Structural and systemic factors of adjustment

Structural and systemic alignments are a precondition for success, which must be achieved immediately, in the first phase of the integration process.

With regard to systemic alignment, it is considered together with structural alignment, as appropriate organizational structure is constructed depending on the complexity of the management system. As organizational structure understood is

„[...] posts occupied by people with assigned tasks (duties), rights and responsibilities, and interconnections present between them that lead to formation of organizational cells”⁸⁸. Out of many similar definitions, the above was chosen as it emphasizes the fact that the organizational structure is in fact the people who have the knowledge relevant to their contracted duties and the relational knowledge that allows them to maintain proper connections among them, especially horizontal and diagonal, as well as connections with the environment. Organizational structure corresponds to the management system adopted in the company, for example, in the hierarchical management a line-staff structure common today is generally created.

88 J. Lichtarski, Struktura organizacyjna przedsiębiorstwa i jej kształtowanie, in: Podstawy nauki o przedsiębiorstwie, Wydawnictwo Akademii Ekonomicznej we Wrocławiu, Akademia Ekonomiczna we Wrocławiu, Wrocław 2001, p. 236.

On the other hand, with a decentralized and more autonomous management system, there are different structures that receive greater discretionary power at the lower decision-making levels, and the role of management, besides the necessary centralization of decisions, also take on features of coordination. In metallurgical enterprises the structure of integrated division dominates, which is a variation of the line-staff structure⁸⁹. This structure, as Strategor⁹⁰ states, is a result that companies with a dominant product, where 70-80% of sales are a single product or line of tightly integrated products, are essentially functional, but their divisions or branches are generally so autonomous that they can manage their diversified business. For functional units in this structure, the task is to ensure the synergy resulting from horizontal connections was foreseen. In this situation, the success factor of knowledge transfer, which is the structural matching, is to find the right direction of the flow of organization knowledge in a functional system, i.e. knowledge transferred from functional cells of one company to the corresponding cells of the other enterprise.

This situation can be illustrated by the example of the incentive schemes in the merging companies. There may be variants of knowledge transfer, which indicate that there are three possible states (resources) of knowledge immediately after the merger. Two of them are vectors, and one is scalar. The vectors are the flow of knowledge from the acquired company to the purchaser, the flow from the purchaser to the acquired company, while the scalar is knowledge that is not transferred in any direction.

The example of the incentive system can take into account 3 basic variants. The incentive system of the acquiring enterprise is better, clearer and motivates better, the system of the acquired is better and both systems do not differ significantly or are identical in the essence of the rules. In the first variant, the acquiring enterprise imposes its system (or successfully convinces to adopt it), in the second uses system of the acquired, which shows the objectivity and control over the mood of its own employees, and in the third knowledge transfer variant success factor will be smooth performance of the transfer in the first stage of taking over the enterprise.

It is possible here to encounter difficulties in the form of resistance of the former company employees in cases where new regulations, such as bonuses, threaten the level of remuneration and force them to increase labour productivity or tighten the rules of eligibility for bonuses.

Possible additional solution is retaining by the acquired company of its own system, slightly modified by the elements of the acquiring company’s system (e.g.

leaving the existing system of wage determination).

89 Strategor, Zarządzanie firmą, PWE, Warszawa 2001, p. 325.

90 Ibidem, p. 332.

The success factor which is structural adjustment can be briefly approximated by analysing the organizational chart. It is a graphic representation of the organizational structure and, together with regulations, service book and other documents, maps this structure at different levels of governance.

Knowledge transfer takes different routes. Open knowledge, contained in all kinds of documents, can be transferred by the management of the merged company down to the lower levels of management and to the staff units located at these levels. This may lead to the loss of important accompanying elements, which are not recorded but affect the use of the system in practice. These are, for example, very often used explanations and oral interpretations. Therefore, it is worthwhile to organize the meetings of the relevant staff of former independent companies, in order to provide knowledge that can be treated as tacit knowledge. The incentive system is no exception when it comes to transferring knowledge. At the time of unification and merging units, there is a similar flow of knowledge in many organizational units. Figure 12 illustrates the flow of knowledge in an example of a simplified organizational chart of two companies.

Figure 12. Flows of explicit and tacit knowledge within the merging organizational structures

Legend:

Flow of explicit knowledge Flow of tacit knowledge Line amalgamation

Source: own study.

Another issue, related to adjustment processes, is establishment of transfer destinations for various knowledge areas. Using the previous knowledge classification, it is possible to determine where in the organizational structure (at

least in the analysed industry) the highest flow rate occurs, and which areas it most affects. The problem is not the flow of knowledge in general, as it is rightly noticed by B. Mierzejewska⁹¹ „explicit knowledge, articulated, easily undergoes the transfer processes [...]”, whereas „transfer of tacit knowledge is not an easy task, even within the organization. It is difficult to expect that in case of knowledge transfer between two so far different social groups, the transfer of knowledge could be simple.”

Therefore, establishing critical sites for the transfer of tacit knowledge in the process of its flow may be of practical importance in undertaking integration efforts.

Figure 12 shows the streams of tacit knowledge in its previously formulated forms, directed to the organizational structure of the acquired enterprise. The streams reflected by the transfer vectors directed to the acquired company do not differ from those shown in Figure 12 and therefore need not be presented separately.

The presented in figure 13 locations (divisions, staff cells) of tacit knowledge flow indicate the special role of professional experience that is valuable to every management. Hence, it is concluded that, within restructuring, almost always taking place during mergers and acquisitions, this should be taken into account when redundancies are made.

Skills, understood primarily as operational skills, are directed to the manufacturing sphere, and here are generally the least doubts. The new owner deprives of highly qualified staff only in extreme cases.

Relations, as a rule, personal, though seemingly invisible, are the basic attribute of logistics and sales personnel. In case of mergers of companies of horizontal character, these divisions are primarily „victims” of reductions. These works should not be duplicated, but the selection for lay-offs must necessarily take into account relations established by the employees. In the event employees with an extensive network of personal relations leave, there may be serious disruptions in supply and sales.

In addition, it should be noted that in the case of a different set of divisions, the situation will not change significantly. If, for example the list of divisions the R&D division is added (which happens rarely, as it is usually included in the division of General Manager or Production Planning), then certainly tacit knowledge would not be directed there. Work in R&D divisions is generally based on explicit knowledge, and only in very special and rare situations – tacit.

Considered should be the directions of the explicit knowledge, difficult to deal with from the point of view of the adjustment, which are the factor of success (Figure 14).

91 B. Mierzejewska, Transfer wiedzy…, op. cit., p. 23.

Figure 13. Simplified flow chart of tacit knowledge transfer

Skills

Experience

Routes

Employee matters

Logistics

Occupational health and safety, fire and environment protection

Sales

Preparation of production

Manufacturing

D 1 D 2 D 3

Legend:

Tacit knowledge transfer

Divisions

Amalgamated divisions Units

Source: own study.

Analysis of the scheme should begin with the statement that even to divisions and staff units, which any vectors do not lead to from certain types of explicit knowledge, it is transmitted in a certain limited amount. Figure 14 shows typical transfer directions. The most versatile is the transfer of knowledge contained in documents and concerns all divisions, which is understandable, as organizational knowledge of explicit nature usually takes the form of documents.

Therefore adaptation measures, which are a factor necessary for success in the area of knowledge transfer, need to focus on the rapid and correct implementation of joint knowledge documents in the consolidated enterprise. In case of absence of this knowledge, it is difficult to talk about success.

Figure 14. Simplified flow chart of explicit knowledge transfer Internal rules

and manuals

Standards

Documents

Employee matters

Logistics

Sales

Preparation of manufacturing

Manufacturing Analyses

Reports

Forecasts

Patents, ideas and innovations

Occupational health and safety, fire and environment protection

Source: own study.

Other types of the explicit knowledge media are of specialist nature and concern one or utmost two vertical divisions as the target of knowledge transfer. The second case concerns analyses, which most often relate to sales (sales and marketing) and manufacturing area (production). This does not mean that analyses are also prepared in other parts of the organizational structure, but they are less frequent.