This corruption in the workforce and environment further exasperated the financial woes afflicting Sprint Next post-acquisition. Sprint Next could have avoided such troublesome times by encouraging HER and management to play a more proactive role in the entire acquisition process, as well as being better prepared. TABLE OF CONTENTS Title ? Table of Contents , Company Introduction ? Organizational Overview ? Theoretical Overview ? ? 5 17 19 Concrete Findings & Company Data . Recommendations ? ? Conclusion References Company Overview 3 12 Sprint Next Is a US based wireless company based In Overland Park, Kansas.
Clemson Leroy Brown founded Sprint In 1899. Sprint Is actively Involved In the global telecommunication market, It Is where Sprint has previously been most profitable. Sprint was also involved in local services prior to their initial stages of corporate restructuring. The executive team at Sprint Next includes, and is not limited to, Dan Hess CEO, Robert H. Burst COOP, and Bob Johnson CSS. In 2005, Sprint acquired Next to create the third largest telecommunications company in the world. This merger spawned the conglomerate we now know as Sprint Next.
The acquisition of Next was a very turbulent time and resulted in Sprint allowing its local division to become a separate entity through the excessive utilization of restructuring and outsourcing. This new sipping company was called Embark. Embark focused on the local markets, comprised of local phone companies serving 8. 1 million people In 18 states (Everything DSL, 2008), while Sprint Next focused on providing simple, Instant, enriching and productive customer experiences through global communication. The merger of Sprint and Next allowed them to better serve a larger variety of customers from all walks of life. Print Next offers a variety AT services on a global scale, out tense services 00 not mom without very stiff competition. Sprint Next has two very strong competitors: AT&T and Verizon. All three of these companies have been in an epic battle over customer retention in order to be known as the number one telecommunications company. The fields in which Sprint Next compete in are: wireless network operations, telecommunication services, data services, data network operators, internet and online services providers, and fixed-line voice services providers. The services that Sprint Next offer are very broad, serving 48. Million customers (Lawson, 2010). The customer-base statistics can be very misleading when comparing hem to the competition. Sprint was the only company to lose more customers than it gained in the fourth quarter of 2008, whereas Verizon added 2. 1 million customers giving them a 70. 8 million customer-base and AT&T added two million customers resulting in 74. 9 million customers in total (Greeter, 2008). Due to the loss of customers, monetary worries are becoming more evident as a result of increasing financial losses. For example, in the fourth quarter of 2009, Sprint lost $980 million, or $0. 4 a share. Although this is an improvement from the fourth quarter of 2008, where Sprint Next lost an astounding $1. Billion, it seems that the company’s momentum is still suffering from a steep decline (Lawson, 2010). This suffrage is also evident in the declining total revenues reported every fiscal quarter due to decreasing customer retention. Sprint Next is still losing customers to competitors such as AT and Verizon at an alarming rate. The exponential decline in sales has resulted in Sprint Next posting an annual loss of $2. 4 billion, or $0. 84 per share.
These losses per share are a growing concern when retrospectively analyzing their financial records. On January 2, 2010, Sprint Next was valued at $3. 6 per share, this is drastically different from the hefty $16. 33 per share price tag of 6 years ago, and even more haunting when compared to the $65. 80 per share value 10 years ago. Organizational Overview The work force at Sprint Next is over 75,000 employees and boasts a very diverse mix within the organization. Unfortunately Sprint Next suffers from a duality in nature in regards to their organizational structure as a result of their failed acquisition of Next.
Sprint is a highly bureaucratic company with a high degree of centralization confined to a tall hierarchical corporate structure, whereas Next was more informal company with a very wide flat managerial structure spread thin within a decentralized corporate framework. The departments in Next thrive on a strong sense of organizational culture which substitutes the need for a high degree of formalization, as opposed to the offices at Sprint where everything was highly formalized through processes, policies and paperwork.
Decisions at Sprint are often handled through a bureaucratic process involving agreement from upper management before proceeding, this proved debilitating towards Nester’s approach of allowing its employees to act quickly in order to maintain corporate agility and adapt to their customers’ needs (Hart, 2007). These stark differences played a major role in the troubles and complications plaguing the company post-acquisition for years to come. Sprint Next offers many Dentists to Its employees Ana NAS several Deterrent organizations and programs to make work an enjoyable place.
The company offers extensive training in diversity, technology, and responsibility earning the recognition from Training Magazine as one of the top 100 employee developers (Sprint). Sprint claims to be a great place to work and offers their employees a flexible work life, Sprint recognizes the varying needs in our employees’ lives, and offers flexible policies to accommodate many of these individual needs, such as telecommuting, flex time, and support for service men and women (Sprint). ” Sprint Next also includes a program called the Employee Resource Groups which helps develop each employee and promote leadership within the organization.
As a company, Sprint Next excels at awarding their employees in leadership, customer experience, and socially responsible activities in order to promote pride and organizational culture. This rosy facade appears great from the perspective of someone looking in from he outside; unfortunately the glass doors at Sprint Next can be very misleading. Browsing through the corporate website and employee handbook gives us a false impression of what really takes place in the work environment at Sprint Next.
It may seem like the perfect place to work, considering all their accolades and badges of honor, but as we continue to dig deeper we are discovering red flags that continuously alert us something very wrong is amidst. Some of these more concerning red flags include customer satisfaction being the lowest in the telecommunication field, customer retention nearly crippling their customer-base, ND quarterly financial statements which are repeatedly showing red numbers. These red flags have left us with more questions than answers at this Juncture of our analysis.
When did the problems leading to financial doom start? What could be the main issue afflicting the company in such a debilitating way? Is there anything they may have overlooked prior or after the acquisition of Next? The problems appear to have begun shortly after 2005; by no mere coincidence this was the year signaling the acquisition of Sprint’s telecommunication rival Next. The merger of Sprint and Next seemed like the perfect deal for the two organizations. Sprint was attacking the consumer market while Next was dominating the construction and business segment with their press-to talk technology.
The collaboration of these two companies appeared to be a great idea on paper but presented many problems for the organization and its employees. Sprint Next lost touch with the human factor within their organizational culture. This has been the issue which has left them in near ruins when compared to the glorious corporation which once stood before us. Their disassociation with the human factor caused them to turn a blind eye to the issues involved with the lashing organizational cultures after the acquisition of Next until it was too late.
They lost touch with their human assets before the acquisition, they lost touch with their employees throughout the acquisition, and they lost touch with their customer base after the acquisition. Theoretical Overview The phrase mergers and acquisitions (abbreviated M) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling Ana condoling AT Deterrent companies Tanat can ala, Tolerance, or Nell a growing company in a given industry grow rapidly without having to create another business entity (Wisped).
Unfortunately M are not always the answer, sometimes they are the causes of further problems and complications. Some of these problems include an overwhelmed human resource department (abbreviated HER) unequipped or unprepared to handle integration difficulties caused by the acquisition process; other problems include the heavy resistance of merging two large companies and the merger of incompatible organizational cultures unable to accept or adapt to change.
According to Graver (2006), in his article on successful mergers, he states that part of the problem is that many HER departments aren’t prepared to assist in the due license that a merger requires. HER is not always ready to play the different roles needed by the organization during the M&A procedure in order to be successful. HER must not only integrate its own shop but also perform two other demanding roles simultaneously: specifically, a strategic role for enterprise-wide integration and a support role for business units in transition.
A 2005 study by professional-services firm Towers Perrine, headquartered in Stamford, Connecticut, found that Just 26 percent of the companies surveyed considered their HER departments to be “fully dead” to aid a merger or an acquisition effort (Graver 2006; Towers Perrine 2006). Human resources alone should not be held solely accountable for a merger’s shortcomings, upper management should also understand a target company’s organizational culture during an acquisition in order to facilitate the integration process.
Organizational culture consists of interrelated elements that refer to a system of shared meaning held by members that distinguish one organization from another (Scheming 1985). Incompatibility among organizational cultures is the bane of all M&A procedures. In a survey of Forbes 500 Scoffs, “incompatible cultures” was identified as the number one factor contributing to the failure of M&As (Towers Perrine 2006). During the early sass, the acquisition of NCR by AT&T served as a great blueprint for the complexity and tribulations involved with merging two very different organizational cultures.
AT&T realized too late how significant the differences between both companies were. By the time AT&T sold NCR only 13% of Ann.’s executive team remained, AT lost more than $3 billion, and NCR was worth a meager half of its initial market value (Cary & Ogden, 1998). The greatest difficulty in most acquisitions has been found to be the differences between peoples’ organizational and racial cultures. Both situations are areas in which HER has the greatest ability to influence integration results in a positive direction.
It is quite often the fault of upper management’s inability to adequately implement a strategy that cause very little positive change within the employees of the target organization during the acquisition. Effective strategies should involve the specific processes of organizational culture at all levels of the acquisition process in order to be successful (Gallon & Whereon, 2007, p. 217). Mergers between companies have an unexpected result of disrupting or changing the work environment of all parties involved to a certain degree.
People respond differently to this uncertainty; fear is the typical result of uncertainty and change. Fear manliest t I sell Walton employees as a sense AT Allocations or lack AT commitment. Organizational pride takes a plunge as an organization assumes the role of reinventing or reinforcing itself post-acquisition. Quite often key personnel begin to fear for their Job security. The more troubles that arise from a failed acquisition, the more worried employees become concerning Job loss (Gallon & Whereon, 2007, p. 140).
The disassociation between employee and organization materialize as a result of trying to merge two very distinct organizational cultures into one. These sweeping changes are bound to have detrimental effects upon a company that upper management should have foreseen had they not overlooked the human effect in organizational behavior and the importance HER management plays during M talks. Concrete Findings and Company Data The two very different corporate cultures which existed in Sprint Next as an organization have resulted in conflict and clashes from the very beginning.
Everything from advertising, strategies, employees, work habits and technologies have mixed about as well as oil and water (Hart, 2007). Evidence of conflict between Sprint and Next (post-acquisition) has stared us directly in the face depending on where we were standing at the moment of conception. Whether we stood in the lush landscape of Kansas or the urban sprawl of Virginia, the differences between organizational structure and culture was in front of us all this time, prior to 2008, in the form of two very different and distinct headquarters. Sprint was based in Overland Park, Kansas, while Next was based in
Restore, Virginia. The vast distance between both corporate edifices was extremely symbolist of the stark differences in each company’s organizational culture. The Coo’s of the two companies decided to keep dual headquarters not realizing the difficulties of working with people thousands of miles away, nor realizing the importance of a unified work environment. They Justified this decision by reiterating the difficulties in forcing employee families to relocate in mass exodus. Operational activities were to remain in Overland park, while several top executive teams would work from Restore (Hart, 2007).
This distance proved to be costly and a hindrance to simple day-to-day operations such as decision-making and cross-departmental meetings. It was not a typical day if executives were not flying to or from Overland Park, Kansas. The daily trips became very expensive for the company and hurt the productivity of the executives. This physical separation only aided in enforcing the disassociation between upper management and the daily operations concerning Sprint Next. This was a troubling reality check during a very delicate time after the acquisition.
The physical boundaries separating both headquarters only proved to increase personal Job dissatisfaction and create contempt amongst both corporate counterparts. For example, Next employees often ridiculed the immense landscaping budget of the extravagant Sprint headquarters in Kansas, nicknaming it “Overhead Park” (Hart, 2007). In order to bridge the physical gap between both headquarters, upper management attempted different techniques to bring both entities closer together. For example, accompanied websites were broadcasted to relay news and International In realm to all employees In an attempt to promote convulsiveness.
While innovative, this technique proved futile. Eventually Sprint Next decided they needed to Join forces physically and combine both cultures under one roof. As the acquitter, Sprint held leverage when determining the location of this new unified corporate office, hence the new corporate headquarters would be located in “Overhead Park”, Kansas. Because of this leverage Sprint also managed to keep their name on the logo and incorporate Nester’s color scheme of yellow and black in the background.
This did not sit well with the Next employees who were already beginning to feel inferior to their counterparts in Kansas. Yet Sprint Next was still tempting to create synergy and cohesiveness between the two organizational cultures. After the merger Sprint Next was still persistent on pushing the sense of new beginnings: 40,000 new employee uniforms, 16,000 new nutmeats and 100 million brochures saying “yes you can” in the name of symbolism were created to reflect synergy on the workforce. (Warranty, 2008, p. 10).
This may appear that the two companies were unified under one costume and standing under the same hybrid- logo, however even though their logo was an even mixture of both cultures, the business needed more to become one. If the CEO epitomizes the essence of a company, then what followed immediately after the acquisition of Next would play precursor to the difficult challenges laying ahead. After the merger, Nester’s chief executive Tim Donahue (former) held a manager’s meeting where he adorned a casual sweater and khakis while displaying an energetic and optimistic demeanor in a relaxed environment.
His echoes of “success” and catchy phrases such as “sticking it to Verizon” filled the room with laughter and cheers from his fellow employees. Immediately after his speech he introduced his guest, Gary Foresee, Sprint’s chief executive officer (former). Foresee towered over the crowd in a formal suit and tie, then proceeded to highlight key points of his Powering presentation while reciting his expectations for both companies in a monotone voice. The crowd fell to a deathly silence. The differences in styles of the two Coos was very clear at this point.
It was going to be a long road for each organization if the acquitter was to successfully assimilate the other’s organizational culture. The dissonance between both organizational cultures have reverberated since day one. Prior to the merger, Sprint and Next had two completely different cultures and org environments. Sprint remained faithful to their bureaucratic approach towards management. This tall hierarchical corporate structure left employees with very little freedom to make decisions on their own and large power gaps between management and employee.
Sprint’s organizational structure made decisions a long and tedious process while awaiting for approval from the different levels of management, something Next employees were not accustomed to. Nester’s structure promoted corporate agility within the organizational culture. In a corporate society overwhelmed by globalization, companies must remain agile in order to focus on the central business challenge of the twenty-first century, which is increasing corporate agility (Graham, Ware & Williamson, 2007). The employees at Next were agile indeed.
They would typically act swift to address problems and adapt to changing situations due to the freedom allowed to them by their corporate structure Ana culture. Former Next CEO, mm Donahue, Deliver Tanat allowing Nils employees to have the freedom and flexibility to make decisions would trickle down to customers and deliver a better customer experience. It was obvious at this point hat the employees of each company had become accustom to the culture of their respective organization and were not handling the change very well.
Steps were eventually taken by Sprint Next in order to create harmony among both cultures. The infrastructure running the IT was quickly merged under one system familiar to both parties, committees designed to discuss company matters equally involved members from both sides of the pond, and consultants were brought in to mediate matters HER was not prepared to tackle on their own (Hart, 2007). Albeit these steps were a welcome change, they left employees feeling as if it as too little too late. Many employees’ discontent had escalated to alarming levels.
The financial woes associated with acquisitions began to weigh heavily on the bloated company. Many redundant Jobs fell victim to cost-cutting measures and workers were left to fend for themselves. Employees were put through a reapplication process which pitted them against their counterparts under the banner of competition for the remnants of the redundant positions that were previously downsized. The lower echelons of Sprint Next were not the only ones to be afflicted by dwindling Job security issues. Sprint Next also decided to make changes at the executive level.
Beginning in 2006, Sprint’s chief operating officer Len Lauer resigned effective immediately pending news his COO position would be removed completely (Taylor, 2006). Shortly after in December 2007, Daniel Hess took on the tough challenge as chief executive officer following news Gary Foresee resigned his position at Sprint Next. Hess hoped to stop the free fall of this company’s reputation. He was already very familiar with Sprint Next considering he was previously the CEO at Embark. The 2005 merger only held 15% of its original value and the disappointing economic conditions were slowing pointing downwards.
Competition was at a level never seen before by Sprint Next and some people were skeptical about the possibilities of a comeback. Daniel Hess was determined on putting the focus back on quality and not on growth as emphasized by his predecessor. Throughout the change, Hess has acknowledged problems accrued with technology and strong competition resulting in Sprint to lose focus of their customers. Sprint Nester’s lack of focus left many customers and employees fleeing the company in frustration and disgust. Recommendations As Dry.
Kent Rhodes, author of Making Mergers a Growth Strategy, said, “When impasses merge or go through an acquisition, the lack of a cohesive culture in the newly merged company can break a deal” (Kohl). Sprint Nester’s main problem, that trickled down to their external frailties, was their lack of synergy between the human resources department and management during the turbulent times before and after the acquisition of Next. To overcome this problem, managers need to focus on their awareness of the situation and preparation (Kohl).
Managers can learn a great deal from Sprint Nester’s blunder. Never overlook the importance of the human factor when Integrating two organizational cultures as a result AT a merger HER snouts owe properly prepared and integrated into the entire acquisition process in order to smooth the rocky road ahead and tackle any employee behavioral problems within the organization. Sprint Next is still currently working on ways to make the human factor in their merger more successful in order to accomplish some of their goals they originally set out to reach in 2005.
When a marriage between two companies is made, it is necessary that management in both organizations “respectfully communicate expectations, goals and boundaries” (Kohl) to one another. Without a mutual understanding between both companies, the internal life of the organization is disrupted and scattered therefore affecting productivity and profits negatively. The focus needs to stand on the customers and hold a strong commitment to a common goal in order to adapt to customers’ tastes and preferences of each of the company’s customer bases (Kirk, 2007).
Instead of jumping into a merger head first, baby steps would be more beneficial for both managers and organizational cultures in order to get to know each other before committing to an uncertain acquisition. Sprint and Next should have began with getting to know one another before committing into a marriage; this would have been lawful in setting the grounds for a smooth acquisition (Warranty, 2008, p. 1 7). Knowing the organizational structure in each company beforehand can help in constructing a plan to incorporate each other in order to get the most efficient mix from the combined client base.
Research needs to be conducted on the two companies’ cultures before the merger is initiated. If Sprint and Next had known how colossally different their companies’ values and cultures were, extra measures may have been taken to compensate and find a happy medium within the human factor rather than focusing solely on the bottom-line. Sprint and Next were two equals and therefore needed some extra help to be digestible. Managers can work along with HER and encourage different ways to accept cultural differences such as getting both sides of mergers to practice empathy.
With no room to accept differences, there is no room for growth. (p . 374) Once two companies are well oriented with each other, perhaps both parties should start with a smaller scale partnership in order to slowly ease into a merger. (Warranty, 2008, p. 17) This can help the employees ease into a transition, allowing them to be more accepting of their partner’s values and ideas while allocating ample time for HER to prepare for the acquisition that will take place. A human resources director specializing in acquisitions would be very useful to create the cohesiveness in a merger that Sprint and Next lacked during their acquisition.
Before a merger is initiated, there needs to be a preset plan of action to connect the two distinct company cultures (Satanist, p. 10). A human resources director with extensive knowledge on multicultural differences should be used to introduce the differing cultures to each other slowly in a systematic way, thereby easing them together instead of forcing two opposites to collide. This specifically trained or hired HER director can assist in sustaining a content unison between companies by implementing culturally sensitive performance evaluations in which the respective organizational culture is most comfortable with.
Such evaluations of employees can be used to better understand where both organizational cultures can connect best. A great tool utilized by effective HER alerts ruling mergers are Teacake communication channels . Nines channels are useful measures of employee’s thoughts about what needs work and allows them to participate in the transition actively. Finding out what the employees feel and their main reservations concerning the merger can give the company a direction on what aspects need attention first in order to blend the organizational cultures successfully.
Due diligence analyses in the financial and human capital related areas can clearly map out a picture showing how the companies can combine and where they may encounter complications in areas such as “leadership, communication, training, and performance management” (Galling, Whereon, P. 250) prior to the deal being finalized. Physical barriers, such as dual headquarters in which two distinct cultures are held part, is a major problem that needs to be extinguished from the very beginning.
In order to unify the company, Sprint and Next needed to share the same headquarters to become more of a single force within the global telecommunications market. This would clear up communication and blend the workforce to hopefully find a happy medium between Nester’s “aggressive and entrepreneurial style” and “sprints bureaucratic approach” (Warranty, 2008). This change is less costly and more convenient for executives who routinely take corporate Jets between the two headquarters at least once a day.
Retaining top employees is also important to NY successful merger. Top-level managers need to establish who they think are the key people within their companies and who can work with the integration process best. Having these people identified can help the companies in the re-recruiting process and set the standards for new employees to meet. In order to keep these individuals during turbulent times in a merger, some incentives are in order for the employees to keep them loyal when faced with uncertainty.
Almost half of senior managers leave a company in one year after a merger and up to 70 percent after three years. (Satanist, 2000, p. 10) HER should design a matrix of valued attributes of model employees. Employees need to be placed in Jobs that they are best at and can excel in. Armed with a matrix of successful attributes pertaining to the available positions, a merger can then place the right people in the right positions which should result in a boost of productivity and Job satisfaction.
While not a perfect system considering the individuality factor of each person, it is a nice starting point. A matrix of personal attributes can also be helpful in other areas as well. The matrix can also aid in partnering people from different work cultures who may share the name values and goals together in teams. Management needs to learn to be extremely sensitive to behavioral changes and maintain a high level of emotional intelligence in order to match the right attributes with the right people in their notes when looking for the proven successful attributes in the matrix.
These simple procedures can make Sprint Next a more productive place and increase the overall quality of life at work for the employees as well as create harmony when grouping people from different work cultures in the same department.. Similar to how a company retains their top employees, companies should also keep their top practices s well. Whatever is found to work for their companies should be kept in the revised business plan of the single entity. A conjoined company needs to remake their business plan and strategy with a clear vision for the employees to follow.
In Sprints case, both of the companies were still following their own strategies and plans of Acton, continuing to compete gallant can toner even tong teen are technically a single company. This leads to less productivity and a segregated workforce. Rules and goals need to be more organic rather than concrete especially in a time of great change. The vision needs to incorporate both of the companies and their client base as a combined mass. Finally, managers should learn to assemble a transition team with members from both companies led by a top-level manager or a HER director as mentioned before.
This team should be orchestrated during the preliminary stages of the acquisition and actively play a role throughout the process. This allows management from both companies to interact with each other and become accustomed to their way of business, structure and work habits. The combination of members should play as a sample for any future confrontations or complications that ay erupt when merging two distinct organizational cultures. This team serves as a vessel for trust between the two companies and serves as an example for subordinates in both organizational cultures.
Bipartisan teams such as these are crucial for a company like Sprint Next in which both parties were direct competitors to each other. A sense of trust needs to be established in order to move forward in combining two competitive companies with equal footing in their market (Satanist, p. 10). Sprint and Next were previously two of the leading telecommunication companies until their unsuccessful merger that led to a chaotic organizational truce which resulted in a loss of customers and profits.
Even though in theory the merger of the two could have been a wonderful business opportunity by combining the consumer market and the construction and business segment, the company’s cultures were not previously researched and the merger was put into action without preparation or a plan for success involving HER. From an outside view, Sprint and Next post-acquisition should have been a wonderful place to work considering their many benefits and affiliations, yet something went apparently wrong. After the acquisition of Next the number of customers, profitability and stock dropped.
These facts told a very different story compared to both companies’ prior success. It was apparent to all that the bureaucratic and centralized corporate structure of Sprint and the informal and aggressive demeanor of Next could not peacefully coexist without some assistance and preparation involving management and HER. The human factor was overlooked when assimilating the two distinctly different companies. The divergence of two very different organizational cultures created animosity within the company and a sense of distrust between the once competitors.