How do Organizational Culture and Leadership Style Influence Employee Readiness in an Acquired Company?

Abstract

Transformation in an organization can occur due to developments in technology, new rules, social aspects and the environment. The organization transformation process will push the organizational culture that exists to adjust with the occurring changes. One of the forms of transformation in a company is company acquisition which is done to enhance the company’s ability to overcome business competitions that keep on developing. Company acquisition will affect the company’s readiness in terms of both material resources and human resources that the company owns, which makes it necessary to analyze the employees’ readiness in overcoming changes after acquisition as well as the role of leadership in motivating the employees in reaching the company’s performance. This research’s purpose is to analyze the organizational culture transformation process in an insurance company in Indonesia that experiences an acquisition done by a governmental company. Individual readiness character identification in overcoming changes can help organizations in developing and implementing more effective changes. Professional organizational development in business is an initiation in changes intervention to create improvements in the organization’s performance. Organizational changes run effectively in a long term only if the members of the organization are ready to change.

The data collection method was done by distributing questionnaires to the employees of the insurance company who have been working there since before the company was acquired. The number of respondents who have filled the questionnaires are 208 people from all the work units in one of the insurance companies in Indonesia. The data processing was done descriptively for the respondents’ characteristics analysis and the organizational culture’s profile, leadership style and the readiness to change in the company after acquisition. The relationship among the variables was analyzed using Structural Equation Model (SEM). The research results show that the dominant organizational culture before and after acquisition is the Communal culture. This means that the employees in the company have had high level of sociability and solidarity. The employees have had strong emotional bonds with each other and a high level of understanding in terms of their work tasks in order to reach the determined targets. On the other side, the dominant leadership style is the task-oriented. The employees’ readiness dimension that is shown is the participating dimension. The relationship among the research variables shows that the organizational culture before acquisition does not give significant effects on the leadership style and the readiness to change. On the other side, the organizational culture after acquisition gives significant effects on the leadership style and the employees’ readiness to change. The leadership style gives significant changes on the employees’ readiness to change.