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Introduction
This paper employs a survey-based evaluation approach using psychological contract to better understand staff/employees anxieties and reactions to merger and acquisition (M&A)[1] related organizational change (Brockner et al., 1992; Seo and Hill, 2005). M&A in the UK public and education sectors have increased dramatically in recent years (Searle and Ball, 2004; Chartered Institute for Personnel and Development (CIPD), 2007; Davies, 2011) with greater financial and organizational pressures to consolidate and share services (Davies, 2011). However, as we will see, many mergers crucially fail to get employees on board during the early stages of the change process. Reasons for typical early and later stage M&A failure from a human resource (HR) perspective include: a lack of shared trust and people integration within the newly merged organization; inefficient sharing and transfer of organizational knowledge; and problems resulting from the weak cultural fit, of two or more merging organizations (Armenakis and Harris, 2009; Azzone and Palerno, 2011). Employee reactions to M&A (regardless of industry sector) can lead to decreased organizational commitment and loyalty, as well as increased turnover intention and on-going productivity problems (Bellou, 2007; Arshad and Sparrow, 2010). As a type of organizational change event, mergers are often associated with employee feelings of vulnerability and perceptions of job insecurity (Searle and Ball, 2004). We will explore some of these issues in the context of managing employee/staff relationships in the UK further education (FE) sector. This paper contributes to the literature by discussing case study findings and offering implications for managers, principals or heads of department dealing with organizational change in the FE education environments, as well as the wider public sector.
In our study, psychological contract is used as a lens for measuring and understanding employee/staff reactions to merger-related change in the FE sector. Psychological contract is often used to measure perceptions of mutual obligations, future promises (and responsibilities) resulting from the reciprocal exchange relationship between the employee and employer (Rousseau, 1998, 2011). A central research question was developed as follows, namely:
How do employees/staff view their employment relationship after a merger is announced?
We address this RQ1 by combining analysis of self-reported staff perceptions of psychological contract, with thematic open/free text commentary of the wider issues involved. This helped us as researchers and...