Moderating Role of Employment Sectors
in the Influence of Organizational
Factors on Group Cohesion in Selected
M&A Organizations

Prof. Dr. Maimunah Ismail
Dept. of Professional Dev. & Continuing Education
Faculty of Educational Studies
Universiti Putra Malaysia.
December 4, 2015
Kobe University, Japan

Introduction

What is GroupCohesion (GC)?
▪ The total field forces which act on members toremain in the group (Festinger, 1950, p. 274)
▪ ‘glue’ that holds the group members together▪ Important for a group of work to be moreeffective▪ GC in the M&A organizations is required due tointegration of two different cultures andpractices – GC becomes crucial due touncertainties

OrganizationalCulture (OC)▪ OC integration problems, aka ‘cultural distance’, ‘culturalcompatibility’ and ‘cultural misfit’ - may weaken bond ofcohesiveness▪ Pucik et al. (2011) suggest 2 ways to managed ‘cultural clashes’
i. distiguish the different levels of culture
ii. nature of the deal matters▪ Arguments: which culture (of the 4 dimensions) is better for M&A
organizations - same culture practice or different one?
▪ Unique cultures practices will reduce uncertainties, create
contininuity and commitment

FlexibilityGroup/Clan Development(Personal, ‘extended family’
loyalty, warm and caring,cohesion & equity)(Entrepreneurial, risk taker,innovation & individualrewards)

Internal

Rational

Hierarchical(Structured, rules andpolicies, stability & rewards
based on rank)(Production oriented, task
and goals accomplishment,pursuit of goals & rewards
based on achievement)

Control

ExternalOrganizational
Justice (OJ)▪ ‘Fairness matters to people’ – and even morein times of M&A (uncertainty and change),
which stimulates employees’ interest infairness (Lind & Van den Bos, 2002, p. 189)
▪ OJ - an important factor that encourages
employees to identify and attached with anorganization (Olkkonen & Lipponen, 2006)▪ Different forms of OJ (distributive, proceduraland interactional justice) included in one
model can become redundant (Fuchs & Edwards, 2012)

Factors that cause employees to leaveorganization – Kelly workforce index (2014) (European, Asia-Pacific, North-America)

Financial benefits is atthe top of the list –organizational justice(Blue)
Organizational culturesthat employees lookingfor (Red)

E.g. Opportunities
for advancement

E.g. Staff
moraleStressSalary/benefits/otherfinancial incentives

E.g. Work-lifebalanceE.g. Current
management

Employment Sectors–Justification as
Moderator▪ Different forms of ‘status evaluation’ such as age, power and tenure
may influence individuals’ behavior differently (Hameed, Roques & Arain, 2013).
▪ Practices in private sector (profit-making – GC less of concern) andpublic sector (services-GC more important) are different - lead todifferent outcomes on employees’ group cohesion.
▪ Therefore, moderation analysis will be used to measure theinfluences of OC and OJ on GC - the view of employees of the public
and private sectors.

Person-Environment (P-E) Fit Theory

Organization

CulturePurple circle
indicates
dimensions of P-E
Fit Theory used forthis study

Vacation

PersonSupervisor

PersonGroupResearch Framework

MethodResearch design
Quantative method

Population & Sample size
257 respondents (G*Power & Raosoft calculation)
Cluster Random Sampling

Data Collection‘drop-and-pick’ and online methods
85.21% response rate

Findings

Profile
GenderAge

56.2% Female
43.8% Male

The average age ofemployees 35.02 years
old (61.6% Gen-Y, 31.5%
Gen-X & 6.8% Boomers)

Employment Sector
50.2% Public
49.8% Private

Education Level

47.9% Bachelor Degree
18.3% Secondary Education
14.6% Master Degree

Structural Equation Modeling (SEM) Output

FitIndices

SEM
Hypothesized path

Beta

S.E.

Std. Beta (β)

Development Culture  GC

-.257

.120

-.393

-2.147 .032

Rational Culture  GC.183.162.248

1.129 .259

Group Culture  GC.648

.252

.804

2.568 .010

Organizational Justice  GC-.052.081-.089-.639

Note: ** p≤ 0.05 , R2=.42
GC = Group Cohesion
S.E. = Standard Error
C.R. = Critical Ratio

C.R.

p.523

ModerationConstruct
Development Culture
PublicPrivateRational Culture
PublicPrivate
Group Culture
PublicPrivate
Organizational Justice
PublicPrivate

Beta

S.E

Std. Beta (β)

CR

p-.360
.272

.164
.688

-.535
.425

-2.202
.392

.028
.693

.467
1.799

.155
2.586

.690
2.099

3.023
.695.003.487.478-1.741

.173
3.230

.602
-2.2112.769-.539.006
.590

.006
.138.085.285.011.227.070
.484

.944
.628

Conclusion, Implications and Recommendations

Conclusion

The explanatory power on GC is 42% (explained by the 4 variables)
This study contributes knowledge on GC based on M&A context in Malaysia
using P-E Fit Theory

Stronger influence of group culture reflects positive tendency for employees
to remain in the group of the organization (GC)
Employment sector moderated the relationship between group culture,
rational culture and development culture with GC – public sector is moresignificant as a moderator

Recommendation:
HR Practices

HRD policy should be understood by all policy makers for successful
implementation of M&A, recognizing the experiences of M&A in public andprivate sectors are different

Continuously develop better organization cultural practices (group andrational culture) in public sector

Recommendation:
Future Research

Include employees from M&A involving MNCs and local companies (crossborder/global perspective research)

Using qualitative method (e.g. in-depth interviews ofmanagers, using FGD) for another approach ofunderstanding M&A deals
GC based on gender perspective

THANKS!

Q&A