She wanted to get more interesting work so she applied and accepted for the secretarial position in the human resource department specially that she assisted them a lot while she was a clerk.
o She continued her education at night.
o The trust that her supervisor was giving her and the information she used to get from her father forewarned her about anything that is going to happen, except the day they announced the buyout.
o She started to worry about her and her dad’s future after hearing the news about her bank.
o She still lives with her parents.
o Since she young and haven’t much experience she can get new job easily at other banks.
o She used to plan everything in her life and did not include the change in her work.
o She was afraid of the change.
-
Diane’s father:
o He is the controller of the bank.
o He is working in the banking business since his graduation from college.
o He faced several bank acquisitions during his work.
o He told Dian that it is too early to tell about the offer or what will happen or start thinking about new job.
-
The employees:
o They read about the buyout offer from the news paper not from the management.
o Most of them were confused and do not know what will happen to them.
-
The president:
o One of the original investors and served as the president for 15 years.
o He needed his employees to like him and think highly of him.
o Used to let the employees know what was going on.
o He knew about the offer before its announcement since he informed Dian’s supervisor about that.
o He said that he will do what he can to keep the employees but he can not assure that since he will not be part of the new bank.
-
The situation:
o The buyout process usually completes in six months.
o The president met the managers and informed some of them in advance about the buyout.
o The president made a general meeting for the employees and informed them that the bank got good offer but this is still under study, besides that the employees will not lose their jobs right now but he can not guarantee that all will remain at work.
o The president apologized for not informing the employees about the offer in advance.
o The employees wanted to get reassurance that they will not lose their jobs but they could not get it.
o The productivity was very low that day.
o The HR department (Diane’s department) met with the vice president and discussed the situation and how they can contribute to boosting the morale in the bank.
o The HR decided to continue the business as usual, including hiring, evaluation and providing awards and planning for future.
o They agreed to be positive about the situation and tell everyone about that.
Analysis:
People:
-
Diane: She has not experience and little knowledge about the work
life but she has great ambitious which appears from her insistence to get new
position and her hard work, she is a high need achiever according to
(Greenberg). She was able to get the trust of her supervisor and make good
relation with her. The manager was telling her confidential information and
kept her updated with what is going on in the bank. All this
-
The
President: (Greenberg p329) defined the
persons with Reflective communication style as the one who does not which to
offend others, the president posses such style since he cares about how
he looks in front of his employees. He also has self monitoring characteristic
which is defined in (Greenberg p90) as
adapting ones behavior to the demands of specific situation so as to make good
impression on others. This applies on him because he does not want the
employees feel bad about him. In spite of his care about the employees, he did
not inform them about the offer that caused some employees to lose the trust in
him specially that he was one of the bank investors that will gain from that
offer.
The Offer:
The
buyout offer was a surprise to most of the employees, which created confusion
about the status of the bank and fear about their future. According to (Robbins) organizational change may cause some employees to resist
the change because of the fear of the unknown (future) and the loss of
security. This change reduces the employees’ performance as in our case
so the management must manage the change (Managing change article) stated
“managing change means managing people’s fear”.). The HR
department worked in this direction so it decided to continue the work as usual
to reduce the effects of change on employees. The president made a public
meeting to discuss the employee’s doubts and explain what is going on.
Stress
on people:
(Tips
for managing stress article) listed some important stressors on employees, feeling
directionless, change and uncertainty are among of them. These factors appear
on the case since the bank structure and owners could be changed and the
employees do not have much information about this change and do not know what
they have to do. The fear from the layoff increased the degree of the stress on
the employees and acted as a de-motivator for their work according to
Maslow’s theory. The employees will be afraid of the time between layoff
and till they get new job. In this case the employees could not fulfill their
security needs. As a result performance degradation and increase turnover which
could be harmful for both Rolling hills bank and the new bank whether the
buyout is completed or not.
Besides
the fear of the layoff, retained employees will have to deal with new organizational
culture.
Stress on Diane:
Her
lack of work experience and youth increase the stress from the unknown on her
(Greenberg) besides that she built great expectations about herself and thought
that she knows a lot about what is going on in the bank. These expectations are
based on her good relations with her manager and because her father has long
time working for the same bank in good position. The (Tips for managing stress
article) stated that a high expectation of self is one of the important
stressors. The high expectations are the result of lack of experience.
Her
father and his experience are of great value in helping Diane to overcome the
stress. This is could be part of the social support that (Greenberg) stated as
one of the most important factors that can help people to reduce the stress on
them.
Recommendations
for Diane:
She
must depend on positive thinking about her future and things around her, She is
young and still has not completed her university study which will help in
getting more work opportunities. She must not think a lot about the buyout and
that it could not complete. Besides that her father is working with her and can
support her in her decisions and since she is still living with her family, she
will not suffer from living expenses or house rent. She can depend on her
parents till she can get a new job if she got out of her current work.
She
must not depend a lot on her expectations and must know that not everyone
should know everything about the organization.
Stress on Diane’s
father:
Even
though he has a family and responsibilities that might increase the stress on
him because of the possible layoff, but he is old with good experience in banks
which enable him to reduce the stress and know that it is too early to worry
about it. His position in the bank could allow him to be close to the decision
making people and be informed about the results or even contribute to the
decisions.
Stress on other employees:
The employees of the Rolling Hills bank can be divided into the following groups:
-Employees worked for one of the banks acquired by Rolling Hills:
These employees faced the same situation before so they know how buyout process goes on and its consequences. This lower the effects of the change and so the stress on them. Once they know that California bank will not retain most of the employees should be the stress will be increased on them. (Tips for managing stress article) stated that “different amounts of experience and practice in stress management and change management affect coping stress”.
The best suggestion for such employees is to think positively since they retained in their positions they most probably will after the new buyout because of their importance to their bank.
-Employees worked directly for the Rolling hills bank
These employees do not know about the buyout process which produces stress on them for the reasons discussed in advance.
-High level managers:
Although the administrators and high level managers will not be retained by the new bank if the buyout offer has completed, but they will suffer the least. (Managing change Article stated: “You might expect a higher-level employees to be less concerned about being laid off, because they have savings and investments to support them during a job search.”
These managers will suffer from stress caused by their responsibilities of employees, motivating them, dealing with questions and making critical decisions about the possible change in the bank.
The buyout offer and the
employees:
The offer was a surprise for the
employees. They knew it from the newspaper and spread in the company through
informal communication channel which could create rumors about the offer and
the future of the bank.
The lack of information about the offer and delayed notification about it created ambiguity about the bank and lowered the trust between the employees and the higher management.
The buyout offer and the board
of directors:
The directors want to have extra free time besides they do not get enough from their investments so it seems they decided to sell the bank. Since they are the main owners and managers of the bank they can use their power to sell the bank. They did not think about the status of the bank or the employees.
Suggestions:
They
could sell their shares in the bank or just retire and hire replacements for
them in the bank instead of selling the bank.
Recommendations for Rolling
Hills bank
- Rolling Hills must negotiate the offer with California bank and try to get the best for the bank and the investors.
- Employees must be empowered so they can accept the consequences of the decisions as stated in (Greenberg p365). This can be done by including some of the employees in the negotiation group that will discuss the buyout offer.
-
The employees must be given the
truth about the offer and the consequences as much as possible and as early as
possible. “You need to define the change for the employees in as much
detail and as early as you can” (Managing change
article)
-
Management must request
employees’ feedback to understand their fears. “You need to
understand their specific fears” (Managing
change article).
- Providing more information about California bank, its business and internal structure could be very helpful for the employees and reduces the fear of the unknown.
- In short, good communication channels between the higher management and the employees will be very helpful for employees especially if they are dealt with honest and trust.
Recommendation for the new
bank if the buyout is completed
- They must gather employees’ Feedbacks.
- Must train retained employees on the new bank rules and system.
General concepts from the case:
References:
· Greenberg, J Baron, (2003), Behavior in Organizations. (8th ed.) Prentice Hall.
· Robbins, S.P, (2001) Organizational Behavior. (9th ed.)
·
about.com, Tips for managing stress and change at work, Retrieved December, 1, 2003 from World Wide Web at
http://humanresources.about.com/library/weekly/aa032202b.htm
By Susan M. Heathfield.
·
about.com, Managing change: managing People’s fear, Retrieved