Change Management in Delta-Northwest Merger

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Table of Contents

Introduction
Obtaining Pilot Unions’ Support
Meeting Stakeholder Needs
On Closing Hubs
Merging and Strengthening Organizational Culture
References

Introduction

Considering the labor form as important stakeholders is central to success during merger processes. Indeed, there has been several cases of failed mergers because respective companies had failed to meet employees’ expectations. This paper shall use the ongoing negotiations between Delta Airlines and Northwest to illustrate the importance of using best practices of managing organizational change during the merger.

The paper is divided into five sections, each dealing with a specific issue. The first part will provide recommendations on how pilots unions could be encouraged to support the merger. the second sections highlights ways of winning over rest of stakeholder groups especially Northwest employees. The third part provides an advice on how both companies regarding processes to be followed in case of hub closures, whereas the last sections highlights factors to consider when developing the new organizational culture.

Obtaining Pilot Unions’ Support

Pilot unions from both airlines are proving to be the harshest critics of the merger, meaning that respective management should do an extra job of convincing the pilots to embark on supporting the merger. There are several measures that can be undertaken in improving this process. First, the management should consider including employee representatives in decision making processes. Most importantly, both companies let pilots take center stage in re-designing the new seniority charts that would be used once the merger plans are complete. This process should further be as transparent as possible, which would increase chances of being accepted by either parties.

Secondly, management in both airlines should embark on illustrating their seriousness in matters regarding to the 2.4 percent stake that pilots. Negating from this promise, or showing lack of commitment could lead to diminishing support from the pilots. The stake that pilots would be getting from the company would lead to them looking at the merger as part owners, not employees. In this regard, the pilots would embark on elaborative process of considering the long run effect of he merger as opposed to the short run view on how respective pay and job security could be affected. Further, these new group of part owners would consider the interests of fellow stakeholders.

Third, senior management in the merging companies should consider keeping all stakeholders informed about the progress being made on the talks (Zajac, 2006, p. 209). Indeed, keeping the pilots informed about the merger process would lead to increase in chances of support. Most importantly, the pilot unions would be in a better position to air their opinions regarding the merger process before discussions proceed to stages that will make it hard for them to express views. This will also allow management and rest of stakeholders to iron issues out in a more productive manner. The management of both companies should therefore feel obliged to support the process.

Fourth, the merger committee should consider pilots fears that some of them would be laid off. This should be done in most gentle manner possible, which begins by listening to the pilots concerns and consequently embarking of looking for suitable solutions. Among the most suitable solutions would include providing descent send off packages to the pilots that could be laid off. In addition, both managements should consider the laid off pilots when there are job opening in the coming days. This would ago a long way in showing concern in former-employees-to-be, and therefore boost support from the unions.

Fifth, the pilot unions and especially representatives should seen as companions in the merger process, not variants. This would help in controlling the tight tension between the two stakeholders, management and pilot unions. The worst case scenario would be fore both airlines’ management to forcefully push the merger without a consensus between the two parties. This could lead to continued tug of war between pilots and management of the new airline (Delta).

The end result of such stand off could include constant pilot strikes and therefore disruption of the entire companies’ operations. Current management of the two companies should thus understand the important place that pilots hold for the new company’s operations. Starting the new airline with good relationships with the pilots would go into great heights of improving efficiency and productivity of this important crew. This is mutually beneficial between the airline, which would improve profitability, and employees who get better remuneration for their services.

Meeting Stakeholder Needs

Management of both airlines and the merger committee should also consider other stakeholders’ interests. In fact, the goal should be to include all members of the labor into the merger process, none should be left out. The interests of Northwest employees, currently being seen as losers in the merger (Parks, 2008) should be first in line to be considered. the management of both airlines should embark on the process of helping Northwest employees to see the merger as a win-win situation. In fact, just because the new airline would be named Delta and would be headquartered in current Delta’s facilities in Dallas does not make Northwest and its stakeholders losers. This would be the hardest task for the merger committee to handle.

The management should embark helping respective employees (in both Delta and Northwest) to consider the long run effects of the merger. First, employees should be helped to understand that synergies developed in the merger would help increase company productivity, revenue, and therefore their salaries. In addition to considering the long run effects of the merger, the management should communicate to the labor force on how both companies would have fared without the merger.

Management should especially expound on the effects of the incoming reforms of US air transport policy on the industry (Bartle, 2006, p. 17 ). Such convincing would result to improved understanding that the merger is a readiness to aggressive competitiveness that will as dawn on the industry in the next few years, and lack of it would be tantamount to exposing respective companies to extinction.

Just like it advised with regard to pilots, current management in both companies should embark on the process of keeping all employees well informed on negotiations. Understanding the progress being made on merger talks will help the larger labor force to prepare for the outcome. Additionally, employees with deep concerns regarding the process would easily discuss among themselves and forward comments to the merger committee, which will promptly address the concerns. Though the process could be regarded as more tedious, it provides one of the best routes of securing the much needed employee support that will lay strong foundations for the new Delta Airlines.

The merger committee should also consider the interests of various stakeholders that do not necessarily work in the two airlines but are direct beneficiaries. Most importantly, the merger committee should consider the interests of communities near the two companies headquarters. The localities are direct beneficiaries of both airlines operations, especially with regard to respective corporate social responsibility programs.

Residents in these areas could have feeling that all the benefits accrued through the many years of collaboration would be ended by the merger. Management have got an important responsibility of assuring that the historical support is there to last and maybe get increased. Such assurance would be go into great lengths of restoring calm in the worried communities that would also offer their blessings on Delta-Northwest merger.

Another group of stakeholders to convince are the current suppliers of respective airlines. Though these are businesses that have risk to in current undertakings, they need to be assure that existing contracts would still be honored and they will also get a chance of applying for concurrent ones with the new Delta. Such assurance will help sustain business relationships that have been working smoothly. In addition, the assurance will aid in the process of assuring the new Delta of availability of reliable suppliers in various hubs around the country. The bottom line for considering all these stakeholders is to ensure support for the merger processes, and ensure that the new Airline will have the much needed goodwill and dedication from stakeholders.

On Closing Hubs

There is speculation that the new Delta will have to close some hubs around the country in the process of cutting cost and thus improve efficiency. While this could be the case, the new management should not just eradicate the hubs blindly; it should consider or undertake the following procedures before making any move. First, there should be a cost benefit analysis on each various operations that seem less efficient in the new company’s operations (Gotts, 2001, p. 169).

Results of these analysis should then get compared in the process of seeing whether closing made concrete business sense. A most important point to consider in the cost benefit analysis would be how much Delta would make in the long run compared with the cost of maintaining the hubs. It is possible that the political leaders around the hubs would express their concerns on economic impacts of closing Delta operations. the company should consider those concerns, but make the final decision depending on long run benefits to Delta.

Also to be considered during cost benefit analysis is the future of the American air transport industry. Indeed, the industry is posed face significant competition when foreign airlines are allowed to ply inter-city routes in the next few years.

Failing to consider the future competitiveness of various routes could lead to closure of hubs that would be important to counter competitors. In order to succeed in this assessment, management of the new airline should consider employing the services of professional consultants who will provide the best analysis and advice. Management would in the end be in a position to develop and implement effective long term strategies. Decisions to close respective hubs should be communicated to stakeholders that would be affected, most importantly the community and suppliers.

Merging and Strengthening Organizational Culture

Merging of two companies should be followed by joining of respective organizational cultures in order to create fresh identity (Black, 2003, p.54) for all to use. The Delta-Northwest merger team should therefore embark on the process of seeing how it could be improved. The first step in this process is to analyze the present organizational cultures and consequently develop ways and means of merging them. Present management in the two companies should thus start with establishing a team that will be tasked with responsibility of this important undertaking. The appointed team should ensure seeking follow employees views regarding the new culture.

Most importantly, employees should be asked on elements of present organizational culture that should be passed into the new airline. It should be understood that keeping employees involved in the process will leave them with an understanding that they are well appreciated by the management. Such encouragement leads to employees increasing their productivity in the new Delta. Getting employees’ views regarding organizational culture is helpful, because they are the ones who have been practicing it while working in the current Delta and Northwest.

Collecting employee views regarding organizational culture should be followed by searching for additional aspects that could be incorporated in the new Delta’s culture. This is best achieved through association with professional consultancy firms that had undertaken such a process before. These professionals should further be provided with the combination of the merging company’s organizational culture, which they should analyze and consequently provide critique.

All these should be done in conjunction with organizational culture development teams of the new Delta. The professionals’ report regarding organizational culture should be presented to the management, who would provide respective views. This should be followed by the actual implementation of the new organizational culture in the entire company.

The new organizational culture development team should ensure providing the labor force with documents containing explanations of the culture. This will help in improving understanding as well as asking for clarifications on unclear issues. In fact, the implementation team should encourage all employees or departmental representatives to express their comments before the actual implementation takes place. Members of staff should on their part feel obliged to express themselves fully lest they get themselves into corporate culture they do not agree with.

Implementing the new organizational culture after this elaborative process is most likely to be easy for the new Delta Airlines, main reason being that employees would be involved in various stages of implementation. Implementation should not mark the end of the team involved inn the process nor th use of professional consultants. Both groups should make a point of monitoring the progress of practicing culture in the organization. Such steps should be undertaken on regular basis through observation and and questionnaires to employees.

All the aspects of the new organizational culture, including its effects should be investigated. the involvement of employees in all these process would lead to higher collaboration during regular surveys, and therefore improve effectiveness. The collection of data should be followed by elaborative analysis that helps in making decisions on which aspects of culture to be retained and enhanced. Undertaking all these processes lead enhances the new company’s ability to achieve short term and long term goal. The process also helps in the process of motivating employees to improving productivity in their day to day operations in the new airline company.

References

Bartle, J. (2006). Developments if American Air Transport Sector. Management Process. 10 (3): 200-230.

Black, R. (2003). Organizational Culture. London: Universal.

Gotts, A. (2001). Merger Review Process. Chicago: ABA.

Parks, J. (2008). Northwest-Delta Anilines Merger. Web.

Zajac, E. (2006). Political Economy of Fairness. Cambridge: MIT.

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