Bancolombia, Conavi, Corfinsura Merger's Cultural Issues | Free Essay Example

Bancolombia, Conavi, Corfinsura Merger’s Cultural Issues

Words: 1008
Topic: Business & Economics

Problem Statement

With the merger of Bancolombia, Bancolombia, Conavi, and Corfinsura, the new bank that was in place has a challenge in the area of human resource (Caijao 2). According to Caijao, employees that would continue to work with the new bank lacked determination with the three companies having a tough time while coming up with an effective method of determining this matter (11). This situation was a cause for a major concern as the three banks created uncertainty in the workforce (Caijao 11). An attempt to solve the problem involved categorisation of employees into four classes namely the key employees, critical employees, those subject for transfers and relocations, and those to be dismissed from the bank after the merger (Caijao 11). Caijao further states that the critical personnel were those that would stay in the new organisation during the merger period pending consideration in the new outfit (11). This issue was the main problem that was derived from the case. The merger also posed a problem of cultural transformation, as the companies were initially working in different setups and or cultural backgrounds, and hence a probable problem to the administration of the new company. The cultural dissimilarities in the workforce would hinder positive progress (Drucker, and Maciariello 23).

Supporting Evidence / Data Analysis

As for the issue of the laying down of employees, the merger of the three companies would create a large pool of employees that were working in similar departments and organs of the new company. This effort would therefore have been a liability on the side of the company, as it would lose some of the profits in paying the workers some of whom may not add value to the company. Caijao reports on the comments made by Boliver that some of the workers had critical knowledge only for the transition period of the merger with the example being members of Conavis information systems (5). It is reported that a distinctive package was then awarded to these employees though it was only for the transition period (Palacio and Fernanda 15). It was the work of the managers in the described jobs in the various companies to ensure that the employees work within the set principles during the merger. The bulk of employees who had been considered for laying off decided to leave the company voluntarily after their conditions were met. In fact, as Caijao informs, the management allowed them to leave at their convenient time (12). The employees close to their retirement ages were also awarded an exceptional package besides being allowed to resign at their convenience. Schein confirms that the cultural diversity in the organisations before the merger was reported to work for the new organisation that came after the merger (27). The company is reported to have overcome the restrictions imposed by culture in the pre-existing institutions before the merger to become successful in various fronts in the sector both locally and internationally.

Key Decision Criteria

The decision to reduce the number of employees during the merger of the three companies was informed by the desire to maintain viability and competence in the market for the new company. According to Gaughan, this move is characteristic of many businesses especially those with intentions of mergers (9). According to Caijao, the workers were given choices to make regarding their stay in the new organisation (11). The provision presented them with the ability to think through their decisions. The other key decision made apart from the employee lay down was the harmonisation of the working conditions of the three companies to produce an effective system of management. This strategy involved a reduction in the managerial staff for the companies involved in the merger with different roles being allocated to the new ones. The criteria for choosing this option were based on merit, the observed performance, and experience in the companies.

Alternatives Analysis

Some of the alternatives that the organisation was presented with included the retention of the labourers with this option posing a risk to the operation efficiency of the new organisation formed after the merger (Drucker and Maciariello 43). Another option would have been to re-evaluate the employment terms of the labourers with the most significant step being to redistribute them within the company in a bid to review the remuneration based on the new functions. Bancolombia used this alternative to some extent in combination with its reduction of employees where the company improved on growth. Reduction of the administrative staff in the new organisation would also have been a feasible alternative as suggested by Drucker and Maciariello (47).


Following the merger of the three companies and the results of the standardisation of the working conditions, several recommendations arise for this particular organisation. The organisation should have invested in an organisational culture that was beneficial to all employees, and which facilitates the functioning of the organisation as a whole. This step should have avoided the challenges experienced in the formulation of employee retention strategies. According to Schein, organisational culture determines the success of an organisation (14).

Action and Implementation Plan

The implementation plan for the recommendations should first be to come up with a working formula after feasibility studies on the organisational culture and employee retention strategies. The organisation would then proceed to get feedback from the employees beginning with the managerial staff to the least senior employee. Consultations should then be made and suggestions made by the employees and other parties considered for implementation (Gaughan 13). The plan hence adopted would be inclusive and one that is perceived to be accommodative to all members of staff thus making the process of implementation easier. The other step that the organisation needs to take is to continue encouraging the newly adopted organisational culture, which, as Caijao states, is working for the organisation after the merger (17). The plan so formulated would propel the company to success in the future besides maintaining profitability. It is also noteworthy that the management considers investing on experienced employees while also reemploying those who are beneficial to its operations.

Works Cited

Caijao, Juanita. Bancolombia: Talent, Culture and Value Creation Management in Mergers. Ontario; Richard Ivey School of Business Foundation, 2011. Print.

Drucker, Peter, and Joseph Maciariello. Management. New York, NY: Collins, 2008. Print.

Gaughan, Patrick. Mergers, acquisitions, and corporate restructurings. New York: John Wiley & Sons, 1996. Print.

Palacio, Jorge, and Luisa Fernanda. AlineacioÌ nestrateÌgica de TI en el sector financierocolombiano: casogrupo Bancolombia. BogotaÌ: Uniandes, 2008. Print.

Schein, Edgar. Organisational culture and leadership. San Francisco: Jossey-Bass Publishers, 1985. Print.