Organizational culture relates to a system of shared values, beliefs, and assumptions, which direct how people behave in organizations. These shared beliefs have a major influence on people in the organizations and dictate how they act, perform their duties, and dress. As such, organizational culture also impacts the change management process as it determines how people will respond to the change (Briody, Pester, & Trotter, 2012). The recent years have seen many companies and businesses engage in mergers to enhance their competitiveness in the market. The success of these mergers is largely dependent on the resulting firm’s ability to integrate cultures from both companies forming the merger. Cultural clashes often lead to problems in the management process and in most cases, if this is not addressed, the merger ends in failure. Sprint/Nextel merger is a perfect example of a merger that did not survive as a result of cultural clashes (Woodsworth & Penniman, 2013).
This paper assesses the impact of culture with the merger between Sprint and Nextel and how to give recommendations on what organizational leaders could have done to create unified strong culture for the organization.
Sprint/Nextel Merger
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The intention to merge Nextel and Sprint was announced on December 15th, 2004, with the deal closing the following year.
While portrayed as a merger of equals, the resulting firm did not survive for long, as the two companies ended their relationship in 2013 (Yellin, 2010). Leaders in both companies had hoped to use the merger to improve their competitiveness, specifically, their ability to provide the best products and services to their target consumers. However, this goal was not realized as the two companies failed to integrate their operations and cultures leading to mistrust and insubordination. At the center of the failure, differences in organizational culture have been highlighted as a major factor that contributed to the collapse of the merger (Gale,
2016). Differences in Culture Research shows that Sprint favored bureaucratic structures, with employees having less control over daily decisions (Woodsworth & Penniman, 2013). Leaders made almost all the decisions and passed them down to their employees. On the contrary, Nextel an entrepreneurial culture where employees are empowered to take part in the decision making process. Its staff was also allowed to come with innovative ideas and share the same with their leaders. It became hard for the two organizations to integrate the two distinct cultures (Gale, 2016). Employees at Nextel were accustomed to being empowered while their counterparts at Sprint expected their leaders to make all the decisions or provide direction at all times. This not only created mistrust but also made it hard for employees in these firms to collaborate to provide the best services to their final consumer. It is hard for people to give their job their best when trust has been compromised. Instead, employees at Sprint/Nextel treated one another with suspicion. Eventually, the firms had to end the merger as this mistrust had a negative impact on performance and customer service (Yellin, 2010). Another of contention was customer service culture. Sprint’s customer service was appalling while Nextel was more adjusted to consumer concerns. It was hard for the firms to agree on how they should treat or handle consumers to achieve high levels of loyalty. Nextel always felt that its efforts were being derailed by what was being done by Nextel's staff. This challenge also saw the companies pulling in opposite directions, which further escalated trust issues. According to Belias and Koustelios (2014), if a merger is to survive the organizations forming it must agree on how they will be serving their customers and avoid issues that are likely to impact consumer satisfaction in a negative manner. Regarding the Sprint/Nextel merger, the companies were not trying hard to solve their differences in terms of which type of service to offer the final consumer. This, in turn, led to deteriorating levels of customer loyalty. Consequently, the firms had no option but to end the merger. The fact that they were not committed to the same goal in their customer service meant that ending the merger inevitable (Gale, 2016). Cultural differences lead to some employees, especially at Sprint, fell like they were being left out. Nextel employees were good at dealing with consumers and coming up with strategies to repair the network (Gaughan, 2013). On the contrary, Sprint’s employees struggled to air their views as they were not accustomed to this type of culture. Employees at the former could not cooperate with their colleagues at Sprint who did not understand how to best serve consumers to achieve satisfaction. The high mistrust made it hard for the merger to deal with issues raised by consumers as executives did not agree on the way forward. Poor coordination and distrust across the post-deal operations saw Sprint and Nextel maintain separate headquarters. As argued by Gaughan (2013), a merger should result in the forming companies synchronizing their operations and possibly have one headquarter. Having separate head corporate offices impacted negatively on trust. It also becomes hard for the businesses to make decisions as one. This increases the risk of leaders coming up with disconnected ideas or favoring conflicting strategies. In the same way, this can also create supremacy wars that ultimately hurt the goals and objectives that lead to the establishment of a merger. Sprint/Nextel merger suffered the same fate as with time, the two companies realized they are better off operating alone (Yellin, 2010). The two companies tried to address the cultural differences and ensure the success of the merger. However, their efforts did not bear fruits as the problems either continued or escalated into more serious challenges (Craig, 2014). For instance, upper management hired external consultants to spearhead the integration process. They also organized meetings aimed at pinpointing the issues and trying to come up with a way to eliminate the same. The fact that they favored different cultures made it hard for leaders to agree. Executives from Sprint wanted to dictate things as they were used to bureaucracy. On the other hand, those from Nextel side were keen to use entrepreneurial strategies to address the complications and ensure customer satisfaction. As explained by Woodsworth and Penniman (2013), it is hard to introduce change when the parties involved in the change process are not willing to compromise or agree on things. Disagreements create an environment where no one is listening and hence coming up with an amicable solution becomes impossible. Sprint/Nextel should have known better. Recommendations The merger between Nextel and Sprint could have survived if the two companies committed their efforts to addressing their cultural differences. From the onset of the merger, leaders ought to have established a shared methodology to decision making that attains the right speed and decisiveness. They should also have established an internal brand where employees felt like they are a part of their resulting firm (Gaughan, 2013). Making culture a primary component of the change management process was also an imperative. It is clear that leaders at Sprint and Nextel were more concerned with how the merger will improve their position in the market as well as enhance their competitiveness. Little was done to determine whether their cultures could be integrated. Eventually, they learned that they could not achieve the long-term goals as a consequence of having differing cultures. It is not common for companies with distinct cultures to merge (Gaughan, 2013). This explains why companies try to merge with other businesses that they have many things in common. Nevertheless, this does not mean that a merger cannot occur between organizations favoring differing cultures. Merging companies should identify their differences and seek to address this. This leads to the creation of a culture that is favorable to both parties and in the end, a merger ends in success (Gale, 2016). There are many cases of mergers that struggled at the start as a result of cultural problems. Nonetheless, companies in these mergers managed to handle these problems and ended in great success. The challenge is with addressing the dissimilarities. Both parties should demonstrate the willingness to compromise for the sake of the merger. The goal should be accessing cultures from both companies, selecting those considered strengths and eliminating those deemed weaknesses. Focusing on the strengths can lead to the creation of a strong culture that benefits both firms and increases the chances of success (Barratt-Pugh, Bahn, & Gakere, 2012). Evidently, leaders at Sprint and Nextel focused much on the negative side of their cultures. Instead of looking for ways to integrate their cultures, each firm was keen to sustain its practices even at the expense of the other. This led to mistrust and made it hard for leaders to agree on what to do to address the cultural challenge. The merger should have utilized external experts on how to integrate their cultures. The management may lack the knowledge or skills on how to synchronize their operations. External experts can help in bridging this gap (Craig, 2014).
In the year of 2005, the companies eventually found a way to make it easier for the companies to combine without having any major issues or problems. Unfortunately, around the year of 20010 the merging com...
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