Factors that influence Readiness and Resistance during a merger: Research performed at ABN AMRO during the merger with Fortis Bank Nederland

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Factors that influence Readiness and Resistance during a merger:

Research performed at ABN AMRO during the merger with Fortis

Bank Nederland

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Gurbinder Singh Garcha Studentnumber: S1760866 Magnoliastraat 7 8924 GC Leeuwarden Phone: +316 3477 3586 Email: g.singhgarcha@jatt.nl Supervisor/ university Dr. C. Reezigt Submitted: August 2010

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University of Groningen, Faculty of Economics and Business – 2 –

Author Gurbinder Singh Garcha Studentnumber S1760866

Contact details Magnoliastraat 7

8924 GC Leeuwarden, The Netherlands T: +316 3477 3586

E: g.s.garcha@student.rug.nl / g.singhgarcha@jatt.nl

University of Groningen

Faculty of Economics and Business

Master Thesis, Msc. Business Administration, specialization: Change Management Supervisor Dr. C. Reezigt, Associate professor

2nd_supervisor _{Drs. H. van Peet, Lecturer}

ABN AMRO Bank N.V.

Information Services, Corporate Functions, Services

Supervisor Mr. K. Morlog, Project manager Information Services 2nd _supervisor _{Mrs. C. Romkema, Portfolio manager Information Services}

Preface

This thesis is the end product of my studies for my Master’s degree ‘Business Administration in Change Management’ at the University of Groningen (RUG). My time at the university has been very enjoyable and worthwhile in both an educational and a personal sense. The skills and knowledge that I have obtained during this period at the university will certainly come into practice during the rest of my life.

I want to thank Koen Morlog and Carolien Romkema for making this thesis possible at ABN AMRO. Furthermore I would like to thank all my colleagues who made my stay at ABN AMRO pleasant and interesting. The thesis gave me the opportunity to do my research in a dynamic and changing environment, in the field that will be my future profession. A special thanks goes to my fellow students Karin and Eline and my professor Dr. Reezigt with whom I had the pleasure to work with during my thesis. Furthermore I want to thank my family and friends for supporting me during the writing of my thesis.

Gurbinder Singh Garcha Amsterdam, August 2010

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TITLE

Factors that influence Readiness and Resistance during a merger: Research performed at ABN AMRO during the merger with Fortis Bank Nederland

RESEARCH QUESTION

Do communication, management support, and participation influence readiness for change and resistance during a merger?

ABSTRACT

Resistance and Readiness for Change are interesting topics for change consultants. This research investigates three factors that influence resistance and readiness for change during the I&I change initiative at ABN AMRO, which is a change project to merge the IT services of ABN AMRO with the IT services of Fortis Bank Nederland. The research took place during the pre-stages of the legal merger with Fortis Bank Nederland, planned for the 1st_{of July 2010.}

This paper investigated three factors that according to the literature influence readiness for change and resistance during a merger. These three factors are: communication, management support and participation. In order to determine whether and how these factors influenced resistance and readiness for change during the merger, a questionnaire was distributed among the employees of ABN AMRO to collect data. The outcome of this study indicates that communication is one of the factors that significantly influenced resistance, while the influence of participation and management support could not be proved significantly. However, communication, participation and management all had a significant influence on readiness for change.

KEYWORDS

1) Resistance 4) Participation

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University of Groningen, Faculty of Economics and Business – 4 – TABLE OF CONTENT 1. INTRODUCTION ... 5 1.1ORGANIZATION... 5 1.2CHANGE PROJECT... 5 1.3MOTIVE OF RESEARCH... 6 1.4RESEARCH QUESTION... 6

2. THEORETICAL FRAMEWORK AND CONCEPTUAL MODEL... 7

2.1ORGANIZATIONAL CHANGE... 7

2.2RESISTANCE... 9

2.3READINESS FOR CHANGE... 10

2.4COMMUNICATION... 10 2.5PARTICIPATION... 11 2.6MANAGEMENT SUPPORT... 12 2.7CONCEPTUAL MODEL... 13 3. METHODOLOGY... 15 3.1DATA COLLECTION... 15 3.2DATA ANALYSIS... 16 4. RESULTS... 19 4.1CORRELATION... 19 4.2REGRESSION... 19 5. CONCLUSION ... 22

5.1CORRELATION BETWEEN READINESS AND RESISTANCE... 22

5.2FACTORS THAT INFLUENCE READINESS FOR CHANGE... 22

5.3FACTORS THAT INFLUENCE RESISTANCE... 23

5.4CONCLUSION... 24

6. DISCUSSION AND LIMITATIONS ... 25

6.1DISCUSSION... 25

6.2LIMITATIONS... 26

APPENDICES... 27

I.QUESTIONNAIRE... 27

II.DATA ANALYSIS... 30

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1. INTRODUCTION 1.1 Organization

This study has been performed at the ABN AMRO Bank, during the legal merger with Fortis Bank Nederland. ABN AMRO has a lengthy history that started back in 17th_{century with the}

establishment of the Dutch Trading Society. In 1991 the banks ABN (Algemene Bank Nederland) and AMRO (Amsterdam en Rotterdam) merged to form the ABN AMRO Bank. Until 2007, ABN AMRO was an independent player on the national and international market. A new chapter started for the bank, when in 2007 a consortium of banks consisting of Santander, Fortis Bank and Royal Bank of Scotland (RBS), bought the ABN AMRO bank. Initially, the bank was to be divided between the three players and the necessary reorganization to achieve this goal was started. Unfortunately, these plans coincided with the first signs of the worldwide financial crisis which, coupled with the fall of the worldwide economy, led Royal Bank of Scotland and Fortis Bank into financial trouble. Support from the banks respective local governments (The Netherlands, Belgium and United Kingdom) managed to save both banks from bankruptcy. In October 2008, ABN AMRO and Fortis Bank Nederland were eventually bought by the Dutch government, which led to a new reorganization within the organization. In December 2009, the European Commission gave its final permission to integrate ABN AMRO Bank and Fortis Bank Nederland into one organization, under the brand name of ABN AMRO, through which all associations with the brand name of Fortis will be removed. This new change initiative will undoubtedly affect all parts of the organization in both ABN AMRO as well as Fortis Bank Nederland.

1.2 Change project

One of the upcoming integration projects within the bank is to integrate the Internet & Intranet (I&I) platforms of ABN AMRO and Fortis Bank Nederland into one communication platform for all clients and employees. Currently there are various types of ABN AMRO and Fortis Bank Nederland websites, mostly locally managed by the business units. The business units have a great deal of freedom to manage the content, strategy and brand of these websites. In the near future all business units will have to work in a more centralized way, with the use of standardized systems/ platforms, procedures and compliance rules. This change project will not only affect the hard aspects of the organization, but also the soft aspects inside the business units. To reduce resistance within the business units and among their employees, plans have been made to convince them to support the change initiative. Due to the changes in working style and the reduction of ownership, the business units are hesitant to conform to the proposed changes. The main goal of the I&I change project is to reduce the large amount of websites/ portals, servers and software licenses used by the current organizations for their Internet & Intranet platforms. This in effect will lead to reduced cost for the IT services and at the same time it will increase the standardization of processes within the new organization. Furthermore the integrated platforms will assist in communicating the new vision of the organization. Therefore the successful integration of the I&I change project is a crucial event for the new organization.

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integrating all IT change projects regarding the merger with Fortis Bank Nederland. The management of Information Services is therefore very interested to know whether employees of the business units are resisting the I&I change initiative and how much support/ willingness there is for the I&I change initiative.

1.3 Motive of Research

Resistance and readiness for change are topics of great interest in relation to this management question. The assumption of the research is that the change initiative will increase the level of resistance amongst the employees and lower the willingness to accept the change. This paper will assess the level of resistance and readiness for the change initiative and furthermore will assess which factors influence resistance and readiness. Kotter and Schlesinger (2008) discuss several strategies in dealing with resistance, such as education and communication, participation and involvement, facilitation and (management) support, negotiation and agreement. The three factors of this investigation will be: management support, communication and participation. Three reasons led to the choice of focusing this research on these three factors: (1) According to the literature management support, participation and communication play a crucial role during a change project (2) The factors can all be influenced by the managers through pragmatic methods or techniques, which make them ideal for this investigation (3) Instruments to asses these factors exist. This paper will therefore primarily focus on these three factors and their influence on readiness for change and resistance. Through data collected from the business units/ departments within ABN AMRO, an analysis will be made of the level of resistance and readiness for the upcoming I&I change initiative. The data will furthermore aid the research, by assessing the extent of influence that these factors have on resistance and readiness for change.

These factors and all related aspects will be discussed in-depth in the theoretical part of the paper. The second part of the paper introduces the conceptual model and the methodology through which the research is conducted. In the final part of the paper the collected data will be analyzed and the findings will be discussed.

1.4 Research Question

The main objective of this research is to investigate how communication, management support and participation influence the readiness for change and resistance inside the business units of ABN AMRO during the (I&I change initiative) merger with Fortis Bank Nederland.

The research question therefore is formulated as:

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2. THEORETICAL FRAMEWORK AND CONCEPTUAL MODEL

The readiness for change and resistance among employees can be influenced by various factors. According to the literature management support, communication and participation are all aspects that can lower resistance and create higher levels of acceptance for an upcoming change project. The opposite is also true; if these aspects are not handled correctly they can derail or create a situation in which change projects can fail to be implemented. The literature also indicates that other factors do have an influence on the level of resistance and readiness. Kotter and Schlesinger (2008) mentioned education and communication, participation and involvement, facilitation and (management) support, negotiation and agreement as factors that can influence resistance in a positive manner. The focus on management support, participation and communication is mostly due to their practical and managerial implications. All factors can be adjusted through methods or techniques to fulfill the requirements of the organization and therefore will be investigated in-depth in this paper. Through transparent and open communication, involving individuals in the change project and with support and involvement from management, the forces of resistance will reduce and the forces in favour of change will increase. These factors counteract the reasons of an individual to resist the change by providing them with information through which they better understand the change. Through active involvement, the level of coerciveness can be lowered, and leaders can decrease the levels of resistance by being less coercive and by involving the individuals influenced by the proposed change. The management can actively influence these factors, which make these factors attractive for the management from a pragmatic point of view. By researching the extent of these factors and their influence on resistance and readiness, managers can assess which factors are relevant and how many resources to allocate.

The theoretical framework will start by making clear the foundations of organizational change, resistance and readiness for change. This will be followed by an elaboration of the factors; communication, participation and management support. Hypotheses will be introduced during the theoretical framework, to test the influence of the factors on resistance and readiness for change. Furthermore two hypotheses will be introduced to examine if there is a relationship between readiness and resistance.

2.1 Organizational change

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adoption and implementation of the change. Lewin’s (1951) model of change describes the three phases through which a change occurs. The unfreeze, change and refreeze phases of the model describe the different phases of change. Successful implementation of change requires all phases being met. Armenakis et al. (1999) also argues that organizational change unfolds through three stages. In the first stage the employees are prepared for the change and acceptance for the change is stimulated. The second stage is the actual implementation and adaptation of the change by employees. The third and final stage is when the organization reinforces the change by implementing norms which enforce the change. Figure 1. shows the combined models of Lewin and Armenakis and the three stages of change.

This model of change is widely used by change agents to design and implement their change strategy, Thomas (1985). Whereas resistance is present during all phases of change, readiness for change looks to focus particularly on the pre-stages of a change (first phase). The levels of resistance can fluctuate during the change, depending on various factors. Change agents in the first phase of the change try to gain support for the change, by increasing the readiness for change and lowering the resistance.

Resistance is based on emotions that individuals feel towards a certain situation. This is in line with Damasio (1994) who argues that “emotion is inseparable from the cognitive process, playing a central role in perception, decision and behaviour”. Many scholars, including Bartunek (1993), Gersick (1991), Lazarus (1991), Frijda (1996), Huy (1999) and Seo (1999) have stressed that organizational behaviour and change are strongly influenced by emotions, in Devos et al. (2002). People working in an organization that is in the process of change are naturally concerned about their situation; “Will the new situation become better or worse for me”, Devos et al. (2002). Liu and Perrewe (2006) state that “If individuals have devoted much time and energy to the implementation of the current strategy, and have psychologically identified with it, it will be emotionally challenging for them to accept the fact that the status quo is going to be changed”. Dirks et al. (1996) found “that individuals are likely to form feelings of psychological ownership in

Unfreeze Change Refreeze

Readiness for change

Resistance

Readiness Adoption Institutionalization

Lewin Armenakis et al.

Figure 1 : Lewin’s model of change & Armenakis model of readiness

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connection with their work. It is reasonable to expect that, when employees expect that the change initiatives will alter the current status of relationships, or will do harm to those who have strong ties with them, they are likely to perceive the changes as threats, which will further evoke negative emotions”.

2.2 Resistance

Resistance is a challenging theme for managers and change consultants during a change initiative. Due to resistance from employees, change projects often fail or are not completely implemented. Folger & Skarlicki (1999) claim that "organizational change can generate scepticism and resistance in employees, making it sometimes difficult or impossible to implement organizational improvements". This is also true for the I&I change initiative within the investigated organization, therefore assessing the level of resistance and readiness is an important indicator for the management. By quantifying the level of resistance and readiness, the management can take appropriate steps to positively alter the level of resistance.

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2.3 Readiness for change

Armenakis et al. (1993) describes readiness for change as the “organizational members’ beliefs, attitudes, and intentions regarding the extent to which changes are needed and the organization’s capacity to successfully make those changes”. Wissema et al. (1993), describe readiness for change as “Dutch – Veranderingsbereidheid uit zich in de waarneembare bereidheid van mensen om mee te werken aan de aanpassingen die voortvloeien uit de eisen die de dynamiek van de ‘omgeving’ van een organisatie aan de organisatie stelt”. According to Armenakis et al. (1993; 1999) readiness for change is an important factor in the first stages of a change initiative. The initial support from employees can influence the final result of the change initiative. Although the concept of ‘readiness’ may have been introduced for the first time by Jacobson (1957), the foundation for readiness as a unique construct has been embedded within several theoretical models, in Armenakis et al. (1993). Holt et al. (2007) developed four dimensions of the change process. The first dimension is the 'process' which describes the steps that are needed to implement the change successfully and the extent to which employee participation is permitted. The second dimension is the organizational change 'content'. This dimension refers to the attributes and the characteristics of the change that is being implemented. The third dimension is the organizational 'context' which consists of the conditions and environment in which employees function. The fourth and final dimension is the 'individual attributes' of the employees. Holt et al. (2007) also describe five factors that have an influence on readiness for change. These factors are: (a) self efficacy (b) appropriateness (c) management support (d) personal valence and (e) discrepancy. The level of readiness increases when management is personally involved in the change and when they involve individuals in the change process. When management communicates transparently and shares information about the change with the individuals who are influenced, the individuals will be more willing to change. This leads to imply that by introducing methods and techniques to increase the forces of readiness for change, the level of resistance will decrease and with that the chances for success for the change initiative will grow. Backer et al. (1995) describe it as “successful efforts to enhance readiness can prevent active resistance from occurring in the first place”. The change initiative inside the investigated organization is in the pre-stages of the change. Therefore readiness for change is a crucial factor in regard to this study. The theory leads to conclude that, if the readiness for a change initiative is high, the levels of resistance among the employees will be low, and vice versa. As explained in the resistance paragraph this indicates a relationship between resistance and readiness. According to Self (2007) resistance and readiness are not located on the same linear continuum. This study will imply that there is a linear correlation between both factors. To investigate this correlation this leads to construct the following hypotheses:

Hypothesis 1: A low level of resistance will correlate to a high level of readiness among employees. Hypothesis 2: A high level of the readiness will correlate to a low level of resistance among employees. 2.4 Communication

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activities or forces of two or more persons”. Redding & Tompkins (1988) state that “…organizational communication researchers have striven to understand the means whereby an individual or organization could achieve effectiveness”. When the message of change is communicated by the management in a transparent and open manner, the level of resistance will decrease. This is in line with Liu & Perrewé (2006) who state that “Employees' willingness to accept change depends heavily on whether adequate information is communicated in a timely fashion. It was suggested that timely communication reduces individuals' sense of uncertainty in the primary appraisal stage, and fosters positive emotions in the secondary appraisal stage”. According to Armenakis et al. (1993) ‘persuasive communication’ is the act of “transmitting information through various channels increasing the support for a change initiative”. Armenakis et al. (1993) also state that persuasive communication may not be as effective as active participation, when account is taken of the self-discovery aspect. According to Gist (1987) an individual is more willing to accept information when information is acquired from different sources, especially if these sources are of an external nature. Lippitt et al. (1986), Wissema et al. (1993), Boonstra & Steensma (1996), Stoter (1997), Cummings & Worley (2001) and Croft & Cochrane (2005) all argue that the importance of information sharing and communication during a period of change is not fully recognized by many authors. According to Hedde et al. (2007) good communication is essential for the success of a change project. This affirms the conception, that transparent and open communication before and during a change initiative increases the readiness for change (acceptance of a change) and lowers the resistance among employees. This leads to construct the following hypotheses for the research:

Hypothesis 3a: Open communication and informing employees about the change will positively influence readiness for change among employees.

Hypothesis 3b: Open communication and informing employees about the change will positively influence resistance among employees.

2.5 Participation

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(1999) identify three forms of active participation: enactive mastery, vicarious learning, and participation in decision making. Since some employees are more inclined to favour organizational changes than others, it goes without saying that the accepted form of participation can be different for each individual. Those with direct influence tend to become affectively committed to the change effort and support the change overtly, Miller & Monge (1985). Those who participate in the change have better access to information than those who do not. This access to information makes it possible for participants to better understand the change and its objectives. Therefore, it is reasonable to state that individuals who participate during a change are less resistance to the change. Holt et al. (2007) state that individuals who participate in the planning and implementation of the change often have the opportunity to influence the change and will be positively associated to readiness for change. According to Coch & French (1948) participants who aid in the planning of a change initiative should score higher on a valid measure of readiness for change than non-participants. Armenakis et al. (1993) and McNabb & Sepic (1995) argue that “...participation at work at a general level to be related to commitment to change”. This confirms the notion that the more involved employees are before and during the change initiative, the higher the readiness for change and the lower the level of resistance will be. This conclusion leads to construct the following hypotheses:

Hypothesis 4a: Involving employees in the change will positively influence readiness for change among employees.

Hypothesis 4b: Involving employees in the change will positively influence the resistance among employees.

2.6 Management Support

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aspects a change agent or manager possesses, the more willing he or she is to a change. Agle et al. (1999) and Hambrick & Mason (1984) suggest that management can shape the way of leading. Through shaping the organization, management can shape the level of resistance and readiness for change. They can create an environment in which communication and participation is allowed. Devos et al. (2002) affirms that the ‘leadership style’ adopted by the manager during a change process is an important element. Support from the management during a change process enables the individual/ group to confront new challenges. During the change initiative the manager plays a key role in the communication process, Kotter, (1995). Devos et al. (2002) state that “organizational members will not take change efforts serious, if management does not actively support the change process”. The less willing the management is to involve employees and to communicate openly during a change, the higher the level of resistance will be among employees and the lower the readiness for change. Kreitner & Kinicki (2000) state that change projects are less successful when the management fails to keep employees informed about the process of change, in Devos et al. (2002). This indicates that the more involved and supporting the management is in regard to the change, the higher the readiness for change among employees. Furthermore the more involved and supporting the management, the lower the resistance amongst the employees will be. This conclusion leads to construct the following hypotheses:

Hypothesis 5a: Committed and involved leaders will positively influence the readiness for change among employees.

Hypothesis 5b: Committed and involved leaders will positively influence the resistance among employees.

2.7 Conceptual Model

As elaborated in the theoretical framework, communication, participation and management support all have in some degree an influence on the level of resistance and readiness for change. The constructed hypotheses will provide the foundation to investigate the influence that these factors have on resistance and readiness for change and with that aid in answering the main research question.

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By combining all hypotheses the following conceptual model is constructed. See figure 2. Conceptual Model.

The conceptual model is a visual representation of the hypotheses and their interaction on each other. The three independent variables – communication, participation and management support - are located in the centre of the model whilst, resistance and readiness for change (the two dependent variables) are located on each side of the model. The extent of the correlation or influence between the factors will be indicated through the data which is collected. The analysis of the data and the results will be discussed in the following chapters.

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3. METHODOLOGY 3.1 Data Collection

Data used for this research was obtained through a survey carried out among the employees of several business units within the ABN AMRO Bank. The business units/ departments that will be directly influenced by the I&I change initiative are: private clients, corporate communication, content office and the channels & infrastructure departments. All respondents of the survey were employees who were directly influenced by the change initiative in ways of changes in their; work style, systems or procedures. The change initiative was performed to integrate all IT activities of ABN AMRO with the IT activities of Fortis Bank Nederland. The data collection was specifically targeted to obtain information for this research. By using the collected data the influences of the independent variables (communication, participation and management support) on the dependent variables (readiness for change and resistance) could be tested. In addition the relationships between the two dependent variables was also tested.

The survey was constructed through the use of three questionnaires developed by Holt et al. (2007), Bouckenooghe et al. (2009) and Giangreco (2002). The questionnaire by Holt et al. (2007) was used to measure the readiness for change, appropriateness, change efficacy and personally beneficial among the employees. Furthermore the questionnaires by Bouckenooghe et al. (2009) and Giangreco (2002) were used to measure leadership (management) support, communication, participation and resistance, see appendix I. Questionnaire. The questionnaires of Bouckenooghe et al. and Giangreco were integrated with the questionnaire of Holt et al. to form the survey. The reason for the use of the questionnaires devised by Holt, Bouckenooghe and Giangreco is (1) they have been tested in the field (2) they examine the factors needed for this study. Eisenberger et al. (2002) state that the items of management support will measure the extent to which employees feel that their leaders support the change. Miller et al. (1994) state that the items of communication will measure how change is communicated. Lines et al. (2004) state that the items of participation measure the extent to which employees are involved and informed about decisions that directly concern them. The respondents could indicate their level of agreement with an item through a 7-point Likert scale. The 7-point response ranged from “Totally agree” to “Totally disagree”.

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The survey was distributed among the employees of the four business units, which are directly affected by the change initiative. The management of Information Services estimated that a total of 114 employees will be affected by the change initiative. From the estimated 114 employees, 97 respondents were able to participate in the survey (excluding management). The survey was available during three weeks through a personal hyper-link on the internet. Data was collected anonymously and no personal information was shared without the consent of the respondent and the organization. This also meant that the workplace (business unit), age, sex, years of employment of the respondent could not be asked in the survey. The use of a personal hyper-link was chosen (1) to ensure that every respondent filled in the survey only once (2) only respondents influenced directly by the I&I change initiative filled in the survey. All respondents were approached by an e-mail in which they were asked to fill in the survey. After one week only 31 respondents had filled in the survey. Through a reminders by phone and e-mail this number increased to 67 respondents in total. This resulted in a response rate of 65%. From the 67 responses two responses were incomplete. One respondent skipped one item in the readiness for change part and another respondent skipped all the items of participation. Because all other items were filled in properly by both respondents, both responses were used in the dataset.

Case Summary

Valid Missing Total

N Percent N Percent N Percent

Participation 66 98.5% 1 1.5% 67 100.0% Communication 67 100% 0 0.0% 67 100.0% Management Support 67 100% 0 0.0% 67 100.0% Resistance 67 100% 0 0,0% 67 100.0% Readiness for Change 66 98.5% 1 1.5% 67 100.0% Table 1: Case Summary- Respondents

3.2 Data Analysis

The first step in the data analysis was to reverse the codes of all negatively formulated items. All items of resistance were formulated in a negative sense, as well as some items of management support and participation. These items were recoded to point in the same direction as all other items. All recoded items are indicated with a (R) and can be found in appendix I. Questionnaire.

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60%. However the items did not separate into two or more components. De Wagt (2010), divided the items of resistance into two separate components: activity items of resistance and attitude items of resistance. Dividing the items according to De Wagt (2010) led to a score of 82.42% on the factor analysis and .888 on the Cronbach α for the activity items of resistance. The attitude items of resistance scored 58.41% on the factor analysis and .628 on the Cronbach α. This result would lead to the dismissal of all items of attitude to resistance and acceptance of all items regarding activity to resistance. Combining all items led to a 2.16% lower score on the factor analysis than required; the Cronbach α (.845), Barlett’s test (.000) and KMO-MSA (.799) and the Scree Plot were all sufficient. This led to the acceptance of all items of resistance. A factor analysis on the items of management support led to the separation of the factor into two components; one with a score of 38.02% and one with a score of 66.76%. However the highest score led only two items pass. After an examination of all items, no clear grouping could be determined. This resulted in the use of the method of dismissal of the weakest items. After experimentation, the factor analysis on management support (items 2, 3, 4 and 6) led to a score of 62.48% and a Cronbach α of .779, which is sufficient to state that there is a strong enough correlation between the items and that they are reliable enough to describe management support as a factor. A factor analysis on the items of participation led to a diffused result. The items of participation separated into four components, which indicates that the items are not investigating the same subject. Analysis showed some grouping with regard to involvement and input delivery. These groups were tested, however they did not provide sufficient results to pass the factor analysis and Cronbach α. Experimenting with various combinations in due course led to five items (items 5, 6, 7, 8 and 11) that correlated strongly enough to pass the factor analysis as well as the Cronbach α. In total eight of the 35 items were removed from the study. Two items of management support and six items of participation were removed.

Table 2. shows a summary of the factor analysis and Cronbach α (reliability analysis).

Table 2: Factor analysis & Cronbachs alpha

The next step in the data analysis was to investigate the normal distribution of all factors. To determine if all factors were normally distributed, a two-tailed Kolmogorov-Smirnov (K-S) test was conducted on all factors. The normal distribution test indicated that all factors were normally distributed (> .05; two-tailed). After close examination, communication had a normal distribution of 0.086 which is enough to conclude that this factor is normally distributed based on a two-tailed test. Based on a one-tailed test, communication would not be normally distrusted (.043), which is just lower than the required .05. To investigate this discrepancy in-depth a Quantile-Quantile (Q-Q) plot and box-plot were generated to display

Factor analysis

% of Variance Bartlett’s Sig. KMO-MSA

Cronbach α

Participation 60.25 % .000 .837 .834 Communication 65.05 % .000 .992 .919 Management support 62,48 % .000 .721 .779

Resistance 57.84 % .000 .799 .845

Readiness for change 65.12 % .000 .776 .813

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the differences between the data and the expected outcome (normal distribution). After close examination of the Q-Q plot and box-plot no evidence could be found to dismiss communication. This leads to conclude that all factors are normally distributed. See appendix II: Data analysis for detailed figures of all Q-Q plots and box plots.

Table 3. shows a summary of the normal distribution of all factors.

The outcome of the data analysis is that all remaining items are significantly distributed (normal), reliable and relevant, to be used for the purposes of this research. Therefore all remaining items are combined to form new variables in regard to their factor (RES = resistance, RTC = readiness for change, MS = management support, COM = communication and PAR = participation).

Normal Distribution Asymp Significance (two-tailed) Participation .276 Communication .086 Management support .222 Resistance .318

Readiness for change .162

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4. RESULTS

The previous chapter determined the correlation between the items, to conclude as whether the combined items could describe a factor. This chapter will test the correlation and regression between the factors and conclude whether there is a relationship between readiness and resistance (hypotheses 1 and 2) and to what extent the factors influence readiness and resistance (hypotheses 3, 4 an 5).

4.1 Correlation

The Spearman’s correlation test (one-tailed) was performed to investigate the correlation between the factors.

First, the test showed a strong correlation between resistance and communication (+.362; p-value = .001). The test furthermore determined a correlation between resistance and participation (+.228; p-value = .033), however no correlation could be found between resistance and management support (+.187; p-value = .065).

Secondly, readiness for change showed a strong correlation with all factors. Readiness for change has a strong correlation with management support (+.353; p-value = .002), communication (+.494; p-value = .000) and participation(+.460; p-value = .000).

Thirdly and finally, a significant correlation was found between readiness for change and resistance (+.246; p-value = .023). The correlation between resistance and readiness for change indicates to be positive. This would imply that if there is resistance among the employees, they are also willing to change. This made no logical sense and after close examination the cause was found in the recoding process. As all items of resistance were re-coded, this resulted in a positive correlation between readiness and resistance. Therefore the correlation can be interpreted as a negative correlation instead of a positive correlation (-.246; p-value = .023). A summary of the correlations between the factors can be found in table 4. Spearman’s correlation test.

4.2 Regression

Next to a correlation, a regression analysis was performed to analyse how much influence communication, management support and participation have on resistance and readiness for change.

All factors showed to have a significant influence on readiness for change. Communication had a significant variation of 27.6%, (p-value = .000; β = .423) on readiness for change, while management support significantly explained 17.3%, (p-value = .002; β = .368) of the variation on readiness for change. Participation also had a significant influence on the variation of readiness for change of 23.8%, (p-value = .000; β = .382).

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University of Groningen, Faculty of Economics and Business – 20 – Table 5: Regression

significant influence on resistance, (p-value = .053; β = .267). A summary of the regression analysis can be found in table 5. Regression.

Correlation

RES = Resistance, RTC = Readiness for Change, MS = Management Support, COM = Communication and PAR = Participation Regression R Square F Sig. (p) β Resistance Communication .116 8.523 .005 .351 Management support .057 3.897 .053 .267 Participation .053 3.557 .064 .229 Readiness for Change

Communication .276 24.344 .000 .423 Management support .173 13.383 .001 .368 Participation .238 19.648 .000 .382

MS RES RTC COM PAR

Correlation coefficient 1.000 MS Sig. (1-tailed) . Correlation coefficient .187 1.000 RES Sig. (1-tailed) .065 . Correlation coefficient .353** _-.246* 1 _1.000 RTC Sig. (1-tailed) .002 .023 . Correlation coefficient .543** _.362** _.494** _1.000 COM Sig. (1-tailed) .000 .,001 .000 . Correlation coefficient .407** _.228* _.460** _.690** _1.000 PAR Sig. (1-tailed) .000 .033 .000 .000 . Table 4: Spearman’s Correlation test *. Correlation is significant at the 0.05 level (1-tailed).

**. Correlation is significant at the 0.01 level (1-tailed).

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Table 6. presents all descriptive statistics per factor: number of respondents, minimum response, maximum response, mean response, standard deviation and the variance.

Descriptive Statistics

N Minimum Maximum Mean Std.

Error Std. Deviation Variance Communication 67 2.00 6.75 4.9291 .13089 1.07137 1.148 Management support 67 2.25 7.00 5.1306 .11988 .98122 .963 Participation 66 1.00 6.00 4.3697 .13493 1.09614 1.202 Resistance* 67 1.00 6.83 3.9726 .13477 1.10310 1.217 Readiness for change 66 2.50 6.75 5.2197 .10708 .86992 .757

Valid N (listwise) 65 * All items of resistance were recoded.

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5. CONCLUSION

The results of the correlation and regression analysis determined that some factors do influence resistance or readiness for change. The results of the research will be discussed below. To conclude that a factor has significant influence on readiness for change or resistance during the change initiative, the p-value was determined at p < 0.05.

5.1 Correlation between Readiness and Resistance

Hypothesis 1: ‘A low level of resistance will correlate to a high level of readiness among employees’ and Hypothesis 2: ‘A high level of the readiness will correlate to a low level of resistance among employees’, were constructed to examine the relationship between readiness and resistance. In the theoretical framework it was suggested that both factors correlate to each other. The findings confirm that readiness for change correlates significantly (-.246; p-value = .023) with resistance and vice versa. The results lead to conclude that if the level of readiness for a change is increased, the level of resistance among the employees will be lowered, and vice versa. This implies that both factors are to some extent related to one another. The findings in addition revealed that the readiness within the business units is relatively high (5.2 on a scale of 7 points) and the level of resistance is neutral (3.1 on a scale of 7 points, reversed). This suggests that the employees are willing to accept the I&I change initiative and no significant resistance is found among the employees against the change initiative. This leads to conclude that both hypothesis 1 and hypothesis 2 are supported by this research.

5.2 Factors that influence Readiness for Change

Hypothesis 3a: ‘Open communication and informing employees about the change will positively influence readiness for change among employees’, was constructed to examine the influence that communication had on readiness. The correlation as well as the regression analysis indicated a significant correlation and an influence on readiness. This concludes to state that open communication and informing employees regarding the change initiative, will positively influence the willingness to change among the employees. As a result hypothesis 3a is supported by this research. This outcome is in line with the literature, which also indicated that open communication and informing employees has a positive influence on readiness for change. Armenakis et al. (1993) state that “transmitting information through various channels increases the support for a change initiative”.

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Hypothesis 5a: ‘Committed and involved leaders will positively influence the readiness for change among employees’ was constructed to examine the influence that management support had on readiness. The correlation tests as well as the regression analysis indicated a significant correlation and influence on readiness. This concludes to state that if management is involved and committed to the change initiative, it will positively influence the willingness to change among the employees. As a result hypothesis 5a is supported by this research. Holt et al. (2007) also indicated that management support has a positive influence on readiness for change.

5.3 Factors that influence Resistance

Hypothesis 3b: ‘Open communication and informing employees about the change will positively influence resistance among employees’ was constructed to examine the influence that communication had on resistance. The correlation as well as the regression analysis indicated a significant correlation and influence on readiness. This indicates that when management communicates the change initiative to the employees, it will positively influence the level of resistance among the employees. As a result hypothesis 3b is supported by this research. Hypothesis 4b: ‘Involving employees in the change will positively influence the resistance among employees’ was constructed to examine the influence that participation had on resistance. The correlation determined a significant correlation between participation and resistance. However the regression analysis indicated that participation had no significant influence on readiness. This leads to conclude that no sufficient evidence can be found to support that participation had an influence on the level of resistance during the change initiative. However the relationship between participation and resistance could be established significantly. As a result hypothesis 4b is rejected by this research. This is contrary to the literature, which indicates an influence on resistance. Korunka et al. (1993) argue that “...participation leads to a higher level of acceptance for new technology and a lower level of ‘dissatisfaction’ and stress”. Coch and French (1948) also state that the greater the extents of participation, the more satisfied employees were and the faster they met new goals.

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5.4 Conclusion

The research question of this paper was formulated as:

The general conclusion of the paper is that: communication is one of the factors that significantly influenced resistance, while the influence of participation and management support could not be proved significantly. Communication, participation and management however all had a significant influence on readiness for change. The findings furthermore conclude that the willingness to change within the business units is high (5.2 on a scale of 7 points) and the level of resistance is neutral (3.1 on a scale of 7 points, reversed). This indicates that employees are willing to accept the change initiative and are not resisting the change initiative.

The results of the research have enhanced the conceptual model (Figure 3). Two adjustments were made to the model: (1) The influence the independent factors have on the dependent factors were added (2) The correlation between resistance and readiness for change, and vice versa was added to the model.

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6. DISCUSSION AND LIMITATIONS 6.1 Discussion

The goal of this research was to measure the influence that factors like management support, communication and participation have on resistance and readiness during a merger. The results of this research suggest that various factors did have an influence on the level of resistance and readiness during the I&I initiative. The methodology used in this survey, makes it possible to generalize the results and conclusions to all business units affected by the I&I change initiative. Although it has been established that management support, communication and participation most definitely have an influence on readiness for change, the factors that influence resistance are not fully incorporated in this paper.

The literature states that management support and participation do have an influence on resistance. Korunka et al. (1993) argue that “...participation leads to a higher level of acceptance for new technology and a lower level of ‘dissatisfaction’ and stress”. Whereas Devos et al. (2002) state that “Organizational members will not take change efforts seriously, if top management does not actively support the change process”. The findings of this paper however could not significantly support the claim that participation and management support influence the level of resistance during a merger. The results of the paper therefore are contrary to the literature. An explanation for this discrepancy could perhaps be found in the factor analysis that was performed. The factor analysis did not find all items of participation and management support relevant and therefore two items of management support and six items of participation were removed. The removal of these items could have led to the current outcome; management support and participation have no influence on resistance. To test this assumption a correlation and regression test were performed on both factors, this time including all items. This resulted in a positive outcome for both factors; participation had a significant influence on resistance (R2_{= .215, F = 17.300, p-value = .000, β = .455), and}

management support too had a significant influence on resistance (R2_{= .198, F = 15.844,}

p-value = .000, β = .427). However these results cannot be integrated in the official result, as the factor analysis in the study determined that some items were not relevant and therefore dismissed them from further use in this paper. In future research the researchers can take into account this discrepancy and develop methods to counteract this discrepancies.

The literature in addition indicated that communication, participation and management support have an influence on readiness for change. The findings of this study support this claim and determined that the three factors had a positive influence on readiness. Combined, these factors account for more than 60% of the variation on readiness, which is significant to conclude that the factors do indeed have a significant influence on readiness.

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initiative successfully. Folger & Skarlicki (1999) claim that "organizational change can generate scepticism and resistance in employees, making it sometimes difficult or impossible to implement organizational improvements". Self (2007) indicated that resistance and readiness are not on the same scale; opposites on a linear continuum. However the findings did support a correlation between both factors. The correlation analysis found a significant relationship between resistance and readiness for change. Furthermore the findings also determined that the level of readiness is relativity high, whereas the level of resistance is neutral. Interpretation of the results would suggest that these factors are in retrospect, related to each other. However to conclude this as a fact would be premature. The only valid conclusion that can be drawn in this research is that both factors do correlate with each other. Further research is needed to determine the degree, as well as how these factors influence one another.

6.2 Limitations

As well as the possibilities of the research, there are also limitations that require further investigation in a follow-up study.

First, the paper attempted to investigate the relationship between resistance and readiness for change. The findings indicate a significant correlation between these two factors. However further research is needed to investigate the relationship in depth. Additionally the outcomes of the study in regard to the factors that influence resistance were not satisfactory. Further research is needed to investigate which factors do influence resistance during a merger.

Second, the merger between ABN AMRO and Fortis Bank Nederland will lead to lay-offs among the employees of the organization. This also includes the individuals that are participating in the I&I change initiative. While the research was done completely anonymously; individual results of the respondents were not distributed among the management or other individuals/ groups. However, the complex environment in which the research was conducted can lead to fears that this might happen. This in effect could have had an effect on the objectivity of the respondents while filling in the survey.

Furthermore, the study was performed just before the introduction of the initial change initiative. Timing plays a role in the influence of the employees’ formulated responses. In this case, the employees were already informed about the change initiative, this might have led to diverse results. If the study were to be conducted in another time period, the results might deviate (significantly) from the current results. Alternatively, future research carried out at intervals would make it possible to investigate employee responses during all stages of a change process.

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Appendices I. Questionnaire

All questions in the survey are statements. You can indicate through a scale how much you ‘agree’ or ‘disagree’ with the statement. Keep in mind that there are no good or right answers; we are interested in your opinion. Do not think to long about a statement; the first impression is often the best expression of your opinion. It could look like that some statement look similar, it is important that you also fill in these questions.

The scale is divided as followed: 1 = Totally disagree 2 = Disagree 3 = Somewhat disagree 4 = Neutral 5 = Somewhat agree 6 = Agree 7 = Totally agree

Choose the answer which expresses your opinion the nearest.

I think that the organization will benefit from this change 1 2 3 4 5 6 7

It doesn’t make much sense for us to initiate this change 1 2 3 4 5 6 7

There are legitimate reasons for us to make this change 1 2 3 4 5 6 7

This change will improve our organization’s overall efficiency 1 2 3 4 5 6 7

There are a number of rational reasons for this change to be made 1 2 3 4 5 6 7

In the long run, I feel it will be worthwhile for me if the

organization adopts this change 1 2 3 4 5 6 7

This change makes my job easier 1 2 3 4 5 6 7

When this change is implemented, I don’t believe there is

anything for me to gain 1 2 3 4 5 6 7

The time we are spending on this change should be spent on

something else 1 2 3 4 5 6 7

This change matches the priorities of our organization 1 2 3 4 5 6 7

Our senior leaders have encouraged all of us to embrace this change

1 2 3 4 5 6 7

Our organization’s top decision makers have put all their support behind this change effort

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University of Groningen, Faculty of Economics and Business – 28 – Every senior manager has stressed the importance of this change 1 2 3 4 5 6 7

This organization’s most senior leader is committed to this change

1 2 3 4 5 6 7

I think we are spending a lot of time on this change when the senior managers don’t even want it implemented (R)

1 2 3 4 5 6 7

Management has sent a clear signal this organization is going to change

1 2 3 4 5 6 7

I do not anticipate any problems adjusting to the work I will have when this change is adopted

1 2 3 4 5 6 7

There are some tasks that will be required when we change that I don’t think I can do well

1 2 3 4 5 6 7

When we implement this change, I feel I can handle it with ease 1 2 3 4 5 6 7

I have the skills that are needed to make this change work 1 2 3 4 5 6 7

When I set my mind to it, I can learn everything that will be required when this change is adopted

1 2 3 4 5 6 7

My past experiences make me confident that I will be able to perform successfully after this change is made

1 2 3 4 5 6 7

I am worried I will lose some of my status in the organization when this change is Implemented

1 2 3 4 5 6 7

This change will disrupt many of the personal relationships I have developed

1 2 3 4 5 6 7

My future in this job will be limited because of this change 1 2 3 4 5 6 7

I am critical about the change in public discussions (R) 1 2 3 4 5 6 7

I am critical about the change with my supervisors (R) 1 2 3 4 5 6 7

I support union activities against the change (R) 1 2 3 4 5 6 7

I support the actions of my subordinates against the change (R) 1 2 3 4 5 6 7

I support the actions of my colleagues against the change (R) 1 2 3 4 5 6 7

I report complaints about the change to my supervisors (R) 1 2 3 4 5 6 7

I am willing to convince the benefits of this change to my colleagues

1 2 3 4 5 6 7

I am willing to put (extra) effort in this change, so it will succeed 1 2 3 4 5 6 7

I am willing to overcome any resistance regarding this change 1 2 3 4 5 6 7

I am willing to make time to implement this change 1 2 3 4 5 6 7

I am regularly informed on how the change is going 1 2 3 4 5 6 7

There is good communication between project leaders and staff members about the organization’s policy toward changes

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University of Groningen, Faculty of Economics and Business – 29 – Information provided on change is clear 1 2 3 4 5 6 7

Information concerning the changes reaches us mostly as rumours

1 2 3 4 5 6 7

We are sufficiently informed of the progress of change 1 2 3 4 5 6 7

Corporate management team keeps all departments informed about its decisions

1 2 3 4 5 6 7

Two-way communication between the corporate management team and the departments is very good

1 2 3 4 5 6 7

Corporate management team clearly explains the necessity of the change

1 2 3 4 5 6 7

Changes are always discussed with all people concerned 1 2 3 4 5 6 7

Those who implement change, have no say in developing the proposals (R)

1 2 3 4 5 6 7

Decisions concerning work are taken in consultation with the staff who are affected

1 2 3 4 5 6 7

My department’s management team takes account of the staff’s remarks

1 2 3 4 5 6 7

Departments are consulted about the change sufficiently 1 2 3 4 5 6 7

Staff members were consulted about the reasons for change 1 2 3 4 5 6 7

Front line staff and office workers can raise topics for discussion 1 2 3 4 5 6 7

Our department provide sufficient time for consultation 1 2 3 4 5 6 7

It is possible to talk about outmoded regulations and ways of working

1 2 3 4 5 6 7

The way change is implemented leaves little room for personal input (R)

1 2 3 4 5 6 7

Staff members are sufficiently involved in the implementation of the changes by our department’s senior managers

1 2 3 4 5 6 7

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II. Data Analysis Descriptive Statistics

N Range Minimum Maximum Sum Mean Std. Deviation Variance Statistic Statistic Statistic Statistic Statistic Statistic Statistic Statistic Communication 67 4,75 2,00 6,75 330,25 4,9291 1,07137 1,148 Management Support 67 4,75 2,25 7,00 343,75 5,1306 ,98122 ,963 Participation 66 5,00 1,00 6,00 288,40 4,3697 1,09614 1,202 Resistance 67 5,83 1,00 6,83 266,17 3,9726 1,10310 1,217 Readiness for Change 66 4,25 2,50 6,75 344,50 5,2197 ,86992 ,757 Valid N (list wise) 65

Case summary

Included Excluded Total N Percent N Percent N Percent Management Support 67 100,0% 0 ,0% 67 100,0% Resistance 67 100,0% 0 ,0% 67 100,0% Readiness for Change 66 98,5% 1 1,5% 67 100,0% Communication 67 100,0% 0 ,0% 67 100,0% Participation 66 98,5% 1 1,5% 67 100,0% a. Limited to first 100 cases.

Normal Distribution

Management Support

Resistance Readiness for Change

Communication Participation

N 67 67 66 67 66

Mean 5,1306 3,9726 5,2197 4,9291 4,3697 Normal Parametersa,,b

Std. Deviation ,98122 1,10310 ,86992 1,07137 1,09614 Absolute ,128 ,117 ,138 ,153 ,122 Positive ,128 ,117 ,094 ,099 ,068 Most Extreme Differences

Negative -,125 -,083 -,138 -,153 -,122 Kolmogorov-Smirnov Z 1,049 ,957 1,121 1,254 ,994 Asymp. Sig. (2-tailed) ,222 ,318 ,162 ,086 ,276 a. Test distribution is Normal.

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Q-Q Plot

Management support Readiness for Change

Resistance Communication

Participation

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Boxplot

Participation

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ScreePlot

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Factor Analysis Management Support

Initial Eigenvalues Extraction Sums of Squared Loadings Compo

nent _Total _{% of Variance} _{Cumulative %} _Total _{% of Variance} _{Cumulative %} 1 2,499 62,484 62,484 2,499 62,484 62,484 Extraction Method: Principal Component Analysis.

Resistance

Readiness for Change

Participation

Communication

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Correlation

MS RES RTC COM PAR Correlation Coefficient 1,000 ,187 ,353** _,543** _,407** Sig. (1-tailed) . ,065 ,002 ,000 ,000 MS N 67 67 66 67 66 Correlation Coefficient ,187 1,000 ,246* _,362** _,228* Sig. (1-tailed) ,065 . ,023 ,001 ,033 RES N 67 67 66 67 66 Correlation Coefficient ,353** _,246* _1,000 _,494** _,460** Sig. (1-tailed) ,002 ,023 . ,000 ,000 RTC N 66 66 66 66 65 Correlation Coefficient ,543** _,362** _,494** _1,000 _,690** Sig. (1-tailed) ,000 ,001 ,000 . ,000 COM N 67 67 66 67 66 Correlation Coefficient ,407** _,228* _,460** _,690** _1,000 Sig. (1-tailed) ,000 ,033 ,000 ,000 . Spearman's rho PAR N 66 66 65 66 66

*. Correlation is significant at the 0.05 level (1-tailed). **. Correlation is significant at the 0.01 level (1-tailed).

Regression R Square F Sig. (p) β Resistance Communication .116 8.523 .005 .351 Management Support .057 3.897 .053 .267 Participation .053 3.557 .064 .229

Readiness for Change

Communication .276 24.344 .000 .423

Management Support .173 13.383 .001 .368

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