The impact of change management on employee’s engagement during mergers and acquisitions in Hire Vehicle Industry of UK. The case study of IRide

Master's Thesis, 2018

47 Pages, Grade: A


Table of Contents

Chapter I- Introduction

1.1 Introduction
1.1.1 Company Introduction
1.2 Background
1.3 Problem Statement
1.4 Research Aim and Objectives
1.5 Significance of the study
1.6 Structure of the Thesis

Chapter II

Literature Review

2.1 Introduction
2.2 Mergers and Acquisitions
2.3 Change Management in M&A
2.4 Change Management Effect Organisational Culture
2.4.1 Organisational Leadership
2.4.2 Organisational Politics
2.4.3 Common reasons for failure in coping with change
2.4.4 Communication aspects
2.4.5 Resistance to change
2.5 Human Integration in M&A
2.5.1 Post Merger Change Management
2.6 Employee Engagement
2.6.1 EE and Turnover Intentions
2.7 Organisational Change and Employee Engagement
2.7.1 EE and Training and Development
2.7.2 EE and Change Management in M&A
2.7.3 EE and Working Conditions in Post M&A

Research Methodology

3.2 Research Design
3.2.1 Conceptual Framework
3.3 Research strategies
3.4 Sampling Process
3.4.1 Accessibility Issues
3.5 Data Collection
3.5.2 Survey
3.5.2 Interviews
3.6 Data Analysis procedure
3.7 Ethical Concerns

Chapter IV
Data Analysis

4.1 Introduction
4.2 survey Data Analysis
4.2.1 Gender
4.2.2 Respondents’ Age
4.2.3 Department
4.3 Reliability Analysis
4.3.1 Correlations Analysis

1. Relationships of Employees Engagement
2. Relationships of Post-Merger Change Management
3. Relationship of Employees’ Engagement and Change Management

4.5 Interviews Analysis
4.5.1 The cause/s of merger of PHV companies
4.5.2 Challenges and opportunities of Merger
4.5.2 Strategies used to increase employees engagement
4.6 Discussion on Research Findings

Chapter V
Conclusion and Recommendations
5.1 Conclusion
5.2 Recommendations
5.3 Limitations
5.4 Implications of the Research


Appendix - Questionnaire .

Chapter I Introduction

1.1 Introduction

Transportation is one of the fundamental tools of growth in developed economies that required a systematic and uniform flow of vehicles to support consumers’ commotion objectives. Besides the presence of public transport such as subway, buses, and trains, the presence of taxis and private hire vehicles are important in transportation network of United Kingdom. Taxis work on both street and rank hiring and the pre-booking bases, whereas, PHVs serve only in the pre- booking segment. Operations of business organisations in transport sector are changing with the passage of time in view of the increasing needs of transportation. However, the increasing challenges of competition affect operational policies and survival tactics of PHV companies at large. Generally, the business changes their strategies in view of competition or to avail new opportunities. For instance, merger and acquisitions (M&A) is one common strategy used by small and large companies to tackle the challenges of large businesses in the industry. The growth of ride sharing platforms such as Uber in the private transport sector has transformed the strategies of PHV companies. This research analyses the impact of merger on employees’ engagement of PHV companies. This chapter introduces the background, rationale and problem statement of the research. Moreover, the aim and objectives research question and significance of the study also discussed in the pages below.

1.1.1 Company Introduction

IRide is formed in 2015 as a merger of five ride-sharing companies of Swiss Group’s operations in the UK. The merged companies are Swiss Cottage Cars, Airport Direct, Great London Cars, and Skyline Express Systems. Presently, the fleets of all these companies operated in London and the individual websites of merged companies redirect customers to the website of iRide London. CEO Duncan Blackett of IRide shared a visionary culture and aim of competing Uber in UK market with staff of all merged companies (Professional Driver, 2017). The resultant of five PHVs brand reputation, iRide is expected to be an open platform with flexible commission and well established network for drivers and support staff. The company based the revenue on fixed pricing and no intention of surge pricing model addition is observed. The company started a training and development project for drivers and marketing staff in Camden that supports the merger initiative. According to iRide (2017), this training centre will facilitate drivers to accommodate the change in management style and adjust with the affiliation crisis of the original parent company in post merger period.

1.2 Background

There is a transformational change in business practices that elaborate the concept of collaborative businesses (Hamari, Sjöklint and Ukkonen 2015). Similarly, Vaughan and Daverio (2016) used the term “collaborative consumption” for the companies or individuals collaborate rather the competing in the same industry. This Co-optation resulted in mergers and acquisitions in transport sector as well. However, trends of extended route sharing and tool sharing are not predominant in the UK and the capacity of expansion in private hire vehicles (PHVs) sector is high in this decade. Therefore, the acceptance of latest IT trends and insolvent of more local communities will affect the growth rate of PHVs business in cities. Thus, the addition of new PHV platform such as iRide London will contribute to the involvement of local companies in the shared economy in the UK.

According the report of Guardian (2017), private vehicles and licensed taxis in England have been increased by 9% since 2013. In 2017, the acute increase is 16% in private vehicles and licensed taxi that increase the figure of vehicles to 281,000 (Department of Transport, 2017). In PHVs transport sector, Department of transport (2017) declared that PHVCs are 73% of all licensed vehicles in England. Therefore, the increase in PHVs recorded since 2013 is 25.9%, were as only 1.5% increases is recorded in taxis that have increased to 22,500 vehicles (Guardian, 2017).

The figures for England transport sector distribution o=in private sector is shown in the figure given below:

Abbildung in dieser Leseprobe nicht enthalten

Source: Department of Transport (2016)

In above figures, sharp rise in PHVs is observed in post 2012 period due to the launch of Uber in London in 2012. This inclusion of ride sharing in the private transport sector affected the business of licensed taxis and PHVs. Therefore, a protest from black taxi drivers in London demanded that the ability of Uber app to calculate the fare on the basis of distance travelled is equivalent to a taxi meter but these vehicles are not registered or paying any license fee (Guardian , 2017). Similarly, the rapid growth of Uber and other ride sharing apps created a tough competition for licensed taxis and PPHVs.

1.3 Problem Statement

The outcomes of M&A strategies not only reflected in the organisational performance but the employees in the merged organisation also get affected. Ngyuen and Kleiner, (2003) added that confusion and lack of surety are observed in employees in the post-merger situation as they become unsure of their future in the new organisation. Moreover, the issues created due to the role conflicts and uncertainty can lead to increased turnover and increased expectation from the job I new organisation (Hewitt, 2013). Thus, the merger of ride compares in the UK also resulted in the formation of a new Company iRide. Therefore, the level of employees’ commitment and their engagement in iRide need further exploration. Seo and Hill (2003) added that participation in decision making and drastic changes in organisational policies make it difficult for employees to stay intact with their roles and responsibilities. Hence, the individual and organisational productivity are normally questioned in post-merger situations. Thus, it is essential to evaluate the existing commitments and expectations of employees with the new organisation. The policy makers of iRide aimed at resolving raised issues and problems from the fleet of 850 plus drivers and other employees.

1.4 Research Aim and Objectives

This study aims to explore the impact of change management during the process of merger of private sector companies in the United Kingdom (UK). The case study of iRide, a recently merged private limited in hire vehicle industry is considered to conduct the research.

Primarily, the research will cater to achieve the following objectives:

1. To review the challenges and issues of change management in relation to the employees’ engagement during the process of merger and acquisition
2. To examine the strategies used by the human resource departments in IRide to increase employees’ engagement during the process of mergers.
3. To investigate the impact of the merger of five private hire vehicle companies on the employee's engagement with the new company IRide.
4. To collect data from employees and managers of iRide to evaluate the change management practices incorporated in the HR department of IRide to increase employees’ engagement in post-merger period.

1.5 Significance of the study

The value of employees’ engagement in organisational strategies is evident as leading organisations view employees as a reliable resource rather than an expense of business (Baynham, 2011). According to Roij, (2014) valuing employees’ expectations and demands resulted in cost saving from employees less turnover and increase in profits due to high employees’ commitment. Therefore, the evaluation of employees’ viewpoints in iRide, organisational policies towards employees’ engagement during time of drastic change and current challenges of gaining a cohesive workforce are important for rapid growth. This research will provide useful insights into employees’ perceptions and management responses to the challenges of change management during and after the merger. Hence, the recommendations of this research will assist management in achieving their targets. The organisation can foster a culture of innovation and more representation of employees’ commitment and engagement in the workforce. The research plays a significant role in highlighting important issues of EE and change management strategies linked with organisational performance in iRide.

1.6 Structure of the Thesis

The thesis comprised on the following chapters:

1. Chapter 1: The introduction chapter provided the background information about the aim and objectives of this study. Scope and significance of the research also share in this chapter.
2. Chapter II: This literature review chapter provides the theoretical framework of mergers ad acquisition and importance of change management strategies. The role of employees’ engagement and implications for the current research are also discussed in this chapter.
3. Chapter III: This chapter interprets the important steps of research methods employed in this research.
4. Chapter IV: This chapter based on the data analysis and interpretation of results of the collected information.
5. Chapter V: This chapter presents the conclusion and recommendation of this study. Research implications and limitations of the current research are also included in this chapter.

Chapter II Literature Review

2.1 Introduction

This chapter reviews the previous studies that have been carried out on the effects of change management on mergers and acquisition. The results are based on the research questions highlighted in chapter one. These include effects on organisational structure, impact on organisational culture, and effects on human capital. The chapter summary provides an outline of the areas covered in this chapter.

2.2 Mergers and Acquisitions

Mergers and acquisitions by their very nature destabilize the harmonious inner workings of organisational structure. According to Zheng et al., (2010), corporate structures do offer a way in which responsibility and powers are allocated within an organisation, how work procedures are executed, and how decisions are made. However, mergers and acquisitions offer significant disruptions in existing sets of relationships that form functional units within an organisation. As a result, decision-making chains are disintegrated; work units reconstituted, abolished, or restructured (Simonet and Tett, 2012). According to Hatch (2010), if change management is not adequately instituted to manage the disruptions and changes, employees motivation is crushed, loyalty dissipated, while performance and profitability fizzle. Decision making structures, information technology structures, and operational structures are some of the areas being examined for change management effects on the organisational structure.

According to Waight (2013), an organisation’s structure influences its innovation potential. Various studies have indicated how decision making organisational structures enables ingenuity, creativity and staff autonomy on new products and processes in mergers and acquisitions.

In mergers and acquisitions, technological import plays a significant role in determining the outcome of the entities merging or being acquired (Mento, Jones and Dirndorfer, 2012). According to Aral et al., (2010), information technology structures have a massive impact on organisational performance. A study conducted by Arvanitis and Loukis (2009), on the effects of information technology in managing change in mergers and acquisitions, revealed that there is a positive correlation between the level of technology and firm performance. According to Mento, et al., (2012), technological structures can take the form of radical technological integration or incremental technological integration. Radical technological integration involves technologies that have an impact on the entire organisational functionality.

2.3 Change Management in M&A

According to Michela and Burke (2009), managing change in cross-cultural acquisitions is the most difficult aspect managers, and organisational leaders have to steer through. Elrod II and Tippett (2010), contends that the constant about organisational acquisitions and change management is that there are no guarantees, nothing is certain. Furthermore, Pietersen (2008), argues that the dilemma managers face in initiating change management in mergers and acquisition is in getting employees on board. A third of all merger failures are attributable to lack resistance to change by the employees. Elrod II and Tippett, (2010), repeat the same sentiments by highlighting that the underlying causes for and of employee resistance must be studied carefully, entirely for the eventual success of navigating change management over mergers and acquisitions.

According to Philip and Lee (2011), change management in merging organisations culture occurs when employees of the organisations become aware that performance and loyalty they ascribed to have suddenly changed. Most of the time, this is perceived as a threat to their corporate values, culture, and organisational lifestyles. As a result, such integrations leave employees in a defensive mood accentuated by mistrust within the institution and even culture shock (Kazík, 2012). Part of managing change in mergers and acquisitions revolves around managing disbelief and employee denial, resentment and anger, emotional change assimilation and acceptance of the change itself (John et al., 2014).

2.4 Change Management Effect Organisational Culture

According to Lucas and Kline (2008), socialization significantly affects organisational cultures of different firms. In a research done by Barbaroux (2011), on acquisitions and mergers in the cosmetics industry in America, indicates that employees’ needs are directly linked to organisational culture, which is precipitated by organisational socialization. According to Balthazard et al., (2006) there exist a positive correlation between corporate culture and performance. In mergers and acquisitions, it is important to maintain productive values and norms within an organisational culture that positively influence organisational performance. However, Barbaroux (2011) argues that mergers and acquisitions can inherit negative values and norms entrenched within the organisational culture. According to Barbaroux (2011), change management within this culture doesn’t elicit resistance compared other forms of organisational cultures

2.4.1 Organisational Leadership

According to Nguyen and Mohamed (2011), the success of any given organisation particularly in mergers and acquisitions relies upon the efficiency, and character of the leader. For instance, according to Lucas and Kline (2008), defines transactional leadership as the influence a leader exerts on his subordinates by providing promises, in exchange for staff performing specific tasks. On the others hand, Kazík (2012), defines transformational leadership as the ability of a leader to model and motivate team into action over a greater good, vision or mission. Equally, Valencia et al., (2011), argues that leadership in mergers and acquisitions should revolve around motivating people towards desired change. Martinelli (2010), Elrod II and Tippett (2010), and Liao (2011) argue that leaders influence the nature of the work environment, hence organisational culture. In this regard, leaders in mergers and acquisition can control the attitude of corporate members by initiating a set of planned actions within the feasible capacity of their organisations to absorb the change.

2.4.2 Organisational Politics

Weissenberger-Eibl and Teufel (2011), points out that there exists a positive relationship between change management in acquisitions and mergers and organisational politics. Equally, there exists a relationship between aspects of change that are adopted as a result of corporate politics, and those elements that are rejected. According to Beyes and Volkmann (2010), merging organisations must identify their political, organisational theory that enhances the realization of organisational change management objectives. According to the Sheard (2011), aligning organisational politics to suit organisational business models and purposes is the primary goal of change management agents or managers. Some of the political power plays in organisations include; legitimate power, expert power, coercive power, referent power, and reward power (Field, 2011).

2.4.3 Common reasons for failure in coping with change

Change on an organisational level can affect employees on either positive or negative firm that depends on the type and intensity of change. If a negative impact happens then, some researchers consider that it is due to leadership. Some believe that leaders tend to focus more in what the physical change will be and become that their primary duty, but having that focus make them lose visibility of the realities that are happening in the organisation, such the change process of the people involved (Austin and Currie, 2003). The outcome of the situation largely based on the level of the impact of change on employees at different levels. According to Liao (2011: 23), ‘transition’ referred to the change process in which employees go through a period of psychological impact. Thus, transition and change are different concerning the feeling and visible aspects if the change in organisations (Sheard 2011). Hence, leaders can anticipate the level of change and the process incorporated in the organisation for employees to adjust to change. The holistic view of change is vital to resolve the issues generated due to the long term and severe impacts of change.

2.4.4 Communication aspects

Environments with high pressure from stakeholders, markets, managers or competition, promotes the resistance from the individuals that will participate in such change. Given Van Loon (2001), the difficulty of people to respond quickly and efficiently in the wake of change becomes a vital issue in the organisations that change process due to mergers and acquisitions. Also, lack of communication increases the vagueness of shift in post-merger or acquisition process as employees do not find answers to their immediate queries. Thus, precise definition of various aspects of organisational change needs to be addressed to all employees, based on the relevant areas of communication. Austin and Currie (2003) suggested that management should take out time to communicate the areas of working that would change. Similarly, Diefenbach, (2006) insisted on the need for clear guidance to avoid confusion and to restrict employees to take their own decisions to manage the Chaos

2.4.5 Resistance to change

However, even when managers or leaders to communicate the actual change process, there still individuals that will resist the change. Brooks and Bate (1994:184) point out an interesting observation regarding resistance of people in organisations when they mentioned: "as opposing change also created personal risk and anxiety, employees ended up neither supporting nor resisting the change, but turning backs on it". Such attitude towards change in a company might be hazardous and stressful for managers when people have fallen into a state of indifference, and change management might face more obstacles.

In contrast, Ellis (1998: 227) argument sounds valid as the fear of facing unknown situations is the cause of resistance to change in employees who face challenges of cultural renewal' and understanding of a different position in the organisation. Thus, the major problem for leadership is to address the fears of individuals and increasing their capacity to accept change. The argument of Diefenbach (2006:7) addressed that ''materialistic change management" provide evidence for employees resistance to change and can provide more guidance for these change opponents in the organisation. On the other hand, Kubler-Ross defmed the different stages of grief cycle that deals with the intensity of resistance to change. These stages ate shown in the figure below:

Abbildung in dieser Leseprobe nicht enthalten

Source: The process of change and adjustment {1969)by Kubler-Ross

Kubler-Ross (1969) provided a sequential flow if the psychological process in humans in the situation in which change becomes evident. Thus, employees in the organisation also found to possess different stages of this change resistance cycle in post-merger and acquisition periods.

2.5 Human Integration in M&A

According to Martinelli (2010), and Aral et al., (2010), there exists a positive correlation between levels of human capital in organisations that have undergone mergers and acquisition, successful integration of change, and overall performance. Based on their research on change management in mergers and acquisitions, most successful organisations organized their human capital in a systematic manner that did not disrupt the business model or operational functions. A prominent study of Birkinshaw, Bresman, and Hakanson (2000) suggested human integration and task integration as two critical processes to handle in post M&A period. Despite the distinctiveness of these two processes, they are not mutually exclusive. For instance, the employees’ satisfaction aspect of human integration resulted in the better capacity building and optimal resource utilization. Similarly, the achievement of task integration causes better self- identity of employees and increases their satisfaction levels. Hiatt and Creasey (2003: 56) study confirmed this view of Birkinshaw et al. (2000) and termed change management in M&A as the ‘people side of the change.'

Since the impact of mergers on the human integration and employees’ engagement is the core aspect of this research, therefore, Birkinshaw et al. (2000) human integration part are evaluated in this section. This study defined Human Integration during M&A activity as the process of positive attitudes creation in employees for the integration of employees of all involved organisations to develop an environment respect and trust. The human integration process is essential to achieve operational synergies concerning the quest for employee satisfaction.


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The impact of change management on employee’s engagement during mergers and acquisitions in Hire Vehicle Industry of UK. The case study of IRide
BPP University
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impact of change management, employee’s engagement, mergers and acquisitions, case study of IRide, Employee Engagement, Employee Engagement and turnover intentions, change management, training development, Organisational Politics, Organisational Leadership, Post Merger Change Management, Change Management Effect Organisational Culture, Relationships of Employees Engagement, Relationships of Post-Merger Change Management, Relationship of Employees’ Engagement and Change Management, private hire vehicle, Minicab service London, iride London, Muhammad Khurram
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Muhammad Khurram (Author), 2018, The impact of change management on employee’s engagement during mergers and acquisitions in Hire Vehicle Industry of UK. The case study of IRide, Munich, GRIN Verlag,


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