Organization behavior analysis of Merck Company Inc

Introduction

Organization behavior analysis refers to the systematic approach in studying and application of human behavior as individuals or groups within an organization their behavior and the effect this behavior impacts on the organization and its goals. It is the analysis of individual and group behavior within an organization. It enhances better relationships to achieve human objectives, organizations objectives and social objectives. The organization’s values goals and culture are all linked in such a way that there is integration between the employees’ personal goals and the organization’s goals. Organizational behavior analyses relationships between variables (McKenna, 2001). The concept of organizational behavior is based on the theory that the environment dictates the human behavior (Duncan, 1982). It covers a wide range of topics that include human behavior, change, leadership and performance. It involves analyzing behavior from an individual level, a group level and an organizational level, where the three are somehow integrated. The analyses results to more efficient and effective organizations.

The company: Merck Company Inc.

Organization behavior includes analyzing behavior that results from external environmental forces. A merger and possible lay offs are factors that would have an impact on Merck’s employees behaviors and this behavior would have an impact on the organizations productivity. This essay will address these topics in relation to the changes in Merck’s & Co. after the company merged with Schering-Plough and during the company’s restructuring program, which involves eliminating 15 percent of the employees located globally (Schepp, 2010). Merck is one of the largest pharmaceutical public companies in the world. The main products include medicines, vaccines, biological therapies, consumer and animal products. The company has its head office in New Jersey and operates in 140 countries located worldwide. The company is listed in the New York Stock Exchange. Merck recently merged with Schering-Plough Company. One of the effects of the merger was lying off of about 15 percent of the new company’s employees.

The issue

According to Appelbaum managers should take into consideration organization’s behavior during and after a merger. Many merger and acquisition failures can be attributed to lack of proper organizational behavior analysis. One of the negative effects on employees’ behavior during and after a merger is that it can lead to insecurity and uncertainty among employees (Appelbaum, 2000). During a merger the management should address the impact it would have on the employees and offer support and encouragement to the employees, analyzing attitudes, values and people’s behaviors and how they are affected by the environment.

The organization will need to analyze planning, organizing, leading and controlling. Analyze job functions, allocation of resources, and work flow procedures. Train the employees to remain focused and reassuring them of their job security will help in creating stability and continuation. Control refers to the management’s subjective and objective assessment of the success of goals. The management should realize that there is a need to address fear for change. Appelbaum et al. (2000) recommends three approaches in addressing organization behavior during a merger, communication, corporate culture and change.

Communication

During the change process, it is very important for the management to retain open communication with the employees. This will be very helpful in retaining the company’s culture. Lack of proper communication to the employees during a merger may lead to rumors which may lower employees’ morale as they become preoccupied with their own individual interests. Communication will help in bridging the gap between the individual’s interests and the organizations interests during the merging process.

This will assist in integration of the two organizational cultures, in this case Merck’s and Schering-Plough Company. Merck’s management achieved this through publicizing the company’s business strategy in the 2009-2010 Corporate Responsibility Review report (Merck, 2010). The plan included unifying, integrating and fostering culture. The strategy included communicating the progress to the employees and other stakeholders (Merck &Co Inc.). One of the ways that communication can be effective is through repetition of information though different forms of media (Appelbaum, et al., 2000). The need for smooth integration of the merger between the two companies was communicated through various reports in the Merck’s website. These reports include the Code of Conduct and the 2009-2010 corporate governance reports. The messages of honesty, transparency and open communication are reflected in most of the company’s policies, showing the emphasis the company has on open communication.

Organizational Culture

When two companies merge, there are possibilities of cultural incompatibility. This may result to conflicts. An organizations culture can be recognized through artifacts such as the company logos, the company values and norms and through basic underlying assumptions. It encompasses informal and formal processes of making decision in the organization. This includes the power hierarchy and how employees who are in different positions interact with each other. At Merck there is mutual respect for employees and they are encouraged to develop their skills and they are therefore committed to high performance.

This means that they can be trusted to make decisions without necessarily having to wait for their supervisors consent. The company allows for some inclusion in the decision making process, though employees in dispute are to report their grievances to their supervisors before they go to everyone else. Thus Merck practice democratic leadership style (Miner, 2007). In addition to this, employees should have someone to confide in about their concerns for a merger. At Merck company management, anyone with a dispute on any issue should report it to the regions Human Resources representative.

The company also has Merck Office of ethics where those who may be afraid of their own supervisors and human resource representatives should take their queries and concerns. In addition to this the company has a code of conduct that acts as a guideline to anyone with any kind of responsibility in the company including employees and the directors. The code of conduct includes ethical questions and the process one should use in decision making. This shows openness and giving employees responsibility to make decisions. This results to happy employees who are more productive.

A company that is in the post-merger situation should have a culture that is clearly defined. There should be common ground for the two companies after which a new culture will be developed. Merck Co. Inc. is in currently in the post-merger stage. The management has developed a plan that would ensure a smooth integration of the two cultures. This is stipulated in the company’s business momentum which includes unifying the two cultures, integrating them and cultivating the new culture.

An organizations culture can be determined from the company’s mission statements, and in its values, ethics and standards which all form part of organization behavior. The company’s values are based on ethics and integrity. Merck’s mission statement reads “To provide innovative, distinctive products and services that save and improve lives and satisfy customer need, to be recognized as a great place to work and to provide investors with a superior rate of return” (Merck Co. Inc., 2010). This mission statement shows the importance at which the organization values the employees’ contribution to the growth of the firm.

This should be a source of inspiration for the employees who remained at Merck’s company after the merger. The same importance is reflected in the company’s ethics and standards statements. On ethics and standards, Merck’s company has a chief compliance office to ensure that Merck’s company complies with all the regulations as required globally. The compliance officer also ensures that the company practices ethical business practices and also safeguarding the individual’s privacy. This safeguarding of the individual’s privacy shows the respect the company has on the individual. This can act as a motivational factor for the employees. The employee feels appreciated, thus becomes more productive which improves the employee’s performance.

A company that has effective corporate governance is in most cases transparent in all its undertakings. Corporate governance also involves appreciating that the people in an organization are the most important assets in that organization (Blair, 1995). Merck’s company has an effective corporate governance structure. The Chief Executive Officer (CEO) is appointed by the Board and it is the Board that also determines his remuneration. The Chairman is responsible for the Board. There is an audit committee which is accessible to all. In addition to this the company has whistle blowers protection policies. These facts are proving of transparency. As such the employees should have confidence in the company and adjust to the culture of the new company.

Changes

A merger leads to several changes in the organization. Once an employee joins an organization, she/he, there is a psychological need is developed. In turn the organization has expectations from this employee. Thus a psychological contract begins and a threat to break it may be devastating to the organization and to the employees. On the Individual level, organizational behavior analyses perceptions, learning, creativity, motivation, personality, performance and ethics. Individual’s sources of motivation do vary from individual to individual, some by incentives, economic benefits, praise or just satisfaction from doing a job well. It involves identifying what motivates each individual employee.

Organization behavior analysis also involves the study of individual behavior towards some external forces and the effects this has on the organization. It also involves of factors which most of the time would be having negative effects on performance. A major change, such as a merger threatens to break the psychological contract, whereby the employee becomes afraid of the unknown and develops feelings of helplessness. This affects the employee’s performance level. The Merck and Schering-Plough merger had an even more helplessness effect as the CEO had announced possible layoffs for 15 percent of the employees. These announcements of possible loss of employees may cause anxiety and fear. If not addressed this could result to depressed employees who are aggressive and thus an increase in unresolved conflicts.

To avoid these effects of change, open communication on the reasons for the merger should be communicated from which the employees should be made to understand the new changes. There should be no surprise for the employees and they should know who and how they would be affected. To eliminate this effect of surprise, Merck’s management included the news on possible laying off of senior and middle level managers, 40 percent of which would be in the US. The fear can also be eliminated by involving the employees to make them feel that they are part of the process. The management should also provide employees with goals that are long term. This creates confidence with their employer as they feel secure in their positions. This involvement was highlighted in the then CEO’s, Mr. Clark’s speech after the merger. Clark said that for the merger to be successful, the company relied on the employees’ passion, innovativeness and commitment.

According to Appelbaum and company, (2000) staff lay offs have the same effect as mergers, depression, anxiety and helplessness. Managers should provide as much information as is possible to reduce rumors and their effects. In addition to this the managers should encourage group discussions. On the group level, organization behavior involves studying of the group dynamics, intra-group and inter-group conflicts and unity, interpersonal communication, leadership, networks and group roles. In Merck Co. Inc. global constituency groups and employee resource groups are two of the strategies that the company uses to implement diversity strategy. The global constituency groups represent individuals from different geographical regions and with different cultures, religion and professions.

They work together towards the same goal, the success of the organization. The employee resource groups are made of volunteer employees who network together and work as teams. These teams offer educational and cultural resources, as well as being contacts to other employees. These groupings help in understanding individuals while they play an important role in developing diversity strategy. These groups played an important role in supporting each other during the merger as the groups would meet and discuss issues that were of concern to them. Employees must be made to feel that they have regained control of their individual goal.

Conclusion

Organizational behavior analysis assists in identifying the individual and group behavior with the aim of using the results to improve on performance. The analysis will be used to identify an individual’s different needs and different methods of working and performing a task. This information is used in providing personalized resources that will help each individual to be more productive. This information will also be of high importance in ensuring a smooth change process as the management devices on ways to assist employees endure the merger changes with confidence.

There should be new defined goals for the new company as well as new policies, new culture. These new policies plus any other changes should be communicated to the employees. The information rayed to the employees should be honest, as employees will be more appreciative if they know the impact the merger has on them. The lay off information should be provided with sensitivity otherwise it may have serious repercussions. Employees’ feelings should be considered in the whole process. This will help in the success of the merger.