Jaime decided to merge due to major

Jaime BrownPSC 5001, December 2017  Exam             Ihave been asked to serve in an advisory position in order to assist the stateof Alabama’s merging of the Department of Revenue and Department of Urban andRegional Planning. Thedepartment of revenue controls the revenue generated from the taxation ofresidents and businesses, and the department of urban and regional planningdevelops strategies that help create communities, accommodated populationgrowth, and revitalize physical facilities in towns, cities, and metropolitanareas. (BLS.gov) These agencies have decided to merge due to major economicdestitution and a new agency on financial transformation is being initiated bymerging these two departments.

My job is to provide a preliminary reportaddressing the mergers, formation, structure, and any other applicablecomponents of this situation, and provide recommendations.             Thereare three different types of mergers: vertical mergers, horizontal mergers, anddiversification. A vertical merger occurs when firms at adjacent stages in thesupply chain merge together, and can take place between actual or possibleexchange partners.  A horizontal mergeroccurs when firms that perform similar tasks merge together to expand the scaleof their operations. Diversification occurs two companies that operate indifferent areas that are unrelated to each other merge, this is also known asconglomerate.

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I believe that the merging of these two agencies is an example ofdiversification since the department of revenue and department of urban andregional planning operate under two different domains.            Thisnew organization can be viewed from a rational system perspective for a numberof reasons. The rational system perspective focuses on the structure of theorganization and its purpose; the organizational structure is viewed as ainstrument which can be modified as necessary to improve performance. (Scott& Davis 2007) Also, rational system perspective emphasizes thatorganizations are highly formalized, which I believe is prevalent in mostgovernment agencies.  Since a merging oftwo governmental agencies is taking place, I believe this falls right under therational system perspective. However, by not viewing this organization in a naturalsystem perspective, I am disregarding the members of the organization.

Naturalsystem perspective believe that organizations are not merely used for achievinggoals within the company and that individuals within an organization do notallow these goals to control their actions. Also, the open system perspectivefocuses how organizations are greatly influenced by their environment. Ibelieve that, in order for this organization to survive, it should integrate componentsfrom each one of these organization perspectives.

            Thereare four schools within the rational perspective that can be used to describethe structure of this new organization: Taylor’s scientific management, Fayol’sadministrative theory, and Simon’s discussion of administrative behavior. Taylor’sScientific Management theory declares that is was possible to scientificallyanalyze task performed by individual workers in order to discover thoseprocedures that would produce the maximum output with the minimum input ofenergies and resources. (Scott & Davis 2007) This theory focuses oneconomic efficiency, which is something I believe this organization shouldconcentrate on in order for the merging of these organizations to besuccessful. There are four principles of scientific management that include:specify the most effective way to perform specific work tasks, match workers totheir jobs depending on their skillset and motivation, observe workerperformance, and distribute the work between employees and managers.

All ofthese principles should be applied to this new merging organization in orderfor them to reach economic efficiency. However, the downside of Taylor’sscientific management theory is that it encourages the notion that there isonly one way to do something. I believe that merging organizations should beoptimistic when it comes to possible solutions and believing that there is onlyone best solution is unrealistic.

            Fayol’sAdministrative Theory describes recommendations of how to formalize anorganization’s structure and relationships, and looked at efficiencyimprovements from the “top down”, instead of from the “bottom up” which is seenin Taylor’s scientific management theory. Administrative theory concentrates onrefining the productivity of managers first in order to standardize processesso the individual workers can then learn and implement these changes. I believethis theory is significant because it describes what management needs to do inorder to ensure success in an organization.             The organization should alsoconsider Simon’s theory of administrative behavior when focusing on thedecision making process within an organization. Simon’s theory ofadministrative behavior clarifies the processes by which goal specificity andformalization contribute to rational behavior in organizations. (Scott 2007)   Simon placed emphasis onthe decision-making process and how decisions are made more effectively in anorganization; he believed that decision-making is the center of administration.

Individuals that are higher in the hierarchy make the decisions of what will bedone in organizations, and individuals that are lower in the hierarchy make thedecisions of how the organization will perform its tasks. By doing this, firms simplifythe decision making process and support participants in the decisions that needto be made. Recommendationsfor Structural Form            Rationalsystem theory Adam Smith discusses the significance of the division of labor,which requires the rationalization of work by assigning tasks to specialistswho mostly performed their assigned tasks. This development is mainlyassociated with an increase of productivity, heightening efficiency ofoperations, and substantial profitability for owners. (Scott & Davis 2007)  While division of labor is mostly seen inindustrial jobs such as factories or mills, this structure can be applied tothe merging organization as well. Not only does this method allow organizationsto capitalize on the individual skills of the employees, it also enables morecost-effective matching of job expertise to work capabilities. Thisorganization should place their focus on being as cost-effective as possibleseeing as how their transformation is mainly focused on financial innovation. However,the downside of implementing a division of labor can be the high coordinationcost.

            Asstated by Henry Mintzberg, organizations can be divided into five parts, whichconsists of the strategic apex, middle line, operating core, technostructure,and support staff. The strategic apex is located at the top of the model andconsists of the managers that make sure the organization fulfills its missionand controls its relationship with the environment. The middle line is composedof a group of middle managers whose duty is convert the mission and plans ofthe apex into operational plans that can be fulfilled by workers in anorganization. The operating core is located at the bottom of the model and iscomposed of the individuals who deliver the services of the organization. Thetechnostructure consists of a group of staff that work to standardize the workof employees. Finally, the support staff are workers whose function is toprovide services to different parts of the organization such as legal aid,public relations, administrators, information technology, etc. Governmentindustries such as the department of revenue and urban planning should ensurethat their organization includes these five components in order for theirorganization to function properly.

 Incentivesand Bargaining            Iunderstand that the merging of two different governmental agencies can bringabout complexity and uncertainty in regards to incentives. While the departmentof revenue might have focused on department teams and issued yearly bonuseswhile paying their team a sizable income, the department of urban and regionalplanning might have solely targeted individual performance while offering alower salary with the chance to earn bonuses throughout the year. It may bedifficult for an organization to decide what type of incentive program isbetter especially when a merger has taken place, but you do have a few options.

According to Chester Barnard, an organization can offer incentives throughmaterial inducements, opportunities for distinction, desirable physicalconditions, and ideal benefactions. (Sharfritz, Ott, Jang 2011) By implementingincentives into this organization, you can increase employee motivation,increase levels of productivity, and increase company morale and loyalty. Incentiveprograms can also result in reduced company costs by reducing absenteeism andturnover of employees.   Leadership            LutherGulick developed the POSDCORB acronym that represents planning, organizing,staffing, directing, coordinating, reporting and budgeting. Along with AdamSmith, Gulick also believes that division of work is the basis of anorganization. This model can be used as a structured framework for methodicallyperforming business process in an organization or by an employee. I believe thatthe organization benefit from following Gulick’s POSDCORB model.

For one,defining what needs to be done and the methods for doing them in this neworganization can carried out in the planning aspect. Organizing can take placeby formally classifying work sub-processes or sub-divisions. Staffing occurswhen companies bring in personnel. Directing includes the giving ofinstructions and leading the personnel in an organization to fulfillorganizational goals. Coordinating refers to connecting various aspects of thework, and harmonizing these activities, which can be important in mergingorganizations that operate under two different domains. Reporting consists offrequently bringing the manager/superiors up to date about what is going on inthe organization. Lastly, the budgeting component involves accounting, fiscalplanning, and control.

Not only does this model assist in getting the maximumvalue out of your workers, it also can help the human resource team to fulfillthe needs of an organization.Culture            Anorganization’s culture consists of values, beliefs, assumptions, perceptionsbehavioral norms, artifacts, and patterns of behavior. (Sharfritz, Ott, Jang2011) One of the most common problems with merged organizations is that most ofthem fail to integrate their cultures; so being able to establish a sharedculture is an important part of merger success. Culture is important in anorganization because it impacts the functioning of an organization bydetermining how the firm handles conflict, how employees interact with oneanother, how the firm cooperates with its stakeholders, and how employees reactto change. I believe that in order for the merged organization to successfullyintegrate cultures, it must establish a new up-to-date culture using the priorcultures of these two agencies. The improved culture should incorporate the bestcomponents from both of these organizations.

Conclusion            Inconclusion, I think in order for this merge to be successful, the mergedorganization should be mindful of their formal network which consists of theirhuman resource practices, job design, and the structure of the organization.The formal network works as a catalyst for communication through the scalarchain that occurs within an organization. In every formal organization, thereis also an informal organization so you should your organization’s informalnetwork which consists of the culture, social network, and power and politics.The informal networks relates to the emergent characteristics of theorganization that affect how the organization operates.

(Scott & Davis2007) As stated above, one of the most important tasks of this mergingorganization would be to successfully integrate the culture of bothorganizations. The merged organization could also benefit from incorporatingtheories from the rational (focusing on efficiency and productivity), open(focusing on the organization’s environment), and natural system perspective(focusing on the members of an organizations). 

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