HOLBORN COLLEGE

MBA

University of Wales

Coursework Report

Subject : Understanding and Managing Organizations

Course Work Title : A Comparative analysis (OB) of 2 merging organizations

Module Code : WAMB 4001

Module Leader : K.Heffernan

Surname : MANIKANTAN

First Name : Jackson

Student ID : 0802966

No. of words :1943 (Word limit :2000)

Student’s signature
Table of content:
Date:
Question 1…………………………………………………………………………….04

Culture………………………………………………………………………………. .04

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Views of seeing culture……………………………………………………………….04

The Cultural perspective……………………………………………………………...04

Schein organization Culture…………………………………………………………..05

Handy organizational culture…………………………………………………………06

Deal and Kennedy model……………………………………………………………..07

Culture comparison through Hofstede study…………………………………………07

Question 2......................................................................................................................08

Leadership…………………………………………………………………………….08

Leadership theories…………………………………………………………………. .08

Trait theory……………………………………………………………………………08

Group and exchange theory…………………………………………………………...08

Behavioral theory……………………………………………………………………...08

Leadership styles………………………………………………………………………08

Authoritarian style…………………………………………………………………….08

Democratic style……………………………………………………………………....08

Laissez-faire style…………………………………………………………………… .08

Lloyds TSB Leadership style………………………………………………………….09

HBOS Leadership style………………………………………………………………..09

Question 3……………………………………………………………………………..10

Fiedler’s situational theory…………………………………………………………….10

Vroom/Yetton & Vroom/Jago theories………………………………………………..11

House/Dressler Path goal theory ………………………………………………………… ..12

Hersey/Blanchard model……………………………………………………………….13

Question 4…………………………………………………………………………......14

Bicultural Audit………………………………………………………………………..14

Identification of cultural gap…………………………………………………………..14

Analysis of cultural gap………………………………………………………………..14

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Culture Bridging……………………………………………………………………….14

Challenges faced by Lloyds TSB and HBOS………………………………………….14

Challenges faced after merging………………………………………………………..14

Mckinsey’s five key of challenges…………………………………………………….15

Conclusion…………………………………………………………………………….15,16

References and Websites………………………………………………………………17

Lloyds TSB and HBOS

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Question 1

Brooks I(2006 p.139) has stated most astutely that “Culture also influences
the way organizational members interpret the nature of their business environment,
as knowledge of the relationship between the organization and its environment is an
extension of the organizational culture; the environment is viewed through cultural
lenses”.

Organism Virtual Culture

Brain ORGANIZATION Instrument of domination

is a ……..

Political system Machine

In figure -Ways of seeing an organization (2006 p.139 fig.5.4) Brooks claims there
are many ways of seeing an organization.

The Cultural perspective:

According to Brooks I(2006 p.140) “Culture and organization can be viewed

as an iceberg, a metaphor which suggests what you see on the surface masks a
much deeper, mystical and powerful reality”.

As per Schein Organizational culture (Mullins, 2007 p.722)

Lloyds TSB:

It is seen that though they have merged with many companies in the
past, they were all of similar culture so the original culture of the organization stayed
undiluted. (Source: Company Corporate Responsibility Review 2007, VAULT
Employee Satisfaction Surveys and Media Articles)

They are based on Artifacts:

a. Customer oriented

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 b. Recruit talented people through tough selection procedure
c. Create framework for employee clear learning and future needs
d. Employees rewarded on the basis of client satisfaction.
e. Provide personal development programs for employees.

HBOS:

Their Anglo- Scottish merger earlier between Halifax and Bank of

Scotland however seems to have resulted in dilution of both cultures.(Source:
Company Corporate Responsibility Review 2007, VAULT Employee Satisfaction
Surveys and Media Articles)

They are based on Values:

a. Rewards-oriented company
b. Market savvy
c. Younger
d. Mortgage expertise

As per Handy organizational culture (Martin, 2005 p.494)

Lloyds TSB:

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They are role cultured:

a. Strong banking system

b. Produce more output in good environment

HBOS:

They are task cultured:

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 a. Focused on goals
b. Work in team

As per Deal & Kennedy Feedback-Rise Model:

As per Hofstede’s study model( Source: Social Responsibility Report 2007 and
2008)

Lloyds TSB HBOS

Power distance High- Low-
Disciplined Acceptance of
responsibility
Uncertainty avoidance High- Low-
Precision Basic innovations
Collectivism vs. High- Low-
Individualism Employee commitment Management mobility
Masculinity vs. Feminity High- Low-
Mass production Personal service
Efficiency Custom-made products
Bulk chemistry Biochemistry
Long vs. short term High- Low-
orientation Developing new markets Fast adaptation

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Question 2

“Leadership is an attribute that is highly prized in most organizations and, as a result,

it is an extensively studied and debated topic in Organizational behavior” (Meiindl et
al.1987). Robbins S P (1998 p.347) states “Leadership is the ability to influence a
group toward the achievement of goals” supported by Stogdill R (1950, p3) who
defined leadership as influencing process aimed at goal achievement. Bennis W and
Nanus B (1985, p.21) observes that managers do things right while leaders do the
right thing. “The leader is prophet, catalyst, mover-shaker, focused on strategy”
(Bryman,1986 p.6).Rollinson D(2005 p.436) has stated most astutely that a“ leader is
someone who occupies a role which involves conforming to a set of behavioral
norms and expectations emanating from followers, in turn for which they confer on
the leader a degree of power(within prescribed limits) allows the leader to influence
their actions.”

Following are the main leadership theories

a. Trait theory: Leadership is inborn talent and God gifted

b. Group and exchange theories: This gives more loads on subordinates and
more benefits to the leader. They are of three types-Leader based; where
there is less authority to the subordinates .Follower based; where there is a
self performance management and more authority to subordinates.
Relationship based; where trust is generated between the employees giving
them due respect in through meetings.
c. Behavioral theories: They are of two types-People oriented; where emphasis
is given on subordinates rather than the goal. Task oriented; where it gives
importance to the goal than the employees.

Following are the main leadership styles (Mullins, 2007 p.371)

a. Authoritarian: The leader sets the goal and his subordinates has to follow
him
b. Democratic style: The leader plays the role of a team member.
c. Laissez-faire: Gives empowerment to the employees helping them to take
their own decisions.

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 Prevailing leadership styles

Lloyds TSB leadership style

a. “Demonstrating leadership from the top

b. Vision to be the best UK financial services company
c. “Balanced scorecard” for performance on relationships
d. Corporate values generated from the top
e. Emphasis communication of responsibility to followers”(Source: Company
Corporate Responsibility Report 2007)

Lloyds TSB themselves describe their leadership style using these words.
Therefore it may be a task oriented company using scorecards to measure
relationships. They seem to have an Authoritarian Style of leadership – or may be
slightly democratic also.

HBOS leadership style

a. “Aim for “joined up” approach of leaders and followers
b. Create leadership/rewards culture throughout the company
c. Peer-based “colleague advocacy” used to substitute leadership
d. Communicate objectives , and do not dictate activities

Take pride in increase in female workers in the company” (Source: Company

Corporate Responsibility Report 2004)

From the description of the HBOS Corporate Responsibility Report we see their
own self descriptions of leadership. It seems they share leadership with employees
using a more people oriented style. They use peer-advocacy (people advising
people).They seem more democratic or even laissez-faire.

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 Question 3

The quality and success of leadership depends on two factors: the mindset of the
people in the company and the environmental situations. There are four different
theories used to analyze the effect of situational factors on leadership:

1. Fiedler’s situational theory: Here three different factors are compared-task

structure, leader power and leader-worker relations. Eight different scenarios
are listed where these three factors are either strong or weak. If all the three
factors are too strong (first column) or all are too weak(last column) the leader
is forced to use a task –oriented direct-control style.
Scenario

Situational One Two Three Four Five Six Seven Eight

Factor
Task
Strong Strong Weaker Weaker Strong Strong Weaker Weaker
Structure
Leader's
Strong Weaker Strong Weaker Strong Weaker Strong Weaker
Power
Leader
worker
Strong Strong Strong Strong Weaker Weaker Weaker Weaker
relations

Leader's Task Participative Approach Task

style Oriented Oriented
Directive Directive
Style Style
  Lloyds HBOS            
TSB
Bank

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Where in all other cases, the three factors have varied mix of strengths and
weaknesses, the leader may need to use a participative style. Lloyds TSB has a
controlling style, while HBOS has a participative leadership style.

2. Vroom/Yetton & Vroom/Jago theories: Here the twelve variables that affect
leadership style are discussed. Using different combinations of these
variables, they arrived at five clear leadership styles: Autocrat A1 and A2,
ConsultativeC1 and C2, and group G2.Each style shows leaders and workers
mixing in a different way when taking decisions.(Mullins, 2007 p.377)

Variables
Leader gets information and takes
Quality decision Autocratic:A1
Commitment
Leader information Group gets information and leader
Problem structure takes decision
Commitment probability Autocratic: A2
Goal congruence Lloyds
Subordinate conflict Leader consults with the individuals TSB
Time constraint and takes decision Consultative: C1

Subordinate information
Motivation development
Geographical dispersion
Motivation time

Leader consults with group and

takes decision Consultative: C2
HBOS

Group shares decision and leader stays

apart Group: G

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Lloyds TSB uses a more Autocratic style and less consultative, where the leader
empowers the worker less. HBOS empowers the worker more. Therefore they are
more consultative and less Group ( Social responsibility review 2007)

3. House/Dressler Path goal theory: This theory tries to show how the leader’s
behavior and his ultimate effectiveness are affected by both employee
contingencies and environmental contingencies. Depending on the type and
quality of these contingencies the leader is advised to use directive,
supportive, participative or achievement oriented style.(Kelvin: 2009)

Leader Achievement
Directive Supportive Participative
Behavior Oriented
Employee Contingencies
Skill/Experience Low High Low High
Locus of control External External Internal Internal
Environmental Contingencies

Task Structure Routine Routine Non-routine Non-routine

Negative
Team Dynamics Low cohesion Positive norms High cohesion
norms

Lloyds TSB HBOS

HBOS scores as a more participative style because the employee contingencies and
environmental contingencies are managed by employees themselves more.
Whereas in Lloyds TSB, the leaders tend to direct and manage more.

4. Hersey/Blanchard model: This is a study of the task-oriented and people-

oriented behaviors of leader’s .The leader task orientedness may be low or
high and the people orientedness may be low or high. Depending on the
combination it may result in either-Delegating, participating, selling or a Telling
style.(Huczynski & Buchanan, 2001 p.723)

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It is seen that Lloyds TSB leadership style is more telling and less selling. While
HBOS leadership style is more participating and less delegating. (Source: Social
responsibility report)

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 Question 4:
The merging of Lloyds TSB and HBOS is not only a merging of two different
financial companies but also a merging of two different cultures. They have to
be ready to face new challenges when they combine. Bicultural audit is
important for the merging of two company’s culture. This audit produces data
for starting work platform, strategy required for successful merger. They are of
three types:
a. Identification of cultural gap: Comparing the values, vision and
management behavior of the two companies, this phase recognizes the
gap.
b. Analysis of cultural gap: This phase brings out the similarities and
dissimilarities between the two cultures.
c. Culture bridging: On the basis of the above two information’s the data
management team can start the bridging of culture process.(Bicultural
Audit, by Richard Cook)

Challenges faced by Lloyds TSB and HBOS

Lloyds TSB HBOS

Financial crises in the market Fund raising from the whole sale market
Searching for new investors Misleading interview
Job insecurity due to recession Financial crisis
Quick decision on merging with HBOS Clearing the picture about the organization

Challenges faced after merging

a. Shake in leadership
b. Less investment by people
c. Employee problems
d. Unemployment problems
e. Reduction in share holder confidence

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 f. Conflict between organizations
g. Employee dissatisfaction
h. Chances of people investing less
i. Pressure of government regulation

Mckinsey identifies five key of challenges:

a. Identify and train people about the merger

b. Understand about the external champion stakeholders
c. Understand the performance culture of the merger company and establish
new hybrid culture
d. Understand and communicate to down merger communication
e. Create a new team for understanding analysis of the company ( Source:
Bicultural Audit: by Richard Cook)

Conclusion:

Lloyds TSB has a strong culture compared to HBOS. Strong culture

seems desirable for the sake of strong performance, and weak culture is believed to
arise due to employee empowerment. But a strong culture can be unsuccessful if it is
too strong and suppresses creativity. It can also be a disadvantage in a volatile
market when the company needs flexibility. Both companies culture may be assets
according to the market situation. In a short term advantage, in this current market
volatility the adaptive culture of HBOS may perform better than Lloyds TSB. But in
the long term, after the present economic crisis, the government may impose strict
regulations on banks hereafter. In that case the most conservative culture of Lloyds
may be better.

Lloyds TSB is a leader based organization which aims to be the top

financial company in UK. Since they focus on “Balanced scorecard” for performance
on relationships and on the completion of task, it is a task oriented company. They
use authoritarian style in which the leader sets the goal and reward system for the
team. They have a directive style in which the leader provides certain specific
direction to the subordinates, who follow the given rules and regulations. They

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demonstrate perhaps more concern for rules and regulations. However, HBOS is a
relationship based organization as they are concerned with the relationship with the
employees. As they are more concerned with employee welfare they are basically a
people oriented company. They adopt a more or less a Laissez-faire style where
there is more empowerment to the subordinates, giving team members more
flexibility and allowing them to take decisions of their own. They believe in
participative leadership style as the company welcomes suggestions for the
improvement of the same .They are more concerned about production.

References

1. Robbins S P(1998). Organizational Behavior,8th edn,New Delhi: Prentice-Hall

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 2. Rollinson D(2005).Organizational behavior and analysis.3rd edn,Gasport:Ashford
color press

3. Mullins Laurie J (2007).Management and Organizational Behavior, 8thedn, Harlow:

FT Prentice Hall.

4. Martin J (2005).Organizational Behavior and Management, 3rdedn, London: Thomson

Learning.

5. Buchanan D & Huczynski A (2001).Organizational Behaviors, an Introductory Text,

4thedn, Harlow: FT Prentice Hall

6. Luthans Fred (2005).Organizational Behavior, 10thedn, New York: McGraw-Hill.

7. Robbins Stephen P (2005).Essentials of Organization behavior, 8thedn, New Jersey:

Pearson Prentice hall.

8. Cole G (2004).Management Theory and Practice, 6thedn,Gosport:Ashford Color

Press

9. Martin J (2001).Organizational Behaviors, 2ndedn, London: Thomson Learning.

10. Hofstede G and Hofstede J.Culures and Organizations,2nd edn,New York: McGraw-

Hill

11. Brooks I(2006).Organizational Behavior, 3rd edn, Harlow: Pearson educational

limited

Websites

1. www.global-excellence.com/getfile.php?g=46 (Bi cultural Audit)

2. http://intranet.holborncollege.ac.uk/students/ClassHandouts/MBAWales/WAM
B4001%20UaMO/l%20-%20Lecture%2006%20(Culture).pdf (Kelvin:2009)
3. http://www.lloydstsb.com/about_ltsb/lloyds_bank.asp
4. http://www.mediacentre.lloydstsb.com/gr/history.asp
5. www.hbosplc.com/community/includes/HBOS_CR_Report_2006.pdf (The
Way We Do Business)
6. http://www.lloydstsb.com/media/lloydstsb2004/pdfs/corporate_report_2007.pd
f
7. http://www.mckinsey.com/ideas/books/Mergers/ (Success on merger
challenges)
8. http://www.lloydstsb-annualreport.com/businessreview/our_people

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