Managing post acquisition integration

Managing post acquisition integration

An evaluative case study

Public censored version

Annelies Wolters

University of Groningen

Faculty of management and Organization Master Change Management

April 2009 Faculty supervisors Leen de Waal Dr. Cornelis Reezigt Company supervisor ******** Rijnstraat 14a 9725ET Groningen +31 (0)6 2723 6633 annelies.wolters@gmail.com Student number 1337343

ABSTRACT

This research handles an evaluative case study regarding to a specific post acquisition integration project. Company X acquires Company Y to establish forward chain-integration in order to increase market share. The managing director of Company X is delegating a change project for the first time, but questiones the effectiveness. Company X finds itself in a crisis of autonomy, which needs to be followed by a delegation phase in order for the organisation to be able to grow. The communication and meaningfulness (style, type of focus, participation level, sharing level and communication level), actors (role clarity and level of knowledge and skills) and steering (type and goal clarity) during the post acquisition integration phase were researched and evaluated. According to theory all these factors have a positive relation to effectiveness. Results show that all these factors regarding to the case situation can be improved. One major recommendation is that in future projects a project leader will bridge the crisis of autonomy and will solve most of the problems that occured. Furthermore open communication, a clear outline provided by the managing director and clear agreements prior to the project will increase effectiveness in the future.

Keywords: Acquisition and change management, post acquisition integration, delegation, crisis of autonomy

CONTENTS

INTRODUCTION 5

Context of the change 5

Causes for change 7

Problem 8

1. THEORY 9

1.1 Managing acquisitions and change 9

1.2 Factors influencing effectiveness 9

1.2.1 Communication and meaningfulness 11

1.2.2 Actors 13 1.2.3 Steering 16 1.3 Conceptual model 17 2. METHOD 19 2.1 Qualitative research 19 2.2 Interviews 19 2.3 Documents 20 2.4 Participant observations 20 2.5 Interpretation strategy 21 3. RESULTS 22

3.1 Communication and meaningfulness 22

3.1.1 Communication style 23

3.1.2 Focus of communication 23

3.1.3 Level of participation in communication 24

3.1.4 Level of information sharing 25

3.1.5 Level of communication 25

3.2 Actors 25

3.2.1 Level of role clarity 26

3.2.2 Level of knowledge and skills 27

3.3 Steering 27

3.3.1 Type of steering 27

3.3.2 Level of goal clarity 28

4. DISCUSSION 29

4.1 Communication and meaningfulness 29

4.1.1 Communication style 29

4.1.3 Level of participation in communication 31

4.1.4 Level of information sharing 31

4.1.5 Level of communication 32

4.2 Actors 32

4.2.1 Level of role clarity 33

4.2.2 Level of knowledge and skills 34

4.3 Steering 35

4.3.1 Type of steering 35

4.3.2 Level of goal clarity 36

5. CONCLUSIONS AND RECOMMENDATIONS 37

5.1 Conclusions 37

5.1.1 Communication and meaningfulness 37

5.1.2 Actors 37 5.1.3 Steering 38 5.2 Recommendations 38 5.3 Theoretical implications 41 5.4 Limitations 41 REFERENCES 42 APPENDICES 46

I Production, customer and sales figures Company X and Company Y

Confidential, not present in this version 46

II Experience acquisitions and changes alike Company X 47

III Stakeholder Typology 48

IV Translation from role descriptions, tasks and responsibilities ‘initial plan of action’ 49

INTRODUCTION

‘There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.’ Nicolo Machiavelli (1469-1527)

Subject to this research are the changes that follow an acquisition. Currently, acquisitions are a way of increasing market share and realizing economies of scale. Small businesses integrate in order to cope with market demands and increasing competition. However, research shows that acquisitions tend to occur far from flawless (DiGeorgio, 2002; Rubis, 2001; Zweig, 1995). Learning from past experiences is important, since acquisitions are hard to manage and results are often disappointing (Schweiger, Ivancevich and Power, 1987). This research handles a single case study1. In this case a company, Company X B.V.2, has taken over another company, Company Y B.V. The employees of Company Y B.V. (after this Company Y) were forced to work for Company X B.V. (after this Company X) or to leave the organization. The production of Company Y had to be integrated in the production plant of Company X in Groningen. In order to be able to do that, first Company X had to have insight in the production process, purchases, sales, and administration. The employees that decided to come to Groningen had to be integrated in the production team as well. One can imagine that this causes a lot of changes. Now the activities of Company Y have been transferred completely into Company X, thus the companies are officially integrated. The managing director of Company X wants to evaluate the acquisition process, from the finalization of the acquisition till the physical moving to the Company X location and integration of activities (the official integration) and the consequences of the events of that period, the integration project. With the evaluation of the integration project the managing director wants to learn how this kind of projects can be executed more effective in the future.

Below, a description of the case is presented, divided in ‘context of the change’ and ‘causes for change’. The context of the change puts the change in a wider perspective of the market and characterizes the two organizations involved. The causes for change explain why the project was initiated and how this fitted in the strategy of Company X. After that the problem of this research is discussed more in depth.

Context of the change

Overall the industry that Company X and Company Y operate in, is the medical market. This market is usually divided into the pharmaceutical, the devices and the diagnostic market (Smith, 2001). Because both Company X and Company Y produce non-diagnostic ergometry devices, they can be

1

Because this is a case study research, findings are ment to be used for the company of research and are not generalizable. 2

characterized to be part of the medical devices market. Smith (2001: 82) mentions in a quarterly review of marked trends the ‘agglomeration of the industry in all three sectors as major players have merged or acquired’. Furthermore, he states that this trend is slowing down and he warns for the difficulties that accompany a merger and acquisition strategy. Recent examples in the overall medical market, and more specifically in the ergometry market, show that mergers and acquisitions are still an important way to gain market share and increase profits in the medical market. The medical market is difficult to enter by new companies because of engineering and quality standards, governmental requirements in a lot of countries and customer requirements (Dawson, 2007). When focusing on the medical ergometry market, specifically on the bicycle and the treadmill ergometry market, appendix I (confidential, not presen in this version) displays what the market shares, competition and sales are at the end of December 2007 (extracted from the commercial plan Company X, 2008).

Company X is a company that specializes in the development, production and sales of ergometry products for the medical market, specifically for cardiology, pulmonary function, revalidation and physiotherapy. The market can be described as a niche market (Porter 1980: 15), however sales are geographically world wide since Company X has distributors in many countries. The main product group of Company X is bicycle ergometry, but Company X has a range of variations on ergometres. Company X has one large competitor in the ergometry market, as can be seen in appendix I (production bicycle ergometry). The strategy of Company X can be divided into the corporate, business and functional level strategy (Burnes, 2004; Johnson, Scholes and Whittington, 2002; Lynch, 1997). At the corporate level, the strategy can be typed as a growth strategy, concentrating on the ergometry market and realizing growth in that market (Burnes, 2004, Porter, 1985). On the business level Company X strives at product leadership (Treacy and Wiersema, 1995), aiming at delivering excellent quality products; their slogan therefore is ‘Company X, the standard in ergometry’. On the functional level Company X can be typed as an analyzer, with tight control over current activities but looser control over new undertakings like new products and innovations (Miles and Snow, 1978). The implication of this combination of these strategy types is that Company X wants to continue to grow, and wants to realize this by product leadership. Therefore, Company X has tight control on current activities, but looser control over new undertakings.The formal hierarchal structure of Company X is typed as the basic functional structure (Cummings and Worley, 2005) with horizontal linkages (Daft, 2001). Although the managing director is the single owner and has no legal obligations to install a supervisory board, Company X has a two-tier governance system (Mallin, 2007).

Company X and the managing director have with acquisitions and change projects. Company Y is a company that specializes in developing and producing treadmills. Company Y is a much smaller company that employs 5 people, with one of them being the managing director and co-owner. Company Y has a 2,9% market share in the production of treadmills worldwide.

Causes for change

Company X was contractually impeded to sell treadmills for seven years since a management buy out (see appendix II). When this contract ended, Company X decided to extend their product range with treadmills and Company Y became their supplier. During the four and a half year period of the customer-supplier relation Company X had ideas for improvements of the treadmills. Sharing this information with Company Y would mean that Company X would increase the value of Company Y. Also, Company X had ideas for extending their treadmill product range with less expensive OEM3 treadmills, which Company Y could not deliver. Company X was not satisfied with the delivery times of Company Y and the quality of the products Company Y delivered. This appeared to be an inconsistent factor, which resulted 40%-60% of the products delivered to Company X being sent back to Company Y for adjustments. This hindered the growth strategy of Company X and on the business level this did not contribute to their product leadership strategy. Because of their power as one of the main customers of Company Y, plus the existing plans at Company X for increasing the value of treadmills and the desire to increase their market share on treadmills, the apparent options for Company Y were either to sell the entire business, or a competitive battle with Company X. The former seemed the best option to optimize the enterprise value for both organizations. A due diligence investigation took place and the acquisition was finalized. Hence, on the corporate strategic level, increasing market share on treadmill ergometry by forward chain-integration was the objective of the acquisition. On the business level this meant decreasing delivery times of treadmills, delivering a better quality treadmill and serving the OEM-market. On the functional level, the activities of Company Y had to be integrated in the Company X location; the purchase-, production-, sales-, and administration-activities of Company Y had to be fully integrated in the processes of Company X. This is summarized in table 1.

TABLE 1

Strategy, actions and results of Company X

Strategy Actions Results

Corporate level Growth strategy Forward chain integration: acquiring Company Y

Increasing market share

Decreasing delivery times Producing treadmills to quality standards Delivering a better quality treadmill Producing treadmills to quality standards

Business level Product leadership

Serve OEM-market Increasing market share

Functional level Analyzer Integration of all activities Producing treadmills at Company X

Problem

The managing director formerly executed similar projects in a top-down manner, using direct supervision as a coordination mechanism vis-à-vis his employees. However, due to lack of time and other projects demanding his attention, a project team was formed for the implementation of this project. The managing director guided the team and the team had to report to the managing director. This way of ‘delegating responsibilities’ and to lead and organize the execution of such a change was new to Company X and the management (and therefore involved change at the meta level). The managing director of Company X noticed that he found it hard to delegate and control the integration project. He also doubted the way the guiding, the communication and the cooperation between him and the project team, and among project team members had taken place. He also doubted the effect of this on the results of the execution. Therefore, the managing director wanted to evaluate the integration project. The questions the managing director posed were: 1) how to manage change projects better in the (near) future and 2) what can the organization learn from evaluating the integration project. More specifically, the managing director of Company X questioned how such projects can be delegated better in the near future.

1. THEORY

1.1 Managing acquisitions and change

In literature, acquisition projects are divided into three phases: the pre acquisition phase that stops at the finalization of an acquisition, followed by a post acquisition integration phase and after that the post integration phase. Because the project that is subject to this text is an integration project, no data about the pre acquisition phase is accessible, and the project team was only responsible for the post acquisition integration, only the post acquisition integration phase is regarded in this research. Feringa, Piëst and Ritsema (1991) and Hunt (1988) concluded that managerial/leadership behavioral aspects matter most in the post acquisition integration phase. Also change management becomes important (Marks, 2007; Piske, 2002; Von Krogh, Sinatra and Singh, 1994) which can be typed as a planned approach to change in literature on post acquisition integration (Ashkenas and Francis, 2000; DiGeorgio, 2002; Walker, 2003).

When the project team was formed, the managing director discussed a ‘proposal plan of action’ with the team. In this document, the tasks and responsibilities of the team members, the key figures, the role of the team, the procedure and a stepwise plan of action were described. After the discussion the plan was altered and extended according the decisions made in the discussion meeting. Lower level employees were not involved in the decision making process regarding to the project. This closely compares to the description of the direction phase of Greiner (1998). The change approach of this integration project can be qualified as ‘Top-Down systemic change’ according to Storey (1992). It also fits into the planned change approach of the late Organizational Development-practitioners, considering the limited participation. The perspective was organization- and systems-wide, since it handled all the aspects of the company in the change (Burnes, 2004). These approaches on change have the assumption that change is facilitated (early ers) or prescribed (Storey, 1992; and late OD-ers) by management and/or consultants (Burnes, 2004). Therefore, the change approach Company X chose in this post acquisition integration project can be qualified as planned change that needed to be managed.

1.2 Factors influencing effectiveness

In an attempt to develop and clarify a joint method for (looking at) planned change, de Caluwé and Vermaak (1999, 2006) searched for similarities in literature to find the elements of planned change. Planned changes, according to de Caluwé and Vermaak (1999: 70) are the ‘changes by which you do not leave the future over to destiny, but by which you intend some sort of steering4’. They review views of various writers on planned change. Despite the differences in the theories, the similarities

show that there are elements of planned change that nearly all writers on planned change cover in their views on change. De Caluwé and Vermaak (1999) base their definition of planned change on these elements and display these elements in a model that can function as a frame for communicating about planned change and as a tool to discover ‘blind spots’. Furthermore, the model presents factors influencing the results (and therefore the success and effect) of planned change projects. Therefore, the model is suitable to translate to the specific situation of this research. In doing so, the model can be used as a framework. The model is presented in figure 1. The elements (or factors) of planned change are: actors, phase(s), communication and meaningfulness, and the steering of these three processes. These factors all influence the results. The change idea influences these four processes. The change idea in turn is influenced by the history (context, philosophy and cause/motivation) leading up to the change.

FIGURE 1

Elements of planned change

Source: De Caluwé, Kor, Weggeman and Wijnen (2002: 124 & 154)

When linking these elements of planned change to factors influencing the success/effectiveness of post acquisition integration, the terminology relates closely. While some writers focus more on management issues (Appelbaum, Lefrancois, Tonna, and Shapiro, 2007; Schweiger et al, 1987), others focus more on cultural issues (Nahavandi, 1988) or the human side (Marks and Mirvis, 1992). However, similarities on important factors influencing the success of post acquisition integration can be found.The elements history and change idea depend on the situation and are of importance in the pre acquisition phase (DiGeorgio, 2002). For the post acquisition integration project at Company X the change idea and the history are described in the introductory section. Because this project handles the post acquisition integration phase, the influence of the various phases on the results is limited to that single phase. Therefore, this element is not further discussed. Schweiger et al (1987) pointed out that communication influences success during the post acquisition integration phase. They concluded that because of the shortage of timely and accurate information, communication is difficult. DiGeorgio

(2002) stated that effective two-way-communication is needed for the success of the integration process. How management handles decisions and how they communicate them is a recurring complaint of the employees they researched. This in turn influences resistance and motivation, what relates to the communication and meaningfulness element of de Caluwé and Vermaak (1999, 2006). How decisions are handled indicates steering. Deiser (1994) stated that guiding and orientation should be provided by management during post acquisition integration. Haspeslagh and Jemison (1994) subscribed the importance of steering for the success of post acquisition integration. This relates to the element steering of de Caluwé and Vermaak (1999, 2006). Vasilaki and O’Regan (2008) argued that the roles and behavior of the top management influences the performance of the post acquisition integration process. Post-acquisition integration projects are complex projects that require a lot of (top management) knowledge (Vasilaki and O’Regan, 2008; Kiessling and Harvey, 2006). The cooperation of employees is in most cases necessary for a successful post-acquisition integration (Appelbaum et al, 2007; DiGeorgio, 2002; Schweiger et al, 1987). But other actors, like customers and suppliers can influence the success of post acquisition integration as well (Feringa et al, 1991; von Krogh et al, 1994). This relates to the element actors of de Caluwé and Vermaak (1999, 2006).

As described in the introductory section, the problem was a crisis of autonomy (Greiner, 1998) in combination with the challenges that post acquisition integration proposes and the doubts the managing director was expressing. Some factors influencing effectiveness as described above are addressing the problem more than others. The managing director stressed the doubts he had with the way of communicating and the level of cooperation together with the difficulties of delegating and steering the project. Greiner (1998:60) states that this is difficult because top managers are used to a directive style and lower-level managers are not used to making decisions themselves. This can be linked with the factors communication and meaningfulness, actors and steering in the model of de Caluwé and Vermaak (1999, 2006), which were also found in literature on post acquisition integration. Hereafter, these factors are discussed in depth to elaborate on the attributes of those factors and to come to questions for the evaluation.

1.2.1 Communication and meaningfulness

Greiner’s (1998) revolutionary phase of the crisis of autonomy Company X finds itself in, this only relates to communication between the project’s principal, the project manager, the project team members, top management and other functional managers. In this research therefore only communication within the project is regarded.

Different attributes of communication influence the effectiveness of the management of a change/integration project (Koeleman, 1992; extracted from de Caluwé and Vermaak, 1999). Koeleman (1992) has classified the different dimensions of communication as: type of style, type of focus, level of participation, level of sharing, and the level of communication. These dimensions can also be found in literature on change projects and post acquisition integration. Regarding to the style of communication, an open style is of importance to avoid problems due to functional or professional orientations of project team members (Pinto, 2007; Barchan, 2006). An open style of communication means: informing each other completely, giving each other feedback, actively expressing ones opinion and being honest (Belbin, 1981). Feringa et al (1991), following Buono and Bowditsch (1989: 197), make a distinction between two types of communication applicable to post acquisition integration projects. The first type is communication about answering the why-questions and how-questions of the acquisition, the integration and the consequences of that integration. The second type is communication about facilitating activities that have to be accomplished (Feringa et al, 1991). The second type can also be regarded as communication about answering the what-questions of the post acquisition integration. In order to improve output, the focus of communication in post acquisition integration projects must be on answering the what-questions, why-questions and how-questions because: ‘People at the top may have already spent months or years assessing the situation and understanding the need for this business decision, while they should not expect everyone else in the organization to come to the same level of understanding in just a few days or weeks’ (Barchan, 2006: 16). This also means it is important that the focus of communication is on (accomplishing) the goals of the project and on understanding and accepting those goals (Barchan, 2006; Doyle, Claydon and Buchanan: 2000; Pinto, 2007). Equal participation and high involvement in communication complements that. If this is done both vertically and horizontally between functions (Pinto, 2007), this contributes to effectiveness. Vertical and horizontal communication is sharing information that is orientated towards goals, and information that is timely and accurate in order to be useful (Cruz, Henningsen and Smith: 1999; Schweiger et al: 1987). Communication within a project can be structured on two levels. To increase effectiveness on content level, communication is task orientated. To increase effectiveness on process level, communication is focused on group maintenance (Pinto, 2007).

activities that have to be accomplished (the what-questions). An open style of communication contributes to the effectiveness of a post acquisition integration project. The more open the style of communication, the more the effectiveness increases. The more the focus of communication is aimed towards goals and answering the why-questions, how-questions and what-questions regarding to those goals has, the more the effectiveness of a post acquisition integration project increases. The higher the participation level, both horizontally and vertically, the more effectiveness increases as well. The higher the level of sharing timely and accurate information that is orientated towards goals, the more effectiveness of a post acquisition integration project increases. Furthermore, the more communication is task orientated on the content level and focused on group maintenance on the process level, the more the effectiveness increases. Because this research handles a case study and qualitative data (see chapter 2), the interest on these variables is not extrinsic, but more intrinsic on the perceived values. Therefore, the attributes concerning communication are: perceived style of communication, perceived focus of communication, perceived participation level of communication, perceived level of information sharing and perceived level of communication.

1.2.2 Actors

Actors can be defined as ‘the ones involved’ (de Caluwé and Vermaak, 1999, 2006). When defining actors like that, this closely compares to stakeholder theory and definitions in project management literature. Because actors and their roles have to be managed and this research handles a project, theory on stakeholder management can be used for insights. Pinto (2007) defines stakeholders as all individuals or groups who have an active stake in the project and can potentially impact its development (39). Following Cleland (1998) he makes a distinction between internal stakeholders (like top management, functional managers and project team members) and external stakeholders (like clients, competitors, suppliers, political groups) in identifying stakeholders. Though frugal in statements about stakeholders other than internal, literature on post acquisition integration recognizes the same possible stakeholders (Appelbaum et al, 2007; Buono, 2003; Cummings and Worley, 2005; Kiessling and Harvey, 2006; Marks and Mirvis, 2000, 2001; Schweiger et al, 1987; Vasilaki and O’Regan, 2008).

The internal stakeholders of post acquisition integration projects are employees, a project leader, project team members, top management and functional managers. Mitchell, Agle and Wood (1997) propose that classes of stakeholders can be identified by the possession or attributed possession of one, two, or three of the following attributes: power, legitimacy and urgency (see appendix III). If a stakeholder has one or more of these attributes, the stakeholder has a potential influence and therefore has to be dealt with. All of the internal stakeholders of the case have power, urgency and/or legitimacy and therefore need to be paid attention to. Considering the problem, the crisis of autonomy (Greiner, 1998) and the choice for communication within the project, employees (lower level employees of Company Y and Company X) that were not involved actively in the project are not considered in this research. The internal stakeholders, the actors of a change project, can possess different roles (de Caluwé and Vermaak, 1999, 2006). Because this research handles a project, project management literature can be used for insights. In project management literature, role clarity is considered to be significant for the functioning of project teams (Boddy 2003; Pinto, 2007). De Caluwé and Vermaak (1999) stressed the importance of role outlining. Burnes (2004) stated about teams that ‘unless roles are both clearly defined and compatible, the result can be sub-optimal for the individual (in terms of stress) and for the group (in terms of cohesion and poor performance)’ (264). Furthermore, complementing knowledge, skills and roles mostly determine team success (Belbin, 1998). What the roles of the top management, the project leader, the project team and functional managers comprise (role clarity) and what the corresponding knowledge and skills for post acquisition integration projects are, are discussed more in depth below.

change and acting as a principal, setting boundaries of the change, setting guidelines and emphasizing goals. Furthermore sponsoring and assigning means acting as a source of information, fitting the project into the bigger picture and establishing commitment of subordinates. This in turn also positively influences effectiveness. The more this role of the top management is clear and the more top management possesses the accompanying knowledge and skills, the more the effectiveness of a post acquisition integration project increases.

The project leader is the driving force of the change project according to de Caluwé and Vermaak (2006). A project leader and the project’s principal (client) are very distinct roles and can never be comprised in the same person (de Caluwé and Vermaak 2006; Pinto, 2007). The role of project leader becomes more important when the plan for the change project becomes clearer, which is the case in post acquisition integration. The project leader has co-responsibility for the preparation and coordination of the intervention plan and engages others in the change, among whom executers (de Caluwé and Vermaak, 2006: 119). Ashkenas and Francis state that project skills are needed by the leader of a post acquisition integration project (2000: 108). They furthermore state that this project leader is often called an ‘integration manager’ and that his role is addressing a gap in accountability between top management and project team members. DiGeorgio (2003) also recommends the use of an integration manager, especially if the integration is going to be absorption, which is the case in this research. The integration manager is appointed full time to the post acquisition integration project. He/she functions as a project leader in post acquisiton integration. He/she provides coordination to the executing tasks of the project (Pinto, 2007; DiGeorgio, 2003; Bannert and Tschirky, 2004). Thus, if the project leader is the driving force of the post acquisition integration project, this positively relates to effectiveness. In doing so, the project leader addresses an accountability gap by taking co-responsibility for the preparation and coordination of the intervention plan. Furthermore, the project leader engages others in the project. It contributes to the effectiveness of a project, if a project leader has project knowledge and skills and is fulltime available for the project. The more this role of project leader is clear and the more the project leader possesses the accompanying knowledge and skills, the more the effectiveness of a post acquisition integration project increases.

acquiring firm (Bannert and Tschirky, 2004; Grant, 1996). In this case the required experts are a R&D, a production, a sales, a purchase and an administrative middle manager. Furthermore for socio-cultural integration, expertise on human resources and change management is needed (Bannert and Tschirky, 2004). Thus, if the project team is customized for the project and if the project team consists of functional middle managers with expertise about the functions that are going to be integrated at the acquiring firm, effectiveness is positively influenced. Consequently for the post acquisition integration project of Company X this means that the project team members are managers with knowledge and skills on R&D, production, sales, purchase and administration and an expert on human resources and change management are members of the project team.The more these project team members roles are clear and the more project team members have the corresponding knowledge and skills, the more the effectiveness of a post acquisition integration project increases. The functional managers, which are at Company X the expert middle managers, are in this way the same as the project team members. Therefore, the role of the functional managers is not discussed separately.

To conclude this subsection, in this research the actors are the internal stakeholders the top management, the project leader and the project team. The found attributes of importance regarding to actors were: the level of role clarity of actors and the level of knowledge and skills of actors. As with the attributes on communication (see subsection 1.2.2), the interest concerning the attributes is at the intrinsic values: perceived role clarity and perceived level of knowledge and skills in comparison with aspects that contribute to effectiveness presented in the findings above.

1.2.3 Steering

According to de Caluwé and Vermaak (2006) planned change implies having some sort of steering, without it the change project would be a ‘runaway train’ (132). They see steering as controlling the progress considering the outcome (that can be adjusted along the way) and than adjusting the plan if there is discrepancy. Steering in this research is therefore defined as controlling and redirecting, using feedback and feed forward. When connecting this to the doubts the managing director experienced and to Greiner’s (1998) revolutionary phase of the crisis of autonomy Company X finds itself in, a condition for the steering in this case is that it is focused on facilitating delegation by top management. Therefore, the level of steering that is considered is limited to top management and project management level. The attributes of steering that influence effectiveness are the type of steering and the level of goal clarity (de Caluwé and Vermaak, 2006).

Directing is steering on tasks, focusing on the execution of the task by stating what is needed where and when, and then controlling the execution. Guiding is steering on relations, focusing on doing it together and participating in decisions (de Caluwé et al, 2002: 85). A situational approach to leading post acquisition integration projects means that directive and guiding leadership behavior is adjusted to the situation. For delegation this means less guiding and less directing. The more employees have the experience, knowledge and skills for a task and the more willing employees are to complete the task, the less guiding and directing is needed. If more delegation is preferred, like in this case, employees have to possess the necessary skills, knowledge, experience, attitude, confidence and motivation to complete the task (possessing all is seldom according de Caluwé et al, 2002). Steering that enables delegation is focused on building competence for self-steering. Employees then initiate work and redirect themselves if necessary, only seeking guidance when problems occur (Kampfraath and Marcelis, 1981). A condition for this is that goals are clear. Thus, a situational type of steering contributes to effectiveness of a post acquisition integration project. The more situational (in this case the enabling delegation) the type of steering, the more the effectiveness increases. The more goals are clear and employees are possessing necessary skills, knowledge, experience, attitude, confidence, and motivation to accomplish the goals, the more the effectiveness increases in case of delegation.

To conclude this subsection steering in this research is defined as controlling and redirecting, feedback and feed forward by top management and the project manager. The attributes of steering that influence effectiveness are the type of steering and the level of goal clarity. As with the attributes on communication (see subsection 1.2.2), the focus is on the intrinsic values: the perceived level of goal clarity and the perceived type of steering in comparison with aspects that contribute to effectiveness presented in the findings above.

1.3 Conceptual model

+ + + + + + + + + Type of focus of communication

Level of participation in communication

Level of information sharing

Level of communication Type of communication style

Type of steering Level of effectiveness

change/integration project

Level goal clarity

Level of knowledge and skills

o of top management team o of project leader o of project team

Level of role clarity

o of top management team o of project leader o of project team

Sub questions formulated accordingly are:

o To what extent was the communication style adequate for effectiveness during the post acquisition integration project of Company X?

o To what extent was the focus of the communication sufficient for effectiveness during the post acquisition integration project of Company X?

o To what extent was the level of participation in relation to the communication sufficient for effectiveness during the post acquisition integration project of Company X?

o To what extent was the level of information sharing adequate for effectiveness during the post acquisition integration project of Company X?

o To what extent was the level of communication adequate for effectiveness during the post acquisition integration project of Company X?

o To what extent was the level of role clarity regarding to the roles of the top management team, the project leader and the project team members sufficient for effectiveness during the post acquisition integration project of Company X?

o To what extent was the level of knowledge and skills of the top management team, the project leader and the project team members sufficient for effectiveness during the post acquisition integration project of Company X?

o To what extent was the type of steering adequate for effectiveness during the post acquisition integration project of Company X?

o To what extent was the level of goal clarity sufficient for effectiveness during the post acquisition integration project of Company X?

FIGURE 2 Conceptual model

2. METHOD

2.1 Qualitative research

Since this research is evaluating one particular project (the post acquisition integration project), the single case study research strategy fits. Because the events have already happened and the research is retrospective, the research is typed as a reconstructive single case study (Flick, 2006). Other aspects of this case that invoke this research strategy are the real-life context of the case and the fact that the boundaries between context and phenomenon are not clearly evident (Yin, 2003). Although some authors advocate the use of quantitative research methods in a case study (Lee, 1999; Stake, 1995), Verschuren (2003) made rationale, that using quantitative research methods would mean reductionistic research. He argued that case study researches should be holistic, which consequently means making use of qualitative research methods (125). Literature in the theoretical part was used, as Flick (2006) stated: ‘in qualitative research, you use insights and information coming from existing literature as context knowledge, which you use to see statements and observations in your research in their context’ (58-59). The conceptual model and the sub questions were used to examine the course of events of the post-acquisition integration project at Company X. In doing so the project was evaluated in order to come to an answer to the main question and to formulate recommendations. To help avoid tunnel vision, triangulation of qualitative research methods and triangulation of data sources were used where possible (Denzin and Lincoln, 1994; Verschuren, 2003). Below the used methods are discussed extensively.

2.2 Interviews

The interviews used in this research had opening questions regarding to factors influencing effectiveness and regarding to communication, roles and steering in general. The pre-formulated topics contained the topics presented in the conceptual model. The respondents were asked how the subjects were handled during the project and to give examples. Respondents were asked about facts, as well as opinions, feelings and their own insights (Yin, 2003). As Flick (2006) described it, the domain of the application will be: ‘Analysis of subjective meanings and reconstruction of subjective theories’ (206, table 1). After the starting questions, the researcher kept stimulating the respondent for expressing their thoughts. If necessary additional questions were asked to keep the interview going as Baarda and de Goede (2001) suggested. Prior to and during the interviews, the criteria of non-direction (by asking open ended questions), specificity (increased by encouragement of retrospective inspection), range (covered by the key topics) and depth and personal context shown by the respondent (increased by maximizing self-revelatory comments concerning how the stimulus material was experienced) were kept in mind and pro-actively applied (Flick, 2006: 150-152). The selection of respondents can be described as selective or strategic sampling (Verschuren, 2003). Because the focus of the project is internally, as discussed in chapter 1, the interviewed persons were: the top management team containing the managing director, the project team containing the head of purchase, the head of R&D, the head of personnel and administration and a project coordinator and the other involved middle managers being the head of sales, the head of production and the head of marketing. This connects to the actors that were reviewed in the theory chapter. The interviews were processed into transcripts.

2.3 Documents

According to Flick (2006), textual documents can add value to qualitative research and can be used as a complementary strategy. Furthermore, these documents should suffice the following criteria: authenticity, credibility, representativeness and meaning. The minutes of meetings of the project team and between the managing director and the project team were used. The minutes of all meetings, from the initiation of the project till the closing of the project, were used. These documents are authentic because they are of genuine and of unquestionable origin. They are credible because they are free of errors. They are representative because they are typical minutes. Finally they are meaningful because they are clear and comprehensible (Flick, 2006). Other documents that also fit the criteria and were used as well are project plans and procedures that were documented during the project. An example of this is the, in the first chapter mentioned, ‘proposal plan of action’ as already mentioned in the first chapter.

2.4 Participant observations

interviewing is preferable when performing case study research. In this case, the participant made observations during the course of the project, which are represented in notes. The observations were focused on those processes and problems that could be of importance for evaluation. However no specific topics were focused on. Since the observations were not focused on the topics of the conceptual model specifically, the notes of the observations are used to complement the data of the interviews.

2.5 Interpretation strategy

3. RESULTS

The information gathered through interviews, documents and participant observations was analyzed against the factors of the conceptual model. Below the results for each of these factors are presented, structured into the following paragraphs: 3.1 Communication and meaningfulness, 3.2 Actors and 3.3 Steering.

3.1 Communication and meaningfulness

The interviewees were asked what they thought the effect and influence of the communication was on the outcomes of the project and what could be improved regarding to communication. Below the summarized answers are presented in table 2.

TABLE 2

Effect of communication and points of improvement

Communication Project team members Managing director Functional managers Effect/

influence

- No fatal mistakes or gaps - Project run time decreased - Successful movement of activities to Groningen

- Less good relation with former owner Company Y

- Termination of one Company Y employee - Less use of resources available (knowledge at Company X) - Less quality of method by lack of asking the how-question repeatedly during the project

- Big influence - Because of mystery more obstruction at Company X

- Because of mystery people fill in the questions themselves

- Commercial and production side of project too less attention

Points of improvement

- Between team and functional managers more clarity

- More information asking of one of the team members

- More initiative to communicate with managing director

- More explicit expectations from managing director

- More active attitude of other functional managers

- More clear agreements at the end of the project (about the moving)

- More detailing of plan of action at the beginning: make the plan point of discussion - Clearer statement of expectations toward the functional managers

- More frequent and more open communication - Explaining: what does a team member do when he/she is a whole day at Company Y?

- Explaining why there is no time for the ‘regular’ work of team members - Earlier involvement of production manager

sufficient’, later this was improving. Communication with the managing director was according to one project team member ‘sufficient and minimal’. The managing director perceived the communication by means of reporting the status of the project as ‘good’, although he had expected that the project team would make more use of him as ‘a source of experience’. The differences of perceptions also become clear in the findings of table 2.

3.1.1 Communication style

Project team members perceived the communication as ‘informal’, ‘open’ and ‘active’ in the beginning of the project. One interviewee claimed that this was due to the fact that in the beginning of the project, the team met regularly together in one room, taking the time to communicate. Later, communication was reduced to emailing and telephone conversations and was perceived ‘less open’, though ‘informal’, by two of the project team members. One project team member stated that another team member was not open about the status of his work and ‘till now the unreliability of incoming goods is the effect that’. Another team member expressed a different opinion stating ‘during the project I experienced the communication as very constructive and involved’. The project team members found that communication with the managing director was ‘informal’ and ‘open’, but was not as often as usual in projects. A functional manager on the other hand expressed that the communication about the project had an ‘ambiance of mystery’ and had wanted it to be ‘more open’. This resulted in a negative effect on the success as regards to ‘communication about the expectations towards others than project team members’, according to the functional manager. Also this functional manager stated that this ‘led to resistance in the organization’ and that ‘if something is experienced as a secret, people fill in the answers themselves and that is not always favorable’. Furthermore this person stated that ‘what people were doing when they were a whole day at the Company Y location, was one big question mark. Some of the project team members found that what they were doing there was very interesting, but they did not want to tell anything about it when you asked’.

3.1.2 Focus of communication

According the managing director ‘the project team should have asked/discussed the how-question more often, to increase the quality of the working method’. The result was that the project team ‘seemed to work isolated and did not optimally make use of the available resources’.

After the first month, the minutes of project team meetings showed that fewer meetings were held. Communication among project team members was about implementation at Company X, the financial liquidation of Company Y and on the progress on to do lists and bottlenecks. A project team member experienced the communication after the first month as ‘exchanging experiences and on some occasions a request for help’. Prior to the physical moving to the Company X location the project team had a meeting with the managing director and after finishing the project a meeting to terminate the project. According to one project team member communication with the managing director was mostly ‘one on one’ and ‘the managing director asked questions until he found he had enough information’. He furthermore expressed that ‘the managing director had a need for control’. Another project team member stated that the focus of the communication with the managing director was ‘on processes and only if coordination was necessary’. The managing director experienced the content of the communication as about ‘progress’ and about ‘tensions with the employees of Company Y and the former managing director of Company Y’. The functional managers considered the communication during the entire project as ‘practical’ and focused on ‘the project team itself rather than on involved departments’. The content of the communication was, according to the functional managers, on ‘the status of the project’. The effect of this was, according to one functional manager, that ‘the production side of the project was under-exposed’.

3.1.3 Level of participation in communication

3.1.4 Level of information sharing

The minutes of the project team meetings showed that during the project information sharing between project team members was planned for. Once a week there was a project team meeting and during these meetings information about the findings of the week before and progress on to do lists was exchanged. At the end of every day, the person that had been at Company Y reported what had happened that day. The project team members all experienced that not everyone shared information equally. One team member expressed that he felt like ‘some persons naturally share more than others, or some are broader interested and not only concerned with their own tasks’. The managing director perceived the sharing of information with the project team as ‘only on major issues and usually after decision-making within the project team (not in the discussion phase)’. About everyone equally sharing information the managing director expressed: ‘I did not have the feeling that information was withdrawn from me on purpose, but sometimes information sharing was delayed’. One project team member stated that in meetings with the project team and the managing director ‘information about the process and bottlenecks was shared’. However, in one on one conversations with the managing director, information about strategy on ‘his functional field’, ‘the future’ and ‘relations with key figures of Company Y’ was shared. Another team member stated that ‘desired information was shared daily’. Functional managers were kept informed in the weekly management team meetings and by progress reports produced by the project team. These progress reports were status reports, with information on activities the project team had done. In reviewing these reports, it was notable that implications for the functional managers were not subject in any of the reports. One functional manager perceived the information sharing by the project team as ‘too less’. The functional managers disagreed if every team member equally shared information.

3.1.5 Level of communication

The communication concerning the project mostly took place within the project team, as the minutes and interview results showed. Communication across functions was on fewer occasions, especially in the beginning of the project. This improved later on, according to the functional managers. The vertical communication took place on head matters. According to all interviewees, communication was usually on the content level about ‘tasks’ and ‘activities’. Communication was less on processes, however on some occasions within the project team and with the managing director communication was on the process level. This was especially the case in one on one communication.

3.2 Actors

production manager could have been in the team instead of the R&D manager, but regarding to the situation at Company X this was not realizable’. The functional managers and two of the project team members agreed that ‘in an ideal situation the production manager should have been on the team’. From the minutes of the project initialization meeting can be derived that the production manager had no time to participate in the project. The managing director felt there was ‘lack of creativity’ within the team and that a ‘leader’ was missing. The participant observations support this. According to the managing director, there were ‘not many alternatives for the forming of the team’ and ‘the objective and time path of the project had to be adjusted to that’. As a point of improvement regarding to the team composition the managing director proposed an ‘external project leader’. However, this was not possible due to ‘financial considerations’, according to the managing director.

3.2.1 Level of role clarity

3.2.2 Level of knowledge and skills

The project coordinator had no experience in this line of work and therefore stated that her ‘knowledge and skills were lacking’ to fulfill the role of coordinator. To deal with this, the project coordinator sought advice from fellow team members and/or the managing director. The project coordinator stated that ‘sometimes it felt like I needed to be the leader of the project, but because I was inexperienced I simply could not fulfill that role’. The rest of the team members and the functional managers felt they had a ‘sufficient’ to ‘excellent’ level of knowledge and skills for their roles. If their knowledge and skills were lacking, they sought advice from fellow team members or the managing director. However, the participant observations and minutes of the termination meeting showed that the integration on the production floor was difficult, because the production manager was absent during the movement to the Company X location. The managing director stated that he had ‘enough experience, skills and knowledge about acquisitions’. He however felt that his ‘knowledge about delegating responsibilities towards a project team’ was lacking. The managing director tried to cope with the lack of experience of the project team by ‘making a concept plan of action and clarifying this’. Further he tried to ‘not involve’ himself ‘too much’, while giving the team ‘the opportunities for asking questions’.

3.3 Steering

Regarding to points of improvement on the steering, one project team member stated: ‘there could have been tighter control over responsibilities, in order to have insight in the project status at every moment’. The managing director had the opinion that ‘at least supervision on the execution, but also the accountability and responsibility could have been arranged better’. The functional managers expected more involvement and as one of the functional managers expressed it: ‘clearer, more structured information about the course of the project and the expectation concerning the people outside this project’.

3.3.1 Type of steering

location) became more and more a point of discussion. Towards the end of the project the initial plan of action was no longer used for steering.

TABLE 3

Steering, by whom and type Steering

The project by the managing director, within the project team by the team itself The project team

In the beginning by the managing director and later on by agreements and discussion within the project team, not by one person

The managing director

The project was steered by the project team, the project team was steered by the managing director On the background probably in a high level by the managing director

By whom

Unclear, regarding to the involved people

Delegating without control, self steering by project team

All kind of ways: supporting, delegating, discussing and instructing Deliberating

Unclear

Telling, delegating and controlling

By a plan of action and by discussion, with a clear division of tasks Task postulating, results focused

Type

In a resolute way

3.3.2 Level of goal clarity

4. DISCUSSION

In this chapter the results from chapter 3 are linked to the theory as described in chapter 1. The relations of the conceptual model, as represented in figure 2 (paragraph 1.3), are the basis of this discussion. Consequently, this chapter is structured into the following paragraphs: 4.1 Communication and meaningfulness, 4.2 Actors and 4.3 Steering.

4.1 Communication and meaningfulness

4.1.1 Communication style

Although most project team members experienced open communication, one project team member, the managing director and the functional managers did not agree on this matter. Therefore, the communication style was not completely open during the project. Because of the frictions regarding to the communication style discussed above, the communication style during the project did not optimally contribute to the effectiveness. The theoretical assumption that the more open the communication style, the more the effectiveness of a post acquisition integration project increases is therefore still correct. This implicates that if the communication style had been perceived as being more open, this would have increased the effectiveness of the project.

4.1.2 Focus of communication

In chapter 1 was stated that the more the focus of communication is towards goals and answering the why-questions, how-questions, and what-questions regarding to those goals, the more the effectiveness of post acquisition integration increases. The corresponding sub question was: To what extent was the focus of the communication sufficient for effectiveness during the post acquisition integration project of Company X? Though the communication within the project team was focused towards the quick movement to the Company X location and also the integration of activities, the content of the communication was more focused on the steps necessary to achieve the goals (the what-questions) than on the goals itself (the how- and why-questions). The why-questions regarding to the goals were never discussed or answered; the initial plan of action was received by the project team as an assignment rather than as something to alter, discuss and make into a project plan. According to the managing director ‘the project team should have asked/discussed the how-question more often, to increase the quality of the working method’. The result was that the project team ‘seemed to work isolated and did not optimally make use of the available resources’. Concluding actions and to do lists was the focus and content of meetings rather than the progress towards the overall objective of the project. The focus of the communication with the managing director was on responsibilities and the continuation of the production, rather than focused towards the goals themselves. The continuation of the production was in fact a precondition for achieving the goals. The actual moving to the Company X location and also the integration of activities became points of discussion in meetings towards the end of the project. The functional managers broached this by stating that the status of the project was the main focus of the communication. This resulted in the ‘production side’ being ‘under-exposed’ according to one functional manager. Because the communication according to the functional managers was more focused on the project team itself than on the entire organization, the objective of ‘integration’ was not the focus of communication between the functional managers and the project team.

the issues explained above, the focus of communication during the project did not optimally contribute to the effectiveness. The theoretical assumption that the more communication is focused towards goals and answering the why-questions, how-questions and what-questions regarding to those goals, the more effectiveness increases, is therefore still correct. This implicates that if the focus of the communication had been more on the goals of the project and more towards answering the why-questions and how-why-questions it would have increased the effectiveness of the project.

4.1.3 Level of participation in communication

As stated in the theory chapter the higher the participation level, both horizontally and vertically, the more the effectiveness of post acquisition integration increases. The sub question regarding to this was: To what extent was the level of participation in the communication sufficient for effectiveness during the post acquisition integration project of Company X? Each time there was communication, the participation in the communication was experienced as equal or high. However, the managing director and the functional managers expressed that they wanted to be more involved in the communication. One functional manager felt that he should have been involved earlier on in the project. This influenced the effectiveness in a negative way, because the integration was hindered by the late involvement of the production manager. This indicates that the frequency of the communication is a factor of influence and that the level of participation alone is not enough. Both the managing director and the functional managers preferred to be more often invited to meetings, they wanted to be more frequently involved. Also a project team member expected a more active attitude from functional managers towards the communication; this indicates that this team member expected a more active participation and involvement of the functional managers during the project. Because of these issues about the level and frequency of the participation in the communication, this did not optimally contribute to the effectiveness of the project. The theoretical assumption that the higher the participation level, both horizontally and vertically, the more the effectiveness increases is therefore still correct. This implicates that there could have been more frequent participation and a higher level of participation in the communication. This would have increased effectiveness.

4.1.4 Level of information sharing

Similar to the focus of communication, information that was shared was more focused on project status rather than on the goals of the project. Furthermore, the accuracy and timeliness of the information can be questioned. The managing director questioned this when he stated: ‘I did not had the feeling that information was withdrawn from me on purpose, but sometimes information sharing was delayed’. The functional managers shared the opinion that the information sharing was insufficient. Because of these issues about the level of information sharing, this did not optimally contribute to the effectiveness of the project. The theoretical assumption that the higher the level of sharing timely and accurate information that is orientated towards goals, the more effectiveness increases is therefore still correct. This implicates that the level of information sharing could have been higher, more accurate and timely and more focused towards goals. This in turn would have contributed to the effectiveness of the project.

4.1.5 Level of communication

As stated in the theory chapter, the more communication is task orientated on the content level and focuses on group maintenance on the process level, the more the effectiveness of post acquisition integration increases. The sub question regarding to the level of communication was: To what extent was the level of communication adequate during the post acquisition integration project of Company X? Communication during the project was mainly about tasks and activities, thus on the content level. This can be related to the discussed findings above. Concluding actions and status on activities were the focus of communication and the shared information. Communication on the process level was incidentally, but absent in the communication with functional managers. Thus the level of communicating was mainly on the content level and incidentally on the process level. The project team members, managing director, and functional managers did not express issues with the level of communication. Furthermore they dit not express that they had wanted more communication on the process level. Whether the level of communication had an influence on the effectiveness of the project is unclear.

4.2 Actors

taken over by the project coordinator, who felt not fit for the job as project leader due to lack of experience. Also the managing director seemed to partially exercise the role of project leader, because he was the driving force of the project and he did the preparation of the intervention plan. According the managing director a ‘leader’ was missing. The participant observations support this. Because of the absence of a project leader ‘it was unclear who led the project and when something fell outside the functional area’s it was not clear who should take responsibility’ according to the participant observations. An effect of this was that ‘sometimes necessary actions were not taken’ and that ‘decision-making outside functional areas went slow’. Because of these issues, the absence of the fulfillment of the role of project leader hindered the effectiveness of the project. The theoretical assumptions are therefore still correct. The theoretical assumptions where: 1) the more a project leader takes the role of the driving force of the post acquisition integration project, and in doing so addresses an accountability gap by taking co-responsibility for the preparation and coordination of the intervention plan, and engages others in the project, the more effectiveness increases and 2) the more the project leader has project knowledge and skills and is fulltime available for the project, the more effectiveness increases. It is plausible to state that if there had been a project leader, or someone to fulfill this role, this would have increased the effectiveness of the project.

4.2.1 Level of role clarity

In the theory chapter was stated that the more project team members roles are clear, the more the effectiveness of a post acquisition integration project increases. The sub question regarding to this was: To what extent was the level of role clarity regarding to the roles of the project team members sufficient for effectiveness during the post acquisition integration project of Company X? The results showed that the roles of the project team members and functional managers were clear. Everyone understood what they had to do regarding to the project. To one functional manager the roles of the projectcoordinator an the personell and administration manager were not clear. A project team member stated about this that the division between the personnel and administration manager and the project coordinator was not entirely clear. This however did not seem to have hindered the project, because no effects of this were mentioned by the interviewees. Because of this, the role clarity of the project team members did contribute to the effectiveness of the project. The theoretical assumption that the more project team members roles are clear, the more the effectiveness of a post acquisition integration project increases is therefore still correct.