Sprint Nextel Corporation - Managing Organizational Change

Managing Organizational

Change during the

Sprint Nextel

Merger

GM587: Managing Organizational Change

Instructor: Philip Bradley

February 19, 2012

INTRODUCTION

Sprint Nextel Corporation is a telecommunications company based in Overland Park, Kansas. The company owns and operates the third largest wireless telecommunications network in United States, with 48.2 million customers, behind Verizon Wireless and AT&T Mobility. Sprint is a global Internet carrier and makes up a portion of the Internet backbone. In the United States, the company is the third largest long distance provider and also owns a majority of Clearwire, which operates the largest wireless broadband network. The company was created in 2005 by with the purchase of Nextel Communications by Sprint Corporation. The company continues to operate using two separate wireless network technologies, CDMA and iDEN (for Nextel and some Boost Mobile subscribers). With the merger of the two companies came the need to consolidate stores. With the need to consolidate stores also came the need to downsize the work force.

Prior to the merger with Sprint, I was a Wireless Consultant for Nextel in 2004. Nextel was one of the greatest places to work while being college student. I was able to be a full time student and employee while working for the company. Nextel was company that was all about their employees. Although a Wireless Consultant is a lower level position, our CEO Tim Donahue, always had a great deal of appreciation for the Wireless Consultants because they were "the face and front line of the company of the company". You could literally contact him in at the headquarters, which was in Reston, VA, and he would answer or return your calls if he was not available. When we had trainings there was a full catered breakfast and lunch. Management would often award the store with the highest sales for the month to dinner at high quality restaurants. An employee was always motivated and excited to come to work and exceed their daily quotas. Nextel was also an industry leader in customer lifecycle management. They invested significantly in analytics capability, which allowed them to surpass their competitors in handling customer concerns effectively. The company also developed capabilities allowing it to assess and review customer relationship values objectively and to project and respond to customer loyalty. As a result of these efforts, and what was reported to be a strong focus on customer satisfaction across the organization, Nextel was known for industry leading customer retention rates, average revenue per user, and customer lifetime value.

PROBLEM STATEMNT

When the merger took place it was a shock to Nextel employees because the company was doing well and the work life was great. Honestly it felt more like of an acquisition by Sprint rather than a merger. Nextel was high performance organization with a wonderful work life culture. Why the needs for a merger with a company like Sprint? Sprint had a horrible reputation for customer service. Nextel had the best of both worlds; we could sell, treat the customers very well, and the company took care of its employee's. Sprint needs to focus on customer service. If they get that right everything will fall into line. Also they need to refocus on their most profitable segment, meaning business, which has suffered to no end because of the inept managing of this merger. As a former Sprint Nextel employee, I experienced the horrid switch to what can only be described as hellish, mind numbing policies of the Sprint "culture". Some of these projects did not even serve a purpose. Employees felt more like a court reporter, rather than a salesman. Every little thing we did had to be recorded, and analyzed. Sprint wanted its sales force to make its quota, but did not provide us with the tools required to make a deal happen. Everything was watched with a magnifying glass, discounts, courtesy credits etc. Regional directors' time is taken up watching stores' every move, to the point we have to call them if we want to waive an activation fee. I would like for my paper on how the effects of a merger among competitors can damage the corporate culture of a successful High Performance Organization. If Nextel was a successful High Performance Organization on its own, then why did they merge with Sprint? Was it the service base, the methodology, the technology, the HPO qualities? What drove their thinking? How does a merger affect an organizational culture? What type of organizational changes will be made?

LITERATURE REVIEW

A merger is a transaction in which two companies opt to meld into a single entity. Conversely, an acquisition involves the takeover of one company by another. The companies' assets are combined in the former scenario, while an outright purchase occurs with the latter (The Impact of Leadership on Corporate Culture During Mergers & Acquisitions, 2010).

Even companies that appear to be very similar can have different corporate cultures and those cultures can be hard to integrate when companies merge or are acquired. Managing cultural change, the author argues, is critical to the success of a merger or acquisition. Smart companies know that cultural due diligence is every bit as important as careful financial analysis. They know that the values an organization holds are imbedded in organizational strategy, exercising a kind of gravitational pull on decision-making. Without understanding the often hidden and implied values that drive decision-making at every level, the chances are great that a merger or acquisition will quickly be awash in misunderstanding, confusion, and conflict (How culture affects mergers and acquisitions, 2000).

Throughout a merger or acquisition, people in an acquired company often complain that they don't know what is happening, express fear about losing their jobs, and feel demoralized as to the future of their contributions. Failed mergers that otherwise have a sound strategic and financial fit are typically the result of the irretrievable loss of intangible, messy-to-measure, and difficult-to-implement human factors on which the company's tangible assets ultimate rest (Merging Successfully, 2004, Volume 7, Issue 1).

Merging two companies with their different policies, procedures, and culture will create stress for all the people involved. The 'survivors' from both