Topic: the Effects of Municipal Amalgamations on Organisational Culture: a Case-Study of Raymond Mhlaba Local Municipality in Eastern Cape Province

Topic: The Effects of Municipal Amalgamations on Organisational Culture: A Case-Study of Raymond Mhlaba Local Municipality in Eastern Cape Province.

Likhaya Hlubikazi Ndlela

201205948

Dissertation submitted to the University of Fort Hare in partial fulfilment of the

requirements of Masters in Public Administration.

Department of Public Administration

Faculty of Management and Commerce

University of Fort Hare

Republic of South Africa

Supervisor:

Prof D.R. Thakhathi

2019

0 Declaration

I LIKHAYA HLUBIKAZI NDLELA (201205948), do hereby declare that this dissertation has been submitted in the fulfilment of the requirements of the Degree of Master of Administration at the University of Fort Hare. The research work has not been previously submitted to another institution and for obtaining another qualification. Throughout the study all sources used have been acknowledged and properly cited as required in the University’s plagiarism policy.

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Signature Date

Dedication

I would like to dedicate this research study to my loving family, Thabile Ndlela, Phumla Ndlela, Nathunathi Mvunge and Lusanele Ndlela, whose courage and support remain the source of my inspiration. In particular to all the young women working hard towards success, you are cherished.

ACKNOWLEDGEMENTS

To God be all the glory and honour. Thank you to the Lord God Almighty for granting me strength and courage to complete this research study.

To my research supervisor Professor D.R. Thakhathi for his guidance throughout the entire journey I just want to commend you so much for your patience, being tolerant with me, encouraging me and for all your efforts and making it possible for me to complete this study. You have made this to be a peaceful journey.

My special gratitude goes to the National Research Foundation (NRF) for their assistance throughout this study, my family and all my friends without mentioning them I would like to express my sincere appreciation for your support. Furthermore I would like to express gratitude to my colleagues within the Department of Public Administration at the University of Fort Hare. Thank you for your guidance and assistance.

Above all and most importantly: Enkosi Bawo.

Contents Declaration………………………………………………………………………………………………………………………………………..1 Dedication………………………………………………………………………………………………………………………………………...2 Acknowledgements…………………………………………………………………………………………………………………………...3 Abstract……………………………………………………………………………………………………………………………………………..9

CHAPTER ONE: GENERAL INTRODUCTION AND BACKGROUND ...... 14 1.1 Introduction ...... 14 1.2. Background of the study ...... 15 1.2.1 Overview of the Eastern Cape Province ...... 21 1.2.2 Amathole District Municipality ...... 22 1.2.3 Overview of Raymond Mhlaba Municipality...... 23 1.3 Problem Statement ...... 25 1.4 Objectives of the Study ...... 27 1.5 Research Questions ...... 27 1.6 Significance of the Study ...... 28 1.7 Literature Review ...... 29 1.7.1 Conceptual Frameworks ...... 29 1.7.1.1 Municipal Amalgamation ...... 29 1.7.1.2 Mergers and Acquisitions (M&A) ...... 30 1.7.1.3 Organisational Culture ...... 30 1.7.1.4 Culture ...... 32 1.7.5 Theoretical Framework ...... 32 1.7.5.1Henri Fayol’s Theory of Administrative Management ...... 32 1.7.5.2 Bureaucratic Theory of Management by Max Weber ...... 33 1.7.5.3 Management Principles ...... 33 1.7.6 Legislative Framework ...... 34 1.7.6.1 Chapter 10 of the Constitution of South Africa provides the basic values and principles governing public administration: ...... 34 1.7.6.2 The Municipal Structures Act 117 of 1998 ...... 35 1.7.6.4 Municipal Systems Act 32 of 2000 ...... 35 1.7.7 Empirical Framework ...... 36 1.7.7.1 Municipal Mergers ...... 36 1.7.8 The Effect of a Merger on Organisational Culture in Netherlands ...... 37 1.8 Research Methodology ...... 38 1.8.1Qualitative Approach ...... 38

1.8.2 Population ...... 39 1.8.3 Sampling and Sampling technique ...... 39 1.8.4 Research Instrument ...... 39 1.8.5 Data Analysis ...... 39 1.9 Ethical Considerations ...... 40 1.10 Delimitations of the Study ...... 40 1.11 Outline of the Study ...... 40 1.12 Conclusion ...... 41 CHAPTER 2: LITERATURE REVIEW ...... 43 2.1 Introduction ...... 43 2.2. Conceptual Frameworks ...... 43 2.2.1 Municipal Amalgamation ...... 43 2.2.2. Organizational Culture ...... 45 2.2.3. Merger ...... 46 2.2.4. Acquisition ...... 46 2.3 Conceptualizing Mergers and Acquisitions (M&A) ...... 47 2.3.1 Objectives of Mergers and Acquisitions ...... 49 2.3.2. Mergers’ and Acquisition’s Life Cycle ...... 50 2.4 Process of Mergers & Acquisitions ...... 51 2.4.1. Business Valuation ...... 51 2.4.2. Proposal Phase ...... 51 2.4.3. Planning Exit ...... 52 2.4.4. Structuring a Business Deal ...... 52 2.4.5 Stage of Integration ...... 52 2.4.6. Operating the Venture ...... 52 2.5 Strategies for Mergers and Acquisitions ...... 53 2.6 Success or failure of Mergers and Acquisitions ...... 54 2.7 Types of Mergers ...... 55 2.7.1 Horizontal Mergers ...... 55 2.7.2 Vertical Mergers ...... 56 2.7.3 Conglomerate Mergers ...... 56 2.8 FEATURES OF MERGER AND ACQUISITION...... 57 2.8.1 Mixed Decision Structures ...... 57 2.8.2. Information Technology Structures ...... 58 2.8.3. Radical Technological Integration ...... 58 2.8.4 Incremental Technological Integration ...... 59

2.9 Advantages of Mergers and Acquisitions ...... 59 2.10 Limitations of Mergers and Acquisition ...... 60 2.11 Organisational Culture ...... 61 2.12. Importance of Organizational Culture ...... 63 2.13Types 0f Organisational Culture ...... 65 2.14 Effects of Change Management on Organizational Structure ...... 66 2.15 Managing change during a merger ...... 68 2.16 Why mergers fail ...... 69 2.17 Organizational Leadership ...... 69 2.18. Organizational Politics ...... 71 2.19 Organizational Learning ...... 72 2.20 Theoretical Framework ...... 74 2.20.1 Henri Fayol’s Theory of Administrative Management...... 74 2.20.1.2 Fayol’s elements of Management ...... 77 2.21.1 Bureaucratic Theory of Management by Max Weber ...... 80 2.22 Legislative Framework ...... 83 2.22.1The South African Constitution, (Act 108 of 1996)...... 83 2.22.2 The White Paper on Transformation of the Public Service 1995 ...... 84 2.22.3 The White Paper on the Transformation of the Public Service, 1997 (The Batho Pele White Paper) ...... 85 2.22.4 National Policy Basic Refuse Removal Services to Indigent Households, 2011...... 86 2.22.5 The Municipal Structures Act 117 Of 1998 ...... 87 2.22.6. Municipal Systems Act 32 of 2000...... 88 2.22.7 Public Administration Act, 2014 (Act No. 11 of 2014) ...... 90 2.22.8 Municipal Modernization Act of 2016 ...... 91 2.22.9 Companies Act NO. 71 of 2008 ...... 92 2.22.10. Proposals for Amalgamations ...... 92 2.22.11 Implementation of Amalgamations ...... 93 2.23 Empirical Framework ...... 94 2.23.1 Municipal Amalgamations in Japan ...... 94 2.23.2 Mergers in Quebec ...... 96 2.23.3 Municipal Amalgamation in City of Tshwane ...... 97 2.23.4 The Impact of Amalgamation on Human Resources Practice in Ethekwini Municipality ...... 97 2.23.5 Overview of Nkonkobe Municipality ...... 98 2.23.6 Overview Nxuba Local Municipality ...... 99 2.23.7 Amalgamation of Nkonkobe and Nxuba Local Municipalities ...... 100

2.24. The Positive and Negative Effect of Amalgamations on Organisational Culture ...... 103 2.25 Organisational Structure ...... 105 2.26 Change management in amalgamations ...... 106 2.27. Communication ...... 109 2.28 Impact of Mergers on workers or employees ...... 109 2.29 Impact of mergers on top level management ...... 110 2.30 Challenges Affecting Organisational Culture ...... 111 2.30.1 Litigation over contracts ...... 111 2.30.2 Service delivery ...... 111 2.31 Conclusion ...... 111 CHAPTER 3: RESEARCH METHODOLOGY ...... 113 3.1 Introduction ...... 113 3.2 Research Design and Methodology………………………………………………………………………………………….112

3.3 Research Paradigm ...... 116 3.4 Types of Research Designs...... 114 3.4.1 Exploratory ...... 115 3.4.2Descriptive ...... 115 3.4.3 Explanatory ...... 116 3.5 Research Approaches ...... 118 3.5.1 Quantitative Research ...... 118 3.5.2 Strengths of Quantitative Research ...... 119 3.5.3 Weaknesses of Quantitative Research ...... 120 3.5.4 Qualitative Research ...... 120 3.5.5 Strengths of Qualitative Data ...... 121 3.5.6 Weaknesses of Qualitative Data ...... 122 3.6 Population ...... 122 3.7 Sampling and Sampling technique ...... 122 3.8. Table 1: Biographical information and profile of the participants ...... Error! Bookmark not defined. 3.9 Research Instrument ...... 123 3.9.1Semi-structured Interviews ...... 123 3.10 Data Analysis ...... 124 3.11 Trustworthiness ...... 125 3.12 Delimitations of the study ...... 126 3.13 Ethical Considerations ...... 127 3.14 Conclusion ...... 128

CHAPTER 4: ANALYSIS OF FINDINGS AND DISCUSSIONS ...... 129 4.1 Introduction ...... 129 4.2 Findings and Discussions ...... 129 4.3 Themes and Sub-Themes Emerged From The Study ...... 130 4.4 Section A: Demographic Information of The Participants ...... 134 Table 4.1 Demographic information of the chief informants ...... 137 4.5 Section B: Questions and Opinion Responses ...... 140 4.5.1 The negative or positive effect of amalgamations on organizational culture ...... 141 4.5.2 Positive effects of amalgamation on organizational culture ...... 145 4.6 Conclusion ...... 152 CHAPTER 5: SUMMARY OF FINDINGS, RECOMMENDATIONS, AND CONCLUSIONS ...... 153 5.1 Introduction ...... 153 5.2 Research Findings ...... 153 5.3 Recommendations and Conclusions ...... 156 Areas for Further Research ...... 163 Table 1: Biographical information and profile of the participants ...... 177 Table 2 Demographic information of the chief informants ...... 179 Appendix 1: Interview Guide ...... 183 Appendix 2: Informed Consent Form ...... 188 Appendix 3: Ethical Clearance Application ...... 191

ABSTRACT

In the study, the researcher assessed the effects of amalgamations on organisational culture in the Raymond Mhlaba Local Municipality in Eastern Cape Province. The study examined whether the current organisational structure is conducive to a sound working environment, analysed change management interventions provided after the amalgamation and made recommendations to the local municipality on the measures to be taken to provide quality service delivery, improved communication networks and challenges that affect organisational culture.

The entire research process was guided by the above research objectives and questions that strive to assess the outcomes of the effects of an amalgamation on organisational culture in Raymond Mhlaba. The study involved a qualitative research approach, and interviews were conducted for the administrative employees of the municipality.

The findings of the study identified that the municipal amalgamation has negative effects on organisational culture, especially at the beginning of the amalgamation. The study established that there are many factors that led to the negative effect of an amalgamation on organisational culture, such as lack of management communication, consultation and planning strategies, preferential treatment, conflict and confusion, service delivery and failure to provide change management interventions. The study also revealed that the amalgamation came with better opportunities in terms of salary scales as the municipality is be more capacitated.

These factors can be prevented to ensure the success of amalgamations in Local

Government. Finally, the study makes recommendations for the municipality on how

9 to handle the amalgamation better, to result to a positive effect on organisational culture.

List of Abbreviations

ADM Amathole District Municipality AG Auditor General CoGTA Cooperative Governance and Traditional Affairs CWP Community Work Program DLG Developmental Local Government EPWP Expanded Public Works Program GRAP Generally Recognised Accounting Practice HOD Head of Department HR Human Resources KZN Kwa-Zulu-Natal IRFA Intergovernmental Relations Framework Act LGE Local Government Elections M&A Mergers and Acquisitions MDA Municipal Demarcation Act MDB Municipal Demarcation Board M&E Monitoring and Evaluation MEC Members of Executive Council MIG Municipal Infrastructural Grant MMA Municipal Modernization Act MSA Municipal Structures Act MSA Municipal Systems Act RMLM Raymond Mhlaba Local Municipality RSA Republic of South Africa SACA South African Companies Act SALGA South African Local Government Association UFH-GMRDC University of Fort Hare Govern Mbeki Development Centre

Keywords Municipal amalgamation, Merger, Organisational Culture, Organisational Structure, Local Government, Change Management, Service Delivery, Communication.

CHAPTER ONE: GENERAL INTRODUCTION AND BACKGROUND

1.1 Introduction

The effects of municipal amalgamations on organisational culture has played a major role in the working conditions among different local municipalities in South Africa.

Lately municipal amalgamations have been common; in addition organisational culture plays an important role in improving the municipal structure. National Treasury (2014) states that a merger can be defined as where a new combined entity is established or started, none of the previous entities obtain control over others and no acquirer can be identified. A merger can have a solid effect, either good or bad; on the way things are done at the affected association. Organisational culture can be clarified as the technique or the way in which organisational workers complete their typical day -to - day activities (Mbele, 2008). Therefore, on a similar note, it is essential to incorporate culture for the achievement of the recently formed association. Madondo (2008) alludes that most mergers involve some level of cultural merging. Brooks and Bate

(1994) further state that strategy, structure and culture are “all part of the same package.” Inadequate cultures keep individuals from contributing everything they have to the reconciliation exertion. Individuals get to be distinct, regional, and the debate about points of interest turned out to be exaggerated. Most of the time is spent battling about positions, longing for the past, as well as fighting decisions. These inner clashes avert individuals from concentrating on what is critical. A number of elements pertaining the organisational culture are to be taken into consideration, which include the mission of the municipality, communication networks, leading ethics, values, and team spirit.

According to the Khumalo and Ncube (2016:5), in 2015 the Cooperative Governance and Traditional Affairs (CoGTA) Minister proposed the merger of local municipalities,

14 so as to manage the challenges of financially non-viable and dysfunctional municipalities. Furthermore, Aula and Tienari (2011); McBain (2012) agrees that the causes for merging include the survival of a low revenue base organisation, the quest for upgraded utility to the affected parties and the pursuit of international competitive advantage. In the 2016 local government elections, the number of municipalities decreased by 21% that is, from 278 in 2011 to 257 in the 2016 (Khumalo & Ncube,

2016:7). Raymond Mhlaba Local Municipality under the district municipality of the

Amathole Eastern Cape Province is a result of this legislative requirement. The proposition by the CoGTA brought numerous policy challenges, which should be examined. Hence, in reference to the Raymond Mhlaba Municipality in the Eastern

Cape,this study looked at the effects of mergers on organisational culture in municipalities.

1.2. Background of the study

The amalgamation of the municipal bodies came into effect following the declaration of the Municipal Demarcation Act, No. 27 of 1998 and the Municipal Structures Act,

No. 117 of 1998. Accordingly, a variety of local councils all through the nation had to converge by forming new limits in accordance with the act. The genesis of the merger of Raymond Mhlaba was because of the demarcation procedure. In the Eastern Cape

Provincial Gazette 2015, the Minister of Cooperative Governance and Traditional

Affairs (CoGTA) when assuming duties after the National and Provincial elections of

2014, willingly examined the status quo of municipalities in South Africa. The results of the evaluation drove him to summon Section 22 of the Municipal Demarcation Act, and proposed the merger of municipalities as a method of addressing their functionality, viability, and sustainability.

The amalgamation of municipalities existed long before. However, several countries have practised the amalgamation of both companies and municipalities in order to improve performance in the organisation. The issue of amalgamations of municipalities in South Africa is supported by various legislations, such as the

Municipal Demarcation Act, No. 27 of 1998, and the Municipal Structures Act, No. 117 of 1998 among others. Consequently, different independent local councils throughout the country had to be amalgamated by forming new boundaries in line with the recommendations of the act. The formation of the Raymond Mhlaba Municipality is, therefore, a product of the demarcation process that is the amalgamation of Nkonkobe and Nxuba Local municipalities, which became the newly amalgamated municipality named Raymond Mhlaba Local Municipality. Thus, one of the standout achievement in the realization of this procedure was the effects of amalgamation on HR and the effect of organisational culture in the Raymond Mhlaba Municipality.

According to CoGTA, five non-viable municipalities were identified to be merged in the

Eastern Cape in 2015. In Amathole District, two local municipalities formerly called

Nkonkobe and Nxuba was merged as one Local Municipality called Raymond Mhlaba.

The Cooperative Governance and Traditional Affairs Head of Department, Nombulelo

Hackula reported, “five non-viable municipalities in the Eastern Cape have been distinguished by the Municipal Demarcation Board (MBD) for a merger with suitable municipalities.” Furthermore, Hackula stated that these municipalities were recognized because of their “low income base, service delivery backlogs, poor audit performance and the fact that they are dependent on Municipal Infrastructural Grants (MIG).”

Therefore, in respect of the merger of the two municipalities, four different towns (Alice,

Fort Beaufort, Adelaide, and Bedford) had to be merged to form one municipality.

According to Raymond Mhlaba IDP (2016/17:11), each entity was genuinely self- sufficient and independent, with its own order and basic leadership powers. There were distinctive states of administration, for instance, leave arrangements, remittances, overtime controls, vehicle plans, protection benefits as well as the pay structures. However, the municipality was hit by challenges, which needed greater attention, such as improved service delivery, incorporating of all employees from the

Nkonkobe and Nxuba Municipalities. The predicament that the organisation is faced with, is the manner by which to accomplish success, without bringing about significant expenses and lessening existing advantages. The workers might, however, want to pick many of the better conditions expected under the circumstances, without giving up anything.

The Republic of South Africa operates a majority rules system, with an arrangement of government constituted of three sphere system and an independent judiciary. The three-sphere system includes the national, provincial and local dimensions of government and every sphere of government has its own functions and controls, which is independent of one another. In addition, with the fact that they have their specific powers and capacities, each sphere has its official and authoritative specialist (Van

Stuyvesant, 2007:1). The Intergovernmental Relations Framework Act (13 of 2005) was put in place “to establish a framework for the national, provincial, and local governments, to promote and facilitate intergovernmental relations; to provide for mechanisms and procedures to facilitate the settlement of intergovernmental disputes; and to provide for matters connected therewith” (Republic of South Africa , 2005:2).

“The objective of the Intergovernmental Relations Framework Act (13 of 2005) (RSA,

2005) is to provide a framework within the principle of co-operative government, as set out in Chapter 3 of article 40 of the Constitution (RSA, 1996).” It states that: (1) “In

17 the Republic, the government is constituted as national, provincial and local spheres of government, which are distinctive, interdependent and interrelated. The article went further to state that all spheres of government must observe and adhere to the principles in this Chapter and must conduct their activities within the parameters that the Chapter provides” (RSA, 1996:25).Therefore, it is noted that the Intergovernmental

Relations Framework Act (13 of 2005) encourages the local government

(municipalities) to work together with the national and provincial government, in order to improve service delivery and standard of the citizens.

In addition, all spheres of government and all organs of the state within each sphere must: “preserve peace, secure the well-being of the people; provide accountable, transparent and effective government. Furthermore, all spheres must be loyal, respect the constitutional status, institutions and powers and functions of government; not assume any power or function except those conferred on them in terms of the constitution, and co-operate with one another in mutual trust and good faith (RSA,

1996:81)”. The local government institutions are at the coal-face of service delivery, as these organisations are constitutionally obliged to deliver a variety of services to the community. These services need to be conveyed in a proficient and powerful way.

The local government is therefore conceptualised as a service-delivery organ (Van

Stuyvesant, 2007:3). Service delivery should, therefore be a top priority and the core concern for local government institutions. Hence, the municipalities are required to work and cooperate with local communities, which helps in addressing the necessities of communities in a feasible way.

According to Layne (2010), over the years organizations have voluntarily entered into mergers and acquisitions, or forced to do so by the prevailing external or internal circumstances. Some of these circumstances include turbulent economic times,

18 constrains of globalization, social and political forces, changes in technology, increasing competition and deregulations among others. Equally, other organizations enter into mergers and acquisition because of corporate strategy leverage on synergies, corporate diversity, market penetration, and growth (Simonet and Tett,

2012). In this post-modern era, globalization, market liberalization, and internalization have brought much chaos within the organizations, making change management transitions tedious, dynamic and elastic (Van-Oudenhoven DeBoer, 2009).

Different organizations with divergent organizational cultures, leadership styles, and operational styles, but ignoring this reality can spell doom for the quest to initiate and manage change transitions within mergers. In the late 20th Century, organizations and business mergers flourished in the business world (McCarthy and Dolfsma, 2012). For instance, companies would enter into a vertical or horizontal merger to combine strength and reap the rewards.

The South African Constitution of 1996 (Republic of South Africa, 1996) requires and expects municipalities to give fair and orderly services, build local democracy, propel social and financial change, ensure protected and satisfactory surroundings, and

“create a generally viable and sustainable system of local government.” The drawings of new municipal limits have been one of the primary stages in the local government change procedure, which seeks to give substance to the vision of the constitution. As stated by the CoGTA, municipal mergers occur by virtue of “monetary non- sustainability, low-income base, service delivery backlogs and due to poor audit performance.” In Section 21 of the Municipal Demarcation Act 27 of 1998 (Republic of South Africa. 1998), the Demarcation Board must regulate municipal boundaries in the domain of the Republic and may re-regulate any municipal boundaries controlled by it. The local government legislation permit municipal amalgamations, however, the

19 current study looked at the predicament that the amalgamated municipalities are facing, the uncertainty of the success of the merger, the gap between the promise and reality and the effects of amalgamation on the organization.

The Department of Cooperative Governance and Traditional Affairs (DCoG) has communicated comparative concerns, and thus established a task team to evaluate the procedure of municipal demarcation as a major aspect of the preparations for the

2016 municipal elections. The difficulties that the government is concerned about relate to the internal and external boundaries of municipalities, cross-boundary municipalities and the effect of demarcation decisions on the monetary execution of municipalities, and the results of the demarcation for the establishment of a truly developmental local government. The issue is whether these concerns are legitimate and whether the demarcation procedure is influencing the money related and monetary execution of some municipalities.

However, there are numerous elements influencing the monetary performance of municipalities. These are the absence of an income base due to destitution and joblessness, backlogs, poor income frameworks and accumulation, administration and payment boycotts, poor service delivery and budget planning, unfunded mandates, corruption, lack of information and experience shortfalls, as well as the failure of the provincial and central government to intercede to address these elements in an auspicious way. The effect of demarcations on the fiscal performance of local government needs to be assessed, in order to establish the outcomes of boundary changes on fiscal variables, such as revenue bases, liabilities, revenues, and expenditure. Moreover, the research is interested in the behavioural culture of the previous employees, and how they cope in the new municipality.

1.2.1 Overview of the Eastern Cape Province

The Eastern Cape is a Province in the eastern part of South Africa. The Province outskirts three South African Provinces (KwaZulu-Natal, Free State and Western

Cape), and furthermore borders Lesotho. The Black Africans transcendently populate the area, with the most generally spoken dialect being isiXhosa. Generally, the province is the third most populous province in the country, primarily rural, and is amongst the nation’s poorest regions. Additionally, the region houses two of the country’s eight metropolitan municipalities (Buffalo City and Nelson Mandela Bay).

However, Cacadu is one of the districts in the province, but has been renamed with a new division of Sarah Baartman District Municipality.

The Eastern Cape Province is estimated at around 170 thousand km² and populated by approximately 6.7 million individuals. This is equivalent to about 13.8% of both the total population and the total land area of South Africa. The larger part speaks isiXhosa, followed by Afrikaans, then English and seSotho. Bhisho is the capital of the

East Cape Province and hosts the administering bodies. Port Elizabeth in Algoa Bay is the largest city and greatest industrial hub of the Eastern Cape Province. East

London is the second largest city and industrial hub, followed by various towns of

Mthatha, King William’s Town, Grahamstown, Uitenhage, Graaff-Reinet, Stutterheim,

Aliwal North, and Port St Johns in the far north-east. The Eastern Cape is divided into

6 District Municipalities and two Metropolitan Areas (Nelson Mandela Bay – Port

Elizabeth, and Buffalo City - East London), and also branched into 37 Local

Municipalities.

1.2.2 Amathole District Municipality

The Amathole District Municipality is a Category C municipality (Area: 21 595km²) situated in the central part of the Eastern Cape. According to Amathole Annual

Report (2015/16:11), Amathole stretches along the Sunshine Coast from the Fish

River Mouth along the Eastern Seaboard to south of Hole in the Wall along the Wild

Coast, it is also bordered to the north by the Amathole Mountain Range. The municipality is comprised of six local municipalities: Mbhashe, Mnquma, Great Kei,

Amahlathi, Ngqushwa and Raymond Mhlaba. There are also four heritage routes developed and named after Xhosa kings and heroes, which are the Maqoma Route, the Makana Route, the Sandile Route and the Phalo Route. These intertwine with the other tourism routes located within the district, namely the Sunshine Coast Route, the

Wild Coast Route, the Amathole Mountain Escape Route and the Friendly N6 Route.

According to Amathole Economic Outlook, (2017:2), the area has a well-developed manufacturing base, with the auto industry playing a major role. Daimler AG through its wholly owned subsidiary Mercedes-Benz South Africa (MBSA) has a large assembly plant located next to the port of East London, which produces a variety of vehicles for export. The main Cities or Towns in Amathole District Municipality are:

Adelaide, Alice, Amatola Coastal, Bedford, Butterworth, Cathcart, Dutywa, Elliotdale,

Fort Beaufort, Hamburg, Hogsback, Kei Mouth, Kei Road, Keiskammahoek, Kentani,

Komga, Middeldrift, Morgan Bay, Ngqamakhwe, Peddie, Seymore, Stutterheim, and

Willowvale. The Main Economic Sectors are: Community services, finance, manufacturing, trade, transport, agriculture, and construction 2%. With the Amathole district municipality world-wide renowned manufacturing base, and auto industry playing a major role, the analysis of Amathole District Municipality must be contextualised globally, (Amathole Economic Outlook 2017:3).

1.2.3 Overview of Raymond Mhlaba Municipality

Raymond Mhlaba Local Municipality was officially set up in 2016, and is made of the

Local Councils of Nkonkobe and Nxuba. Alice remains as an authoritative seat, and

Fort Beaufort as the managerial seat, the latter is located about 140km North West of

East London on the R63, which is approximately 200km North East of Port Elizabeth.

The municipality is the second largest local municipality covering 6 474 km2 of the surface area of the Amatole District Municipality. Raymond Mhlaba Local Municipality is a countryside municipality that sits on the foot of the mountain range of the

Winterberg (Intaba ze Nkonkobe). According to Raymond Mhlaba Local Municipality

(2016/2017:4), the municipal head-offices are situated in Fort Beaufort (as already indicated above) and the council meetings and other standing committee meetings are convened at Alice. The municipality has the following satellite offices: Middledrift,

Alice, Seymour, Adelaide, and Bedford. The Raymond Mhlaba area is neighbored by the boundaries of Makana Local Municipality, Blue Crane Local Municipality,

Amahlathi Local Municipality, Ngqushwa Local Municipality, Enoch Mgijima Local

Municipality, and the Buffalo City Metropolitan Municipality, (Raymond Mhlaba

Economic Review, 2016:2).

According to Raymond Mhlaba Economic Outlook, (2017:11), the Raymond Mhlaba

Local Municipality has ward committees in each ward, with 10 members each, totalling to 230 within its jurisdiction. They are always invited to participate in municipal activities during the development and review of the IDP, Budget and the annual report review as required by the amended Municipal Systems Act, no 32 of 2000. With about

156 000 individuals, the Raymond Mhlaba Local Municipality housed 0.3% of South

Africa's total population in 2016. However, between 2006 and 2016, the population growth averaged 0.50% per annum, which is more than half of the South Africa 1.54

23 growth rate. The Raymond Mhlaba Municipality IDP (2016-2021:11), noted that when compared to other regions, Raymond Mhlaba Local Municipality accounts for a total population of 156,000, that accounts 18.1% of the total population in Amatole

District Municipality, thereby ranking the municipality as the most populous local municipality in year 2016. In addition, The Raymond Mhlaba Annual Report,

(2016/17:12), noted that the ranking of the municipality in terms of size compared to the other regions remained the same between the year 2006 and 2016. In terms of its share, Raymond Mhlaba Local Municipality accounts for 18.1% in the year 2016 and this was significantly larger compared to the 16.6% of 2006. Also in the average annual growth rate, it is noted that Raymond Mhlaba ranked highest (relative to its peers in terms of growth) with an average annual growth rate of 0.5% between 2006 and 2016.

However, the municipality is expected to have a new organogram, but yet to be implemented because of the uncertainties and challenges of the employees concerning their job positions. Some of the employees remain demotivated while some may have to relocate to other offices. Also this has led to a result of lack of commitment from the employees, deteriorated quality of services, coupled with a decrease in the level of performance as a result of the employees’ reluctance and lack of commitment, and also the reason they always leave work early. The community is also affected as administrative offices have moved from the other entities, which are costly for them.

The system of communication with the community is also a challenge as there is no official website for the municipality. The merger has had a negative effect on the organisational culture, and because of these challenges, there is no definite stability to date.

Schein (2010) states that “culture is to a group, what personality or character is to an individual.” This view suggests that organisations also have different ways in which they operate and the manner in which things are done. This is the reason a standout amongst the most vital difficulties achieved by this procedure was the effect of the amalgamation on organisational culture. This study looked at the effects of municipal amalgamations on organisational culture in municipalities.

1.3 Problem Statement

“create a generally viable and sustainable system of local government.” The drawing of new municipal limits has been one of the primary stages in a local government change procedure which seeks to give substance to the vision of the constitution. As stated by the CoGTA, municipal mergers occur by virtue of “monetary non- sustainability, low income base, service delivery backlogs and due to poor audit performance.” Section 21 of the Municipal Demarcation Act 27 of 1998 (Republic of

South Africa. 1998), stated that the Demarcation Board must regulate municipal boundaries in the domain of the Republic and may re-regulate any municipal boundaries controlled by it.

The local government legislation permit municipal amalgamations, however the current study looked at the predicament the amalgamated municipalities are facing, the uncertainty of the success of the merger, the gap between promise and reality.

The situation had also created uncertainty and quarrel amongst the employees of the different entities. As a result, the CoGTA at the beginning of the merger, to enforce cooperation among these municipalities issued a circular notice. The new municipality

25 does not have an approved organogram, which has not been reviewed to implement placement for the employees. Moreover, the former Minister of finance had allocated funds for merged municipalities to develop new organograms, tariff restructuring, debt reconciliation, rationalisation and alignment of policies, transitional costs relating to employees including retrenchment packages, relocation and salary equalisation

(SowetanLIVE, 2017). On the other hand, Section 8 of the Municipal Modernization

Act of 2016 states that “all the debts, obligations, and liabilities of the municipalities that are amalgamated become the debts, obligations and liabilities of the newly amalgamated municipality.” This has had an effect on the organisational culture, as there is reluctance among employees in terms of commitment, performance at work and delivering services effectively.

Furthermore, the merger has had an effect on the quality of services as employees are demotivated with no clear direction in their job positions, while some are affected by the possibility of relocating to other satellite offices. The employees remain with a number of unanswered questions, on how long it would take the organisation to settle, and whether the organisational structure will be conducive for the newly merged municipality. Whereas Chapter 3 of the White Paper on Human Resources in Public

Service (Republic of South Africa, 1997) states that, “both the operational needs of the organisation and the needs of the employees will be taken into account.” The newly amalgamated municipality is more populated with new wards and councillors and this will effectively affect services being delivered. Important elements of organisational culture, such as the mission of the municipality, communication networks, leading ethics, values, and team spirit need to be taken into consideration. The merger certainly appears to have an effect on organisational culture, which results to the problem statement identified.

1.4 Objectives of the Study

The main objective of the study was to:

To assess whether the amalgamation has negative or positive effects on the organisational culture.

The sub-objectives of this study included the following:

 To examine that the current organisational structure is conducive for a sound

working environment.

 To analyse change management interventions provided after the

amalgamation.

 To make recommendations to the local municipality on the measures to be

taken to provide quality service delivery, improved communication networks

and challenges that affect organisational culture.

1.5 Research Questions

 Does the amalgamation have a negative or positive effect on organisational

culture?

 Is the current organisational structure conducive for a sound working

environment?

 Are there interventions made in adapting to change management after the

amalgamation?

 What recommendations can be given to the local municipality on measures to

be taken in providing quality service delivery and challenges affecting

organisational culture?

1.6 Significance of the Study

The study provided insight on the complexity of mergers on organisational culture, the significance of organisational structure in creating a conducive environment as well as change management interventions that could be utilised. The study further made recommendations to the local municipality on the measures to be taken to provide quality service delivery, ensuring job security, communication networks and challenges that may affect organisational culture. This study also contributed to the information already accessible on mergers, specifically in the South African setting.

A few specialists have uncovered that organisational culture adds to the accomplishment of tasteful outcomes and individual duty within an organisation.

Workers “experience social stun as the two societies collide, and this tends to haul out their support and persistence, if they expect a greater number of changes within the culture than they can deal with." Amidst instability and disarray, culture works as an extraordinary wellspring of high unwavering quality, and further clears and guides people to different routes, in which duties could be performed (Mbele, 2008:21).

Culture controls and affects the conduct of people. This means, “If a merger occurs and the cultures are not compatible, it often leads to an unhappy family.” (Robbins,

1997:326).

Pauzuoliene and Mauriciene (2012:121) agree that research on organisational culture has been performed in different organisations, trade and manufacturing companies, health care, education institutions, and public institutions. Lately, mergers are common, and organisations and managers often turn a blind eye on the effect amalgamations have on organisational culture. Most of the time, the human resources is left behind and much concentration is on costs. Auditor General of South Africa identifies effective leadership, culture and sound human resources management as

28 internal controls required to support sound financial management and cooperative governance. In light of this, a well-organised organisational cultures contributes positively to a number of issues, which include financial viability. For managers and leaders in organisations be able to deal with challenges which threaten the organisational culture, a study of this nature is needed to equip current and future managers with necessary knowledge.

1.7 Literature Review

According to Gensor (2010), the topic of mergers and acquisitions is in a number of literature sources, both in the South African context and internationally. Coffey,

Garrow and Holbeche, (2002:29) stated that, when organizations manage amalgamations, more consideration is given to monetary and money related feasibility of the amalgamation, while less is done about the general population perspective, until the merger is practically completed.

The researcher explored the current and accessible literature in view of the research problem highlighted.

1.7.1 Conceptual Frameworks

1.7.1.1 Municipal Amalgamation

In local governance, amalgamation is a term reciprocally utilized with merger, which portrays the combination of least one municipal entity into another organisation. The term alludes to a particular type of combination, in which a newly established municipality comes into existence where various entities previously existed. Either, it is therefore imperative to differentiate an amalgamation from another type of merger known as a takeover, or fractional, where one entity is bigger and having more assets that are very prominent or entities that are smaller with fewer resources. The contrast

29 between the two procedures can be compared to the qualification made in the business world between a merger and an acquisition (Belley, 2010).

1.7.1.2 Mergers and Acquisitions (M&A)

As demonstrated by Straub (2007), the illustration on Mergers and Acquisitions (M&A) implies the aspect of collective strategy, collective fund, and administration dealing with obtaining, offering, and the incorporation of another organization that can help, or assist a developing corporation of a given field to grow rapidly, without creating another business substance. In a merger two organizations are combined to form a new entity and the outcome is a legal break down of one of the organizations, i.e. two organizations consent to go ahead as a new solitary organization, as opposed to operating separately (Bragg, 2007, Grinblatt et al., 2006 and Straub, 2007). In an acquisition, the acquirer, purchases an extra association and controls, which the acquirer is liable to require (Bragg, 2007, Grinblatt et al., 2006 and Straub, 2007).

Finally, an amalgamation can be perceived as a wager concerning the future execution of a new entity meant to replace two or more existing entities to whose operations and results have been viewed as more or less satisfactory. However when implemented in local public administration, it also emerges as “a process of instrumentation of territory”. From that viewpoint, municipal amalgamation whether intentional or forced is more than the insignificant reconfiguration of the existing structures. (Belly, 2010:3).

1.7.1.3 Organisational Culture

Organisational culture, is characterized as "the way an organisation get things done around here". Organisational culture is the vehicle through which the organisation cultivates gainful practices (Western Cape Government, 2016). Mbele (2008:6) suggests that organisational culture can be characterised in different ways for various

30 purposes. On many events, this idea is related with workers’ or peoples’ interaction in the organisations. Furthermore, organisational culture is comprehended to be the channel that encourages and gives participation among workers. Organisational culture can be clarified as the technique or way in which organisational workers complete their typical day- to- day activities. This might be translated as a stage where personnel are associated with each other. Likewise, it is comprehended as a framework portrayed by individual standards and principles. These standards and principles fill in as a controlling element for the organisations administration framework.

On the other hand, Carlton and Lineberry (2004:19) state that organisational culture is a significant part of organisational existence and the capacity to scrutinise, understand and deal with the combination of the indispensable culture of the organisations. Furthermore, a number of organisational matters identifying the viability, quality, consumer loyalty, cooperation, development, basic leadership and versatility are controlled by the organisations culture. “Organisational culture is established in the history, structure, environment and initiative of the organisation.

When organisations merge, a new association is born” (Madondo, 2008:13). Coffey,

Garrow and Holbeche (2002:199) liken an amalgamation to a birth instead of a union.

They express that the new association has qualities from both guardians, yet may endure traumatic birth and absence of well parenting. A merger may have a positive or negative impact on organisational culture. Donnoly (2017) further states that, organizational culture implies the medium of effect on the medium that do not only come from group’s norms, principles and rationality, but also from casual activities.

1.7.1.4 Culture

Varadarajan (1995:22) and Darussalam (1998) concur that a general remedy cannot be found in regard to the meaning of culture as it differs from each society. From an artistic perspective, Tomaselli (1995:3) contends, “for some individuals, culture denotes what people viewed as developing their cultures, under the conditions that are not of their own making.” This reductionist perspective of culture pulls it far from a comprehensive ethnographic definition commended by culturists. Mazrui (1990:8-30) emphasises this perspective more by defining culture as “a system of inter-related values, active enough to condition perception, judgment, communication, and behaviours in a given society.” Mazrui's accentuation on 'sufficiently dynamic' is affected by the perspective of culture as a force, which influences the world governmental issues, when he proclaims "culture as the heart of energy in worldwide relations.”

1.7.5 Theoretical Framework

1.7.5.1Henri Fayol’s Theory of Administrative Management

Fayol’s idea of establishing the first general theory of management was developed because of his belief that it was essential for managers to have a set of standards to lead their management. He developed his ideas that when public and private institutions were growing, this led to a need for management positions. Research- based knowledge was needed to help the field of management develop. Fayol distinguished a difference between “governing” and “managing” an organization

(Tompkins, 2005).

Fayol developed 14 managerial standards to give direction for leaders in any form of organization. The aim was not to provide widespread answers to administrative issues.

He underlined adaptability and adjustment in connection to each of these standards, and in view of the specific situation. According to Sheldrake (1996), the principles are as follows:

“(i)Division of work, (ii) Authority,(iii) Discipline, (iv)Unity of command, (v)Unity of direction,(vi) Subordination of individual interest to general interest,(vii)Remuneration of Personnel,(viii)Centralization,(ix)Scalar chain,(x)Order,(xi)Equity,(xii)Stability of tenure of personnel,(xiii)Initiative as well as Esprit de corps-building and maintain of harmony among the workforce.”

Locating a decent harmony between the structure of the administration and the mission of the association, is the primary role of the administrative management theory. It accentuates and ensures emphasis on the significance of organizational effectiveness. (Tompkins, 2005). This study was guided by the administrative theory, which improved the organisational culture as well as ensuring harmony between the structure of the administration and the mission of the organization.

1.7.5.2 Bureaucratic Theory of Management by Max Weber

Mulder (2017:1) states that “bureaucracy is an organisational structure characterised by many rules, standardised processes, procedures and requirements, number of desks, meticulous division of labour and responsibility, clear hierarchies and professional, with impersonal interactions between employees”. According to the

Bureaucratic Theory of Max Weber, such a system was “indispensable in large organizations, in structurally performing all tasks by a great number of employees.”

1.7.5.3 Management Principles

As expressed by the Bureaucratic Theory of Max Weber, management is the main source behind an organised association, and the intention is to ensure capability and

33 monetary supportability. In addition, it is an ideal model for management and its association to bring an association’s vitality structure into focus. With these observations, Max Weber sets out the key norms of an association and underscores the division of work, chain of significance, rules and impersonal relationship. The six management principles are as follows:

“Task specialisation, Hierarchical Authority, Formal Selection, Rules and

Requirements, Impersonality and Career Orientation.”

Bureaucracy is particularly inevitable in associations where enactment assumes a vital part. The bureaucratic theory helps organisations to operate in an effective way and achieve its goals thus appropriate for this study.

1.7.6 Legislative Framework

1.7.6.1 Chapter 10 of the Constitution of South Africa provides the basic values and principles governing public administration:

An elevated standard of professional morals must be encouraged,(b) productive, financial and viable utilization of assets must be enhanced, (c) Public administration must be “development oriented” (d) services must be given unbiasedly and reasonably,(e) The needs of the public must be attended to, and the general population must be urged to take part in policy-making,(f) “Public administration must be responsible,” (g) “Transparency must be endorsed by giving the public convenient and available information, (h) There must be the creation of good human-resource management and career improvement practice,” to build human potential, must be created.

1.7.6.2 The Municipal Structures Act 117 of 1998

“Chapter 2 of the Municipal Structures Act accommodates the Establishment of

Municipalities (ss 12-17) Members of the Executive Council (MEC) to determine municipalities (1) The MEC for local government in a province, by notice in the

Provincial Gazette, must establish a municipality in each municipal area which the

Demarcation Board outlines in the province in terms of the Demarcation Act.”

“(2) The establishment of a municipality- (a) “must be consistent with the provisions of this Act; and (b) takes effect at the commencement of the first election of the council of that municipality. (3) The notice establishing the municipality must set out- (a) the category of municipality that is established; (b) the type of municipality that is established; (c) the boundaries of the municipal area; (d) the name of the municipality;

(d) in the case of a metropolitan or local municipality, the number of wards in the municipality; (e) the number of councillors as determined in terms of section 20 “.

1.7.6.4 Municipal Systems Act 32 of 2000

A municipality must within its regulatory and financial capacity establish and organise its organisation in a manner that would empower the municipality to:

“be receptive and attend to the needs of the local community; encourage a culture of open administration and responsibility among the staff; guarantee that the political structures, political office bearers, administrators and other staff individuals to adjust their roles and obligations to the needs and goals stated in the municipality’s integrated development plan; set up clear relationships, and encourage working together, control and communication, between its political structures, political office bearers and the administration;” on a decentralised basis: “maximise efficiency of communication and decision-making within the administration; delegate responsibility to the most effective

35 level within the administration, involve staff in management decisions as far as is practicable, and provide an equitable, fair, open and non-discriminatory working environment.”

As stipulated in the constitution public administration must be development orientated.

This study sought to improve the human resource management and career development practice by providing recommendations so as to improve organisational culture in merged municipalities, as well as contributing in ways of improving the working environment of the new municipality.

1.7.7 Empirical Framework

1.7.7.1 Municipal Mergers

The quantity of municipalities in Japan diminished from 3,232 in 1999 to 1,820 in 2006 by uprightness of the state metropolitan merger strategy. The merger approach planned to fortify the regulatory limit of municipalities for monetary decentralization and to diminish the aggregate use by municipalities by methods of economies of scale.

Hirota and Yunoue (2014:4) express that past research on civil mergers mostly centred around the basic leadership handle and the impact of mergers, and the subsequent economies of scale, on municipal uses. The aftereffects of these reviews differ broadly. The exact outcomes from a few reviews have affirmed that municipalities in Japan are given different motivators to take part in mergers.

Hirota (2007) announced that low monetary conditions, municipality elimination, and little municipal population are the elements driving city mergers. Specifically, the outcomes affirm that particular conduct of the focal government influences municipal mergers. The particular conduct incorporates the expanded local assets and uncommon stipends. Most combined municipalities get special treatment from the

36 central government. The conduct of local municipalities likewise influences basic leadership concerning mergers. Hanes (2003) concentrated on the impact of amalgamation in nearby open uses in Sweden, and demonstrated that city mergers negatively affected expenditure growth in consolidated municipalities, due to economies of scale.

However, using the information on Norwegian municipalities, Sorensen (2006) analysed political figures in merger choices and the normal productivity gains, which demonstrated that liberal awards is made up of the impact of diseconomies of scale on city mergers. Since less populated municipalities can get bigger grants from the central government without merging, they did not consider the amalgamation to be essential. Regardless of the guarantee by the central government to keep up the level of stipends to small municipalities, however, some less populated municipalities decided not to take part in municipal mergers on account of the central government's absence of validity.

Dolley, Byrnes, and Chase (2007) with Geys, Heinemann, and Kalb (2007) concentrated on the separate impact of mergers on aggregate uses in Australia and

Germany. Dolley et al. (2007) found that city mergers enhance money related manageability, while Geys et al. (2007) found that consumptions of small municipalities ascend with population size. In utilizing board information on Japanese municipalities, Hirota and Yunoue (2013) found that mergers decreased municipal expenditures.

1.7.8 The Effect of a Merger on Organisational Culture in Netherlands

In a study conducted, focusing on the extent to which mergers affects organizational change over time from two organisations. The outcomes showed that the culture

37 perception changed in time and relies on the perception the employees had at the start of the merger. Motivation had an impact on the change. The level of acknowledgment and information of the representatives had no impact on this change. The findings showed the view of organizational culture at the commencement of the merger, and thereafter assumes an imperative role for the culture perception. The more employees are inspired, the more they are willing to change. In addition, the longer employees work at the organization, the more they are willing to change (Bhasing 2010).

1.8 Research Methodology

Research is a procedure for procuring new learning in a “systematic approach” including steady planning and interventions for discovery or elucidation of the new- acquired data (Garg, 2016). Therefore, in this study, the researcher used a qualitative research design.

1.8.1Qualitative Approach

The researcher used a qualitative research approach, which consisted of interviews.

The purpose of using interviews was to enable the researcher to get a deeper understanding of the research topic from the participants. Mayoh, and Onwuegbuzie,

(2015) state that qualitative research is a precise, subjective approach used to portray beneficial encounters, and concentrates on an all-encompassing perspective of what is being examined (by means of records documents, case histories, perceptions and interviews). Furthermore, the qualitative research is concerned with improving explanations of social phenomena. Vitally, it means to enable researchers to comprehend the social world in which they live and the reason things are the way they are.

As Guercini (2014) suggests that qualitative research offers some well-known advantages, which are “useful for describing complex phenomena, and provides information for individuals, with the conduct of cross-case comparisons and analysis.”

1.8.2 Population

“A population can be defined as the total group of people from whom data is required”

(Wild and Diggines, 2013:186). The population of this study consisted of the administrative management and employees as they are more familiar with the day to day activities of the Raymond Mhlaba Local Municipality.

1.8.3 Sampling and Sampling technique

“A sample is a subset of a population that is considered to be a representative of the population (du Plooy-Chillers, Davis and Bezuidenhout, 2014:135).”For the purpose of this study, a stratified random sampling of 20 employees was formed. The strata was formed from the various administrative departments to ensure representation of the population.

1.8.4 Research Instrument

For the purpose of this study, semi-structured interviews were used as the research instrument “A semi-structured interview is a qualitative method of inquiry that combines a pre-determined set of open questions with the opportunity for the interviewer to explore particular themes or further responses” (Stuckey, 2014).”

1.8.5 Data Analysis

The data collected from interviews was analysed by using content analysis. “Content analysis is known as a wide set of techniques for analysing the content of qualitative material. The goal is to identify important aspects of the content, clearly present them, and effectively provide the reliability and the validity checks” (Neuendorf, 2016).” The

39 study provided the interview guides, which guided the participants, with themes and sub-themes included.

1.9 Ethical Considerations

According to David and Rensik (2015:10), there are a number of reasons why it is critical to abide to ethical principles in research. Vitally, to “advance the main aims of research, such as knowledge, truth and avoidance of error e.g. prohibitions against fabricating, falsifying or misrepresenting research data promote the truth and minimise error.” Every source utilized in this study was properly sited. Informed consent and confidentiality will be ensured by providing informed consent forms which would ascertain the voluntary participation of the participants and confidentiality of the information provided. The researcher applied for ethical clearance from the UFH-

GMDRC ethics committee, and professionalism and honesty was ensured in collecting the data of the study.

1.10 Delimitations of the Study

The research was within the field of Public Administration. The research has been limited to the Raymond Mhlaba Local Municipality, therefore the outcomes cannot be generalised to other organisations.

1.11 Outline of the Study

This study is composed of five chapters:

Chapter one presents the introduction, background and reason for the study, the problem statement, research methodology, preliminary literature review, the significance and objectives of the study and finally gives definitions of the key terms.

Chapter two reviews the theoretical, conceptual and empirical literature related to the research problem. Thus, the chapter covers the theoretical, conceptual and empirical literature related to amalgamations, mergers and acquisitions, organizational culture, organizational politics and organizational structure of Raymond Mhlaba Local

Municipality, as well as the enabling legal framework for promoting efficient and effective service delivery.

Chapter three makes a discussion on the motivated research design, methodology, and data collection techniques and data analysis. In this research, interviews and secondary sources are used as a method. The researcher motivated her choice for choosing interviews for data collection in the study. The chapter attends to issues of trustworthiness in qualitative research, which is a mirror concern for validity and reliability in quantitative research.

Chapter four presents the analysis and discussion of the findings in the study. The findings focuses on the objectives as identified in chapter one.

Chapter five is on the summary, conclusions and the recommendations and pathways for future research.

1.12 Conclusion

In the discussion above, the South African Constitution of 1996 (Republic of South

Africa, 1996) requires and expects municipalities to give fair and orderly services, build local democracy, propel social and financial change, ensure protected and satisfactory surroundings, and to “create a generally viable and sustainable system of local government.” “The drawing of new municipal limits has been one of the primary stages in a local government change procedure which seeks to give substance to the vision of the constitution. With respect to CoGTA, the municipal mergers occur by virtue of

“monetary non-sustainability, low income base, service delivery backlogs and due to poor audit performance.” In the Section 21 of the Municipal Demarcation Act 27 of

1998 (Republic of South Africa. 1998), the Demarcation Board must regulate municipal boundaries in the domain of the Republic and may re-regulate any municipal boundaries controlled by it.

The local government legislations permit municipal amalgamations, however, the study looked at the predicament that the amalgamated municipalities are facing, the uncertainty of the success of the merger, and the gap between promise and reality.

The situation also created uncertainty and quarrel amongst the employees of the different entities, as a result of a circular notice issued by the CoGTA at the beginning of the merger, to enforce cooperation among these municipalities.

This chapter aimed at providing a general background to the study; the scope of the study was discussed that is the problem statement, value of the study, research questions, research objectives, and important terms that are relevant in the study were defined.

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

The amalgamation of municipalities can be attributed to the various factors and reasons beyond the municipality’s control. In South Africa, the amalgamation of municipalities is not a new phenomenon, which has existed over the years. However, the subject of Mergers and Acquisitions (M&A) can be found in various literature both internationally and locally, which can also be used to support the amalgamation of the two municipalities of Nkonkobe and Nxuba to become Raymond Mhlaba Municipality.

Several scholars argued that it is important to understand that when public organisations, like the municipalities deal with mergers, more focus is shifted on the economic and financial viability of the merger, while little is done on the people aspect, until the merger is almost complete. This chapter gave an overview of the reasons behind the merger of the above-mentioned municipalities, the history of amalgamations, where they occurred from, how organisational culture has been affected, the effect of amalgamations on organizational culture, the conceptual framework, theories informing the study, empirical literature on the merger of municipalities, the M & A life cycle and the reasons for the failure of some mergers.

2.2. Conceptual Frameworks

2.2.1 Municipal Amalgamation

The concept of amalgamation has been widely used by different schools of thought to mean different things. The subject of amalgamations is contained in a number of literature, both in the South African context and internationally. Various authors concur

43 that, when associations manage mergers, more consideration is paid to the monetary and budgetary feasibility of the merger, while little is done on the aspect of the general population, hence, things are done inside an association until the point that the merger is relatively complete. In any case, the financial aspect is not factor or criteria behind why a few mergers will succeed, and while others will not succeed (Coffey, Garrow and Holbeche, 2002:29).

In local governance, amalgamation is a term reciprocally utilized with the merger, which portrays the combination of at least one municipal entity into another organisation. The term alludes to a particular type of combination, in which a newly established municipality comes into existence where various entities previously existed. It is, therefore, imperative to differentiate amalgamation from another type of merger known as a completely or fractional takeover, where one entity is bigger and has more prominent assets to totally ingest one or more entities which are smaller with fewer resources. The contrast between the two procedures can be compared to the qualification made in the business world, which is between a merger and an acquisition

(Belley, 2010). On the other hand, Slack and Bird, (2013) state that a municipal amalgamation is seen as a way to ascertain that municipalities are well capacitated to be financially and technically capable of rendering services. Furthermore, the idea is that local government institutions do not only reap economies of scale, also administer service delivery and equitably share costs and diminish overflows caused across the local boundaries. In an implementation, a number of transition matters need to be managed. These include: legal and policy matters, human resources, finances, communication and institutional arrangements for municipalities.

Importantly, an amalgamation can be perceived as a measuring tool concerning the future execution of a new entity meant to replace two or more existing entities to which

44 operations and results have been viewed more or less satisfactory. However, when implemented in local public administration, it also emerges as “a process of the instrumentation of territory”. Hence, whether municipal amalgamation is intentional or forced, it is more than an insignificant reconfiguration of existing structures. (Belly,

2010:3).

2.2.2. Organizational Culture

Serpa (2016) sees organisational culture as “a way collective way of thinking, acting and coordinating one another with a reciprocal expectations.” Organisational culture is “the set of shared values, beliefs and norms that influence the way employees think feel and behave in the workplace” (Agwu, 2014: 1). Collins and Porras (2000) opine that “organisational culture refers to a system of shared meaning, held by members that distinguish one organisation from other organisations”. Organisational culture is

“an informal, shared way of looking at an organisation, and how the membership that binds the members together influences what they think about themselves and their work” (O‟Donnel & Boyle, 2008:19). Schein (2009) defines organisational culture as the collective behaviour of people in an organisation. Finally, Maseko (2017:3) viewed organisational culture as “a company’s orientation towards its internal stakeholders, which forms the basic rules that guide employees‟ shared behaviours, developed within an organisation. Based on the above definitions, organizational culture can be generally defined “as the underlying beliefs, assumptions, values, and ways of interaction, which contribute to the unique, social and psychological environment of an organization.”

Organisational culture can be viewed as the identity of an association. It impacts how workers think and carry themselves in the workplace. It is crucial to the beliefs, qualities, principles, attitudes and inter-personal behaviours that characterises how

45 the organisation carries out its work (Desson & Clouthier, 2010:1). Culture can be viewed as a principal factor not just for achieving the objectives of the association, but, in winning over and keeping the desired employees, creating a public image that is positive and building relationships with different partners (Desson & Clouthier,2010:1).

2.2.3. Merger

A merger is said to happen when at least two organizations consolidate into one organization. According to Mallikarjunappa, (2007:11), the merger is characterized as an exchange. It is a situation where only one organization endures when there are at least two organizations involved in the trading of securities. It is also known as merger at the point when investors of more than one organization, choose to pool the assets of the organisations together, under a typical element. In addition, ’the event of the appearance of another organization during a merger, is called an amalgamation.' For instance, Gupta (2012: 34), gave a case of Centurion Bank of Punjab, which is as a result of the merger of Bank of Punjab and Centurion Bank; or merger of Indian Rayon

Ltd, Indo Gulf Fertilizers Limited (IGFL) and Birla Global Finance Limited (BGFL) to shape another single organization called Aditya Birla Nuvo is also an example of an amalgamation. However, it is known as ‘retention’ when in a situation of a merger, one organization endures and others loses their free element. The merger of Global Trust

Bank Limited (GTB) with Oriental Bank of Commerce (OBC) is a case of assimilation.

However, at the end of the merger, GTB lost their personality, while OBC holds their character.

2.2.4. Acquisition

Agrawal, (1992) defines an acquisition as “an act of acquiring effective control of the company’s assets (purchase of assets either by lump sum consideration or by item-

46 wise consideration) or management (purchase of stocks/shares or gaining control over

Board) of another company, without combining their physical businesses. Generally, a company acquires effective control over the target company by acquiring the majority of the shares of that company. However, effective control may be exercised with a less majority shareholding, usually ranging between 10% and 40%, but because of lack of proper coordination among the remaining shareholders, they are not likely to challenge the control of the acquirer.” A takeover is considered a type of obtaining, and besides a takeover is a business methodology of obtaining power over the administration of an objective organization either specifically or indirectly.

2.3 Conceptualizing Mergers and Acquisitions (M&A)

According to Gensor (2010), the subject of mergers and acquisitions is contained in a number of literature, both in the South African context and internationally. Coffey,

Garrow, and Holbeche, (2002:29) concur that, when organizations manage mergers, more consideration is given to the monetary and money related feasibility of the merger while less is done about the general population perspective, until the merger is practically complete.

“A merger or amalgamation is known as the merging or amalgamation of two or more corporate entities into a combined entity or entities. The merger procedure is a recent introduction to South African law, by the new South African Companies Act, 2008 (the

Companies Act) on the 1st of May 2011 “(Gilfilan, 2013: 348. In an acquisition, the acquirer, purchases an extra association and controls it reliably with what is required by the acquirers (Bragg, 2007, Grinblatt et al., 2006 and Straub, 2007). "An acquisition", according to Krishnamurti and Vishwanath (2008), "is when a company

(the acquirer) purchase of a substantial part of the assets or the securities of another

(target company) company. The purchase may be a division of the target company or

47 a large part (or all) of the target company's voting shares." Acquisitions are frequently made as a component of an organization's development procedure, whereby it is useful to assume the control of a company's current activities and specialty, instead of developing it.

On the other hand, Straub, (2007) states that the articulation of Mergers and

Acquisition implies the aspect of collective strategy, collective fund, and administrative dealing, with obtaining, offering, and the incorporating of another organization that can assist a developing corporation grow rapidly without creating another business substance. In a merger two organizations are combined to form a new entity and the outcome is a legal break down of one of the organizations, that is, two organizations have the consent to go ahead as a solitary new organization, as opposed to separate operation (Grinblatt et al., 2006 Bragg, 2007, and Straub, 2007). Devine, (2002) explains the motive behind Mergers and Acquisitions and highlights the main reasons for its occurrence, such as, economies of scale, consolidation, globalisation, access to distribution channels, increase products and services and access to new markets.

The diagram shows kind a of M&A

(Source: www.krchoksey.com)

2.3.1 Objectives of Mergers and Acquisitions

There are various objectives in mergers and acquisition, and as proposed by Asquith

(1990), the objectives of M&A are going to be discussed below.

The economy of scale: This alludes such that the joined organization can frequently lessen its settled expenses, by evacuating replica offices or activities, and bringing down the expenses of the organization with respect to a similar income stream, in such a way that it expands overall revenues.

The economy of scope: This alludes to efficiencies mainly connected with demand side changes, for example, expanding or diminishing the extent of marketing and dissemination, of various kinds of items.

Increased revenue or market share: This assumes that the purchaser will assimilate a noteworthy contender, thereby expanding its market control (by capturing expanded market share) set costs.

Cross-selling: For instance, a bank purchasing a stock representative could pitch its saving money items to stock the intermediary's clients, while the agent can join the bank's clients for investment funds, or a maker can procure and move correlative items.

Synergy: An example is managerial economies such as the increased opportunity of managerial specialization. Another model is acquiring economies because of expanded request estimate and related bulk-buying discounts.

Taxation: A profitable organization can purchase a loss-maker to utilize the target’s loss, by decreasing their assessment risk. In the United States and different nations of the world, rules are set to constrain the capacity of profitable organizations to "shop"

49 for loss making organizations, and restricting the tax motive process of an acquiring organization.

Geographical or other diversification: This is intended to smooth the earnings results of an organisation, which over a period of time smoothens the stock price of an organisation, giving conservative investors more trust in putting resources in the organisation.

2.3.2. Mergers’ and Acquisition’s Life Cycle

Mergers and acquisitions are not only economic decisions, but can also be understood as social processes. It is very important to understand the Mergers and Acquisitions cycle so that the challenges and strengths in the process can be easily identified.

Acquisition researchers generally based their arguments on the issue of finance as a major issue when there will be merging of any organisation. When the merger and acquisition fails, it is more advisable to use social processes to find out the reasons why the cycle has failed.

Holbeche (1998:399) stated that “all mergers go through different phases, namely, the run-up or pre-merger phase, the immediate transition phase and the integration phase”. Holbeche (2000:11) argues that “the run-up period should be used to carry out effective human resources due diligence and develop an awareness of the likely challenges and pressure points. In the cycle, the run-up team should make a realistic assessment of the probable management workload and find ways of easing the burden. During the cycle, different teams should be used for the transition period, but there should be an effective handover between the teams”. Schmidt (2002:4) concurs with this view and he alludes this procedure as M&A life cycle. He recognizes the following stages: Pre-Deal, Due Diligence; Integration Planning and Implementation.

However, in researches carried out in mid-2000, it was presumed that HR has fundamentally less inclusion in the initial phases of a merger than the later stages that are (integration planning and execution) (Schmidt, 2002:6). Research likewise showed that association of Human Resources Practitioners amid the beginning stages would yield constructive outcomes as this would concentrate on individuals’ issues.

2.4 Process of Mergers & Acquisitions

In corporate restructuring, the M&A process is known to be the most difficult and critical. One wrong choice or move can actually reverse the impact in an unfathomable way. Therefore, the process of M&A should certainly be followed in a way that a company can gain maximum benefits with great deal. The following are some of the important steps in the M&A process:

2.4.1. Business Valuation

Gaughan, (1998:56) suggests that, business valuation or evaluation is the primary procedure of M&A. This stage involves the examination and assessment of both the present and future market value of the targeted organization. Thorough research is done on the history of the organization with respect to capital increases, organisational structure, market share, distribution channel, corporate culture, explicit business qualities, and credibility in the market. There are different factors that ought to be considered to guarantee if a proposed organization is prepared or not for an effective merger.

2.4.2. Proposal Phase

“Proposal phase is a phase in which the company sends a proposal for a merger or an acquisition with complete details of the deal including the strategies, amount, and

51 the commitments” (Jansen, 2002). More often, this proposal is sent through a non- binding offer document.

2.4.3. Planning Exit

At the point when an organization chooses to sell its operations, it needs to experience the phase of exit planning. The organization needs to make firm conclusions regarding when and how to make the exit in a well organised and productive way. In the process, the administration needs to assess all money related and different business issues, like taking a decision of full deal or partial deal alongside, assessing the different alternatives of reinvestments.

2.4.4. Structuring a Business Deal

According to Sudarsanam, (2003:11), “after finalizing the merger and the exit plans, the new entity or the takeover company has to take initiatives for marketing and creating innovative strategies to enhance business and its credibility. The entire phase emphasizes on the structuring of the business deal”.

2.4.5 Stage of Integration

Scott, (2004:34) pointed out that this stage involves both the organization initiating their own parameters. Furthermore, it involves the whole process of setting up the document, officiating the agreement, and negotiating the deal. It additionally characterizes the parameters of things to come in the connection between the two.

2.4.6. Operating the Venture

“After signing the agreement and entering into the venture, it is equally important to operate the venture. This operation is attributed to meeting the said and predefined expectations of all the companies involved in the process. The M&A transaction after

52 the deal includes all the essential measures and activities that work to fulfil the requirements and desires of the companies involved” (Scott, 2004:34).

2.5 Strategies for Mergers and Acquisitions

M&A techniques are critical to infer the most extreme advantage of a merger or obtaining bargain, sound strategic planning can shield any merger from disappointment. Through market overview and market examination of various mergers and acquisitions, it has been discovered that there are some brilliant guidelines which can be treated as the methodologies for the fruitful merger. Scott, (2004:36) identified the following strategies for mergers and acquisition in organizations:

(a) Before entering into any M&A bargain, it is required to completely assess the targeted organization's market execution and market position so that the ideal of the targeted organization can be picked and the arrangement can be finalized at a satisfactory cost. b) Identification of potential market opportunities, ongoing business sector patterns and client's response to the organization's items are likewise vital to evaluate the development capability of the organization. c) After settling the M&A deal, the integration procedure of the organizations should start immediately. From the time when the arrangement procedure is on and before finalizing the negotiations, the administration of both organizations requires to develop an appropriate incorporation strategy. This is to guarantee that no potential issue manifests after finalizing the deal d) If the organization which expects to win the targeted organization designs the rebuilding of the targeted organization, then this arrangement ought to be pronounced and actualized within the duration of acquisition to prevent uncertainties.

53 e) At the period of formulating M&A strategies, it is important to consider the workplace and culture of the workforce of the target organization, so that the workers of the target organization do not feel left out and end up dispirited. In the period of formulating the

M&A strategies, there must be an endeavour to keep the workers educated, encourage input, speak the truth about what is ahead, and ensure that individuals remain centred by guaranteeing them of the best possible start for the newly expanded company.

2.6 Success or failure of Mergers and Acquisitions

Chetty, (2010:65) noticed that there are large volumes of local and global research carried out in respect to the issue of failure and achievement of a merger. Moreover, regardless of the changing research objectives and strategies, are reliable discoveries that substantial quantities of M&A transactions are neglected to achieve potential.

However, any explicit components of the M&A procedure cannot be recognized as the basic achievement or failure factor affecting the performance of a transaction.

Certainly, a scope of issues and components are the cause of M&A failure. Therefore, there are essentially two wide issues responsible for the accomplishment or failure of

M&A transactions, and these issues are 'Fit' issues and 'Process' issues. As indicated by Scott, (2004.:36) 'Fit' issues are those which analyse the situation of the acquirer and the target. The acquirer has constrained capacity to impact the fit issues; nevertheless, there are a few factors over which control can be attested. On the other hand, 'Process' issues are those which the acquirer can apply a vast level of control.

The diagram shows Fit Issues and Process Issues

Source: (Mallikarjunappa, 2007)

2.7 Types of Mergers

There are various methods for characterizing merger forms. The type of a specific merger has the effect of influencing and impacting merger forms as well as the procedures. Furthermore, the kind of issues or challenges are likely to be experienced, with the achievement and results that are probably going to be accomplished (Chetty,

2010).

Mbele, (2008) mentions and explains the different types of mergers:

 Horizontal Mergers

 Vertical Mergers

 Conglomerate Mergers

2.7.1 Horizontal Mergers

According to Botha (2001), a horizontal merger is between companies with “identical products operating in the same or different markets”, which means in this kind of merger, a company could acquire a customer or supplier. From a “non-theoretical” perspective, horizontal mergers are easier to negotiate and manage because they are

55 usually similar in nature. However, some authors have pointed out that this can also be a very difficult type of merger to integrate (Harman, 1999). This stems from the fact that while the two similar departments/programmes are being integrated, there may be a variety of associated problems, like human resources related matters, such as retrenchments or elimination of the duplicated programmes (Chetty, 2010).

2.7.2 Vertical Mergers

A vertical merger is a point at which a purchaser-seller relationship exists or could exist amongst organizations. Such a merger requires, that the administration of the target organization “shift from serving the market to linking/acquiring the parent firm”

(Botha, 2001). Generally, there would be a backward integration to the organisation, to assimilate the sources of supply and forward integration towards the market. The similarity between a vertical and horizontal merger is that both occur with companies within the same line of business, and the difference between such types of mergers tend to reside in the products. Similarly, vertical mergers can be complex to manage and integrate, although they may be different types of institutions with different programmes, the integration could, however, be bedevilled by cultural and traditional differences. Furthermore, in the course of a vertical merger, the vision, mission, values and a re-examination of the teaching programmes may also come under review or be completely changed, hence adding to the complexity of such a merger.

2.7.3 Conglomerate Mergers

According to Baniya, and Shah (2016), a conglomerate merger is when two organizations that work in a totally unique enterprise paying little respect to the phase of production merge. This is generally done by expanding into different ventures, which lessens risks. “Conglomerate mergers occur when two organizations sell products in completely different markets. There may be little or no synergy between their product

56 lines or areas of business. The benefit of a conglomerate merger is that the new, parent organization gains diversity in its business portfolio. Conglomerate transactions take many forms, ranging from short-term joint ventures to complete mergers. Whether a conglomerate merger is pure, geographical, or a product-line extension, it involves firms that operate in separate markets. Therefore, a conglomerate transaction ordinarily has no direct effect on competition. There is no reduction or change in the number of firms either acquiring or acquired firm's market”.

2.8 FEATURES OF MERGER AND ACQUISITION

2.8.1 Mixed Decision Structures

According to Andrews (2012), and Liao (2011),” mixed decision structures are the best options in change management in mergers and acquisitions. Mixed decision structures enable management to extend autonomy and authority for decision making to employees and line managers in areas of their functional units, while at the same time, ensuring that critical decisions, or major decisions are reserved for the top executive in the subsidiary, or headquarters of merging firms”. Equally Zheng et al., (2010), argues that in mergers and acquisitions, employees don’t necessarily feel threatened when less disturbance is introduced to their functional units. However, Holmes (2013), refutes Zheng et al., (2010) assertion that merging organizations can reach amicable agreements on mixed decision structures. According to Holmes (2013), most multinational acquisition of African businesses tends to favour centralized systems, where decisions are made in a bureaucratic top-down fashion from headquarters, and dictated down upon acquired or merged firms in Africa. The subtleness lies in the fact that assimilation of cultures, decisions, and operations have to be synchronized with the mother company’s operations. As a result, the effects of managing change in this environment most often results in employee terminations, restructuring transfers

57 among others, which eventually bolts concerns within the organization (Wroblewska,

2014).

2.8.2. Information Technology Structures

“In mergers and acquisitions, technological import plays a major role in determining the final outcome of the entities merging or being acquired” (Mento, Jones and

Dirndorfer, 2012). According to Aral et al., (2010), information technology structures massively affect hierarchical execution. An examination directed by Arvanitis and

Loukis (2009), on the impacts of information technology in overseeing changes in mergers and acquisitions, uncovered that there is a positive connection between the dimension of technology and firm output. In any case, the investigation additionally uncovered that overseeing change in the coordination of the data innovation in the combined or procured associations brought disturbance, dissatisfaction and the dangers of occupation misfortune to administrators and workers inside the framework.

As a result, managers who acquired the capability of adequately plan for the technology, explain that the technology, and the integration of the technology in an efficient manner, had more collaboration and support from employees than those who did not.

2.8.3. Radical Technological Integration

According to Mento, et al., (2012), “technological structures can take the form of radical technological integration or incremental technological integration. Radical technological integration involves technologies that have an impact on the entire organizational functionality”. For instance, rapid automation of production lines, in commercial or industrial product lines is a recipe for failure in organizations (Bourgeois et al., 2004). Change management in mergers and acquisitions can be an uphill task for management, due to the automation of process which leads to redundancy. The

58 fear and threat of job losses due to technological automation and the innovation can also bring resistance, sabotage, and even outright rebellion, mistrust, and loss of loyalty (Philip Lee, 2011).

2.8.4 Incremental Technological Integration

Mento, et al., (2012), contends that mergers and acquisitions that have greater success in managing change are those that implement incremental technological integration. Bocquet 14 et al., (2007), agrees with Mento, et al., (2012), that the aspects of redefining organizational framework, structure, people, and processes should be done in planning phases to ensure adequate buy-in from managers and employees. According to Gera and Gu (2009), information technology enables organizations to introduce significant changes in areas that need re-engineering, or enhanced efficiency.

However, the implementation process can disintegrate the entire organizations operations leading to unnecessary costs, or losses. It is critical, therefore, during change management, for planned incremental technological integration be explained to management and staff, and equally for them to be prepared for the integration through training and capacity building (Mento et al., 2012). In as much such coordinated steps cannot be a solution that shields the organization to change resistance, it, however enables smoother, integrated transitions with less operational disruptions.

2.9 Advantages of Mergers and Acquisitions

(i) The most basic explanation behind firms going into M&A is to combine their capacity and power over the business sectors.

(ii) Another preferred advantage is a collaboration, that is the enchantment influence and that takes into account the expanded value, efficiencies of the new organisation and takes the state of profits advancement and cost reserve funds.

(iii) Economies of scale are shaped by sharing the assets and services (Richard et al,

2007). An association of two firms leads in general cost decrease giving an upper hand, that is practical because of raising buying power and longer production runs.

(iv) The decreasing of risk using innovative techniques of managing financial risk.

(v) “To become competitive, firms have to be compelled to the peak of technological developments and their dealing applications. By M&A of a small business with unique technologies, a large company will retain or grow a competitive edge”.

(vi) “The biggest advantage is tax benefits. Financial advantages might instigate mergers and corporations will build use of tax- shields, increase monetary leverage and utilize alternative tax benefits” (Hayn, 1989).

2.10 Limitations of Mergers and Acquisition

Mergers and acquisition have some loopholes in terms of administration and management of a newly formed organization. The challenges being faced are going to be discussed below:

(i) Loss of experienced workers.

(ii) The organisation will face significant challenges because of interior rivalry that may happen among the staff of the unified organizations. There is conjointly danger of getting surplus employees in a few divisions.

(iii) Merging two organisations that are providing similar services may mean duplication and the capacity inside the organization that may require retrenchments.

(iv) Increase in expenses may occur if there is right administration of modification and if the execution of the M&A and dealing are delayed.

(v) On numerous occasions, the return of the share of the organization that caused buyouts of the other organization was less than the return of the overall sector.

(vi) The M&A decreases flexibility and increases the change costs.

2.11 Organisational Culture

According to Helrigiel et al (2004:357), organisational culture is the distinctive pattern of shared suppositions, qualities, and standards that mould socialisation practices.

This definition stresses essential aspects of organisational culture, such as, shared values, shared socialisation and standards, narratives and practices and furthermore accentuates how organisational culture helps employees socialised into the new organisation while simultaneously internally incorporated into the organisation.

Organisational culture is characterized as "the way we get things done around here".

Organisational culture is the vehicle through which the organisation cultivates gainful practices (Western Cape Government, 2016). Mbele, (2008:6) suggests that organisational culture can be characterised in different ways for various purposes. At many events, this idea is related to workers’ or peoples’ interaction with organisations.

Furthermore Mbele (2008:6) explains that organisational culture is comprehended to be the channel that encourages and gives participation among workers.

Organisational culture can be clarified as the technique or way in which organisational workers complete their typical day to day activities. This might be translated as a stage where personnel is associated with each other. Likewise, it is comprehended as a framework portrayed by individual standards and principles. These standards and principles fill in as a controlling element in the organisations administration framework.

On the other hand, Carlton and Lineberry (2004:19) state that organisational culture is a significant part of organisational existence and capacity to scrutinise, understand and deal with the culture of the organisations that are indispensably combined.

Furthermore, a number of organisational matters, identifying with viability, quality, consumer loyalty, cooperation, development, basic leadership, and versatility are basically controlled by the organisation’s culture. “Organisational culture is established in the history, structure, environment, and initiative of the organisation.

When organisations merge, a new association is born” (Madondo, 2008:13). Coffey,

Garrow and Holbeche (2002:199) liken an amalgamation to birth instead of a union.

They express that the new association has qualities from both guardians yet may endure traumatic birth and the absence of good parenting. A merger may have a positive or negative impact on organisational culture. According to Donnoly (2017), the organizational culture alludes to the impact of the medium that has resulted not only from group’s norms, values, and philosophy, but also from the informal activities.

Given the significance of organisational culture, it is also important that local municipalities take into account the influence of organisational culture in the performance of the organisation. Due to this amalgamation of municipalities, different cultures have come together and the municipalities have to understand and build up the most grounded culture. Hellriegel et al. (2004: 361) further allude that “when organisations from different entities amalgamate, such as with some of the South

African local municipalities, cultural clashes often arise. These cultural clashes are one of the prevalent reasons that amalgamations regularly neglect to meet wanted desires

“(Hellriegel et al., 2004: 361). Parker and Bradley (2000: 125) have a similar view to

Hellriegel et al. (2004: 361) by stating that “from a management perspective, there is a concern for the lack of understanding of organisational culture. This would likewise

62 be appropriate to the public service sector at the local government level. This concern pertains to how administration procedures, which are related to the new public management, will conflict with the attitudes, qualities, and culture within the selected municipality” (Harrow and Wilcocks, 1990).

2.12. Importance of Organizational Culture

Organisational culture assumes a vital role in any association, Carleton and Lineberry

(2004:18) characterize a culture as an example of fundamental suppositions designed, found or created by a given group as it figures out how to manage its issues of external adjustment and internal integration, that has functioned admirably enough to be viewed as legitimate, and, thought to the new. In public or private institutions, the organizational culture is very important because it helps the employees to understand values and beliefs in the organisation. Organisational culture is a significant part of organisational survival and has the capacity to assess, understand and managing the culture of the associations that are combining is imperative. Many key organisational issues, which relate to adequacy, quality, consumer loyalty, cooperation, advancement, decision-making, and adaptability are fundamentally determined by the association's culture.

Furthermore, to adequately oversee organisational culture is to manage contracts, terminating, motivations and remuneration, decision-making organisational structure, policies, systems, innovation, the workflow, the executives and leadership styles procedures and measures (Carlton and Lineberry, 2004:19). Organisational culture is established in the history, structure, condition, and management of the association.

Coffey, Garrow and Holbeche (2002:199) compare a merger to a birth instead of marriage. They express that the new association has qualities from the two guardians yet may experience the ill effects of a horrible birth and absence of good parenting. A

63 portion of the primary components of organisational culture involves recruitment and selection, managing performance, handling conflict, reward systems, induction and socialization (Brown, 1998:166).

One of the greatest difficulties that combining associations confront is the manner by which to deal with culture change. Holbeche (1998:362) states that the chaos theory recommends that while an association can exist in a steady or unstable state, the state most profitable of progress and new potential outcomes is the "edge of chaos". This theory implies that the association must have the ability to be steady, to also change or advance. Too much change may lead to disorder, lack of management and waste.

At the edge of chaos, where there is experimentation but the system within, is most helpful for developing organisational change since the general population are probably going to be influenced by the change presented.

Schmidt (2002:10) recommends that a key to progress is the capacity of the two joining associations to see each other's cultures by measuring them with explicit tools and strategies, and afterward tending to potential issues at an opportune time. Schmidt

(2002:10) contends that organisational and cultural issues are certain than financial components to sink a merger, while inadequate cultures hinder individuals from contributing everything they can to the combination. Individuals become territorial, and debate about subtleties end up exaggerated. Too much time is transparently spent battling over jobs, longing for the past, and fighting decisions, and these inner clashes keep individuals from concentrating on what is critical, which are the clients, products, markets and operational efficiency.

2.13Types 0f Organisational Culture

Organisational culture comprises of components that represent the main building blocks of the whole framework (Bratianu, 2008). These are thoughts of individual workers of the association formed by their insight and experience, their essential inclinations, values, standards, mentalities, and innovations (Cow, 2012; Matoskova,

2012; Lukasova&Novy, 2004). Vital components determining organisational culture are the individual needs of the employees. In general, organisational culture might be seen as a reﬂection of human dispositions in work activities, which reinforces man's mentality to work and control the relationships among workers and an association's administration (Kachanakova, Stachova, 2011). Organisational culture is dictated by two kinds of determinants, known as the internal and external. The external determinants among the current include: social framework, financial framework, and the effect of the environment. Interior determinants comprise an organisation’s history, system, training of employees, and the utilized processes.

Another kind of determinant, is the division into tangible, known as an association's property and intangible known as partners' and workers' interests' determinants; which alludes to an association's history and which alludes to the present processes applied or the determinants that are possible to inﬂuence, like employees' education or difficult to inﬂuence like an association's age. Among the variables emphasized are: the effect of the environment, the effect of the size and length of existence of an association, the effect of innovations and of the founder (Lukasova, & Novy, 2004).

Positive effects are clearly shown in organisational culture only if it is adequately strong and compatible with other elements of the system (Shih & Chiang, 2005).

Furthermore, it “creates a synergic effect, which is directly reﬂected in processes such as co-ordination, integration, and motivation, since organisational culture is superior

65 to personnel management “(Bedrnova and Novy 1998). Novy, (2004), distinguishes the four basic types of an organisational culture characterised by the criteria of the predominant direction followed by the organisation, these are:

• The power culture: aims at the dominant position of both an individual and the entire association.

• The role culture: favours conforming to ethical principles and regulations.

• The task culture: Exceedingly commends the fulﬁlment of speciﬁc appointed undertakings and extends the dependent on information and abilities.

• The person culture: regards and empowers individual needs and desire of people with great relations among workers. It gives space to self-fulﬁlment and self- awareness (in Lukasova, Novy, 2004).

The previous section demonstrates that if workers in the association share a similar essential inclination, qualities, and dispositions, they add to the enhancement of the procedure of knowledge and information sharing (Matoskova, 2012). Organisational culture is likewise observed as one of the variables determining the transfer of learning in associations (Lindner, & Wald, 2011; Lauring, & Selmer, 2011). In the event that an association has a working culture, it can accomplish a competitive advantage.

2.14 Effects of Change Management on Organizational Structure

According to Herath (2007), organizations are institutions that are formed by people with the intent of achieving specific objectives the individuals cannot achieve alone.

To achieve these objectives and as stated by Bourgeois et al., (2004), organizations form relationships among organizational parts that are referred to as an organizational structure. Similarly, Martinelli (2010), refers to organization structure as a set of

66 elements in the interaction that enhances decision-making units in an organization.

Equally, organizational structure is defined as a set of methods, processes, and hierarchies through which, organizations distribute distinctive tasks that synergize duties and responsibilities in a formal manner, so as to coordinate, control, and motivate employees towards the set objectives of the organization (Michela and Burke,

2009). Herath (2007), argues that sets of relationships do form proper structures that anchor proper functioning of organizations. According to Elrod II and Tippett (2010),

Beach (2009), and Kazík (2012), organizational structures can be hierarchical, horizontal or integrated.

However, most of these structures, as stated by Herath (2007), insists, that they are static in nature and most often cannot meet the dynamic requirements of efficiency and adaptability particularly in mergers and acquisitions. Mergers and acquisitions by their very nature destabilize the harmonious inner workings of organizational structure.

According to Zheng et al., (2010), organizational structures do offer a way in which responsibility and powers are allocated within an organization, how work procedures are executed, and how decisions are made.

However, “mergers offer major disruptions in existing sets of relationships that form functional units within the organization. As a result, decision making chains are disintegrated; work units reconstituted, abolished, or restructured” (Simonet and Tett,

2012). According to Hatch (2010),” if change management is not properly instituted to manage the disruptions and changes, employees’ motivation is crushed, loyalty dissipated, while performance and profitability fizzle. Decision making structures, information technology structures, and operational structures are some of the areas being examined for change management effects on organizational structure”.

2.15 Managing change during a merger

During the amalgamation period, it is imperative that managers are furnished with important abilities to manage issues, for example, vulnerability and redundancy. The goal is to assist the workers with coping with the fears of retrenchments and losing jobs and furthermore show the spirit of caring. Kanter (2003:167) states that, when individuals are suddenly faced with an amalgamation or merger, there is a sentiment of powerlessness. This is normally joined by expanded staff turnover, increased sickness, and a higher absenteeism level.

“Organizations often underestimate the impact of change on people and tend to focus only on putting change into effect. Today’s organizations need leaders at all levels who are skilled not only at implementing change but also at effectively helping their employees through the psychological process involved in coming to terms with change” (Human Technology, 1999:1). For the most part, change has the capability of being both positive and negative, and the effect relies upon its size. Amid any merger or amalgamation, except if there is a clear and distinctive correspondence, workers have an inclination of feeling compromised. It is vital that management understand the state in which their employees find themselves. Holbeche (2006:84) argues that one of the impacts of change is on the psychological control between employers and employees. Cohen (2005:87) points out that “a common misconception in organizational transformation is that training will be enough to prepare employees for their job changes. He argues that when people begin training without any understanding of the changes and their specific impact, they spend much of their time coming to grips how their jobs are changing and how they will be affected”.

2.16 Why mergers fail

Schmidt (2002:3) states that the reason why M&A does not succeed is that of individuals or related issues. During this period, key directors and scarce skills leave startlingly. “Valuable operating synergies evaporate because cultural differences between the companies are not understood or are simply ignored. Cuts in pay or benefits programmes create ill will, which reduces productivity “. Management does not communicate its business method of reasoning or its objectives for the organization and workers flounder in the following perplexity. Appropriate pre-planning is important to keep away from the failure of the merger e.g. if too little consideration is paid to distinguishing and keeping high performing, high potential employees or no consideration is paid to social issues, these deficiencies will come back to torture the new association.

The implication is clear: “strategic people management is as crucial to a successful merger as a sound strategic and fair valuation.”Schmidt (2002: 3) supports this view when he states that “many companies expect a merger or acquisition to provide the scale of operations, resources and capabilities, financial strength and broad market- reach, necessary for growth and long-run competitions, yet, various studies concludes that even well-conceived deals often fall short of their promised benefits. Research has shown that the major obstacles to achieving success stem from people issues such as: inability to sustain financial performance; Loss of productivity, incompatible cultures, and loss of key talent. “

2.17 Organizational Leadership

Nguyen and Mohamed (2011) suggest that, the accomplishment of any association, especially in mergers depends upon the proficiency, and character of the leader. For

69 example, as indicated by Lucas and Kline (2008), characterizes transactional leadership as the impact a leader applies on his subordinates by committing promises, in return for staff performing specific tasks. Kazík (2012), characterizes transformational leadership as the capacity of a leader to model staff without hesitation over a more noteworthy, vision or mission.

Charismatic leadership is defined as the leader’s ability to communicate by inspiring followers on an emotional way that spurs them towards a cause. Finally, contingent reward leadership on the other hand involves the leader’s ability to assign followers tasks and responsibilities and structuring rewards in exchange for great work done

(Aral, Brynjolfsson, and Wu, 2010).

According to Nguyen and Mohamed (2011), leadership is the art and science of mobilizing teams to struggle for shared aspirations. To examine the effects of change management in mergers, leadership have to understand that their style of leadership has a positive relationship organizational change dynamics. For instance, resistance to change, or resistance to the introduction of new technology, might be as a result of the leadership style. Skilful leaders understand this aspect of organizational culture, and adjust their style where possible to make the transitions less frictional or repulsive

(Bourgeois, McAllister, and Mitchell, 2004). Valencia et al., (2011), in referencing the work of Weber (1978), attributes successful culture change to charismatic interventions by leaders in mobilizing others towards a successful transition cause.

According to Weber (1978, 1996), leaders must inspire trust and belief in their staff if they hope to steer them towards change. Equally, Valencia et al., (2011), argues that

“leadership in mergers and acquisitions should revolve around motivating people towards desired change”. Martinelli (2010), Elrod II and Tippett (2010), and Liao

(2011), argue that “leaders influence the nature of the work environment, hence organizational culture. In this regard, leaders in mergers and acquisition can influence the attitude of organizational members by initiating a set of planned actions within the feasible capacity of their organizations to absorb the change”.

2.18. Organizational Politics

Gotsis and Kortezi (2011) suggest that, organizational politics refers to the self-interest of individuals within the organization without proper consideration, and how those interests affect organizational quest to achieve its objectives. During a merger, organisations must adopt behaviours that inject positive political behaviour. According to Gadot (2009), organizational self-interest is a representative of actual human behaviour that can paralyze the operations of an organization. In mergers, change management can be difficult as a result of employees taking advantage of the transition periods to promote self-interest, at the expense of the overall organizational objectives. Weissenberger-Eibl and Teufel (2011), points out that there exists a positive relationship between change management in mergers and organizational politics. Equally, there exists a relationship between aspects of change that are adopted as a result of organizational politics, with those aspects that are rejected.

According to Beyes and Volkmann (2010), merging organizations must identify their political organizational theory that enhances the realization of organizational change management objectives.

According to Muhammad (2007), the organogram of any given organization, job or work distribution, hierarchies of autonomy, form the basic lenses through which organizational politics can be viewed. However, Gadot (2009), challenges this assertion by arguing that relationships between decision-makers and specific staff members within mergers determine the level of politics within the organizations.

Sheard et al., (2011), asserts a unique dynamic that trust between supervisor and employee, and the willingness for the two in helping each other attain organizational goals and absolves any simmers of political tensions. As a result, change management processes being driven by the supervisor gets cordial embrace, as employees do not feel threatened by the change. However, the reverse is true because, Gadot (2009), argues that, if change management is being driven by antagonistic relationships between line managers and employees. Also if the new standards of pay renegotiation seem to intimidate on the performance management front, then political posturing takes the centre stage, and genuine aspects of desired change are lost.

According to the Sheard (2011), aligning organizational politics to suit organizational business models and objectives is the main goal of change management agents or managers. Having the ability to dissect through bureaucracy to determine the networks within the organization, which are the centres of organizational politics is a positive front for an effective drive in change management in mergers and acquisitions. Aral et al., (2010), argues that failure for managers and organizational leaders to identify and manage organizational political networks can be detrimental to any quest to drive successful change.

2.19 Organizational Learning

According to Xenikou and Simosi (2009), merger transitions can transform employees working attitude towards organizational learning, which determines the eventual success the organization will experience. Muhammad (2007), defines organizational learning environment as the entrenchment of a new culture, organizational members adopt, to structure their changing work environment so as to achieve organizational objectives. According to Pokharel (2010), the enhancement of a learning environment

72 can indeed sway the resistance within the organizational push for change. To determine the level of learning, managers should observe the penetration rate of the new organizational aspects in local departments (Arvanitis and Loukis, 2009).

According to Olav-Eikeland (2011), organizational culture influences organizational change and learning processes.

The act of changing the physiological contract between employees and managers, and the power differential between the two can lead to enhanced organizational culture, and organizational learning, or frustration, balkanization, or even knowledge and skill redundancy (Xenikou and Simosi, 2009). According to Field (2011), there exists a positive correlation between organization learning processes and change management. Furthermore, the human resource management during change is largely reflected in more cooperation, more coordination, and less change resistance.

Similarly, Olav-Eikeland (2011), maintains that organizational learning has a positive relationship with the performance, growth and productivity for mergers and acquisitions. According to Valencia et al. (2011), organizations that are undergoing organizational change, that have undergone mergers or acquisition, should develop leadership and learning programs to fast-track the realization of organizational objectives.

On the other hand, Van Dijk and Van Dick (2009) state that the process of integrating merging corporate cultures, and entire sets of human capital policies and procedures require a keen evaluation, revision, or replacement. The boomerang from such neglect can be catastrophic. Notably, as argued by McEnrue et al. (2008), the effects of cross- cultural clash and an ill-conceived human capital integration strategy is attributable to a most failure in mergers and acquisitions. Most venture capitalists, and acquisition managers pay little attention to the management of talent during mergers, hence suffer

73 the consequences of such neglect, while some of the effects revolve around downsizing, outsourcing, and disharmony remunerations.

2.20 Theoretical Framework

2.20.1 Henri Fayol’s Theory of Administrative Management The Management principles of Fayol alludes to an expansive and general guideline that gives an outline to decision-making in an association. It could be utilized to choose employees who are to be promoted in an association, in view of the manager’s scrutiny, i.e. one manager could consider the position, while another may deem the principle of merit as more important. The management principles manage human conduct and are executed productively depending on the current circumstance.

Human conduct is regularly changing as well as technology, organisational structure, business techniques, and all of which influences the operations of a business.

Subsequently, it is prominent that all standards are up to date with these changes.

According to Sheldrake (1996), the principles are as follows: “division of work authority, discipline, unity of command, unity of direction, subordination of individual interest to general interest, remuneration of personnel, centralization, scalar chain, order, equity, stability of tenure of personnel, initiative as well as esprit de corps- building and maintain of harmony among the workforce”.

The significance of the management being a factor that determines an organisational success is one which has for some time been contemplated, and which cannot be over-emphasized (Robinson, 2005). In 1916, Henri Fayol published the 14 principles of management. The management specialists throughout the years opine that these standards by Fayol are that which transformed to the present-day management and organization. It is trusted that each association today one way or the other execute the

Fayol’s principles of management.

The principles of Henri Fayol such as division of labour is applicable in the Raymond

Mhlaba Municipality, as it is relevant to associations that have numerous employees and also those that have few. The standards express that work ought to be delegated among individuals who are competent and not be over-burdened to a concentrated few. This standard additionally indicates that, work should not be diluted by giving a similar work to such a large number of individuals. It guarantees legitimate use of work, keeps them centred, and productive. Fayol, contended that efficiency and productivity can be accomplished when one employee is completing one task at once and another completing a different task. In new businesses, there exist divisions of work. Work is partitioned into departments ranging from the finance division where monetary transactions are completed and record of the financial statements kept, to have the capacity to foresee the financial position of the association, and as the rule predicts, not all individuals in the office will do a similar activities, somebody can be requested to do bank duties, another prepare vouchers, while others could be responsible for distributions. It is the duty of the Head of Departments to assign responsibilities to employees in each department depending on specialization.

In addition, Witzel, (2003) notes that “in the organization, there is the administrative department of which majority classifies as both administration and human resource”.

In this department, they have employees that major in employee welfare and filing of the documents to allocate jobs as directed by the top management. There is communication, cooperate services and community services departments where skilled labour is employed, and it was observed that they have the IT departments. In contemporary companies, I.T. (Information Technology) department is considered vital, as they handle most of the operations that deal with the internet, they also save

75 data and information of the organization’s stakeholders, however their jobs are considered pivotal and requires skilled people to carry out.

Furthermore, the principles of authority are also visible in Raymond Mhlaba

Municipality, which makes it applicable to this study. These principles recommend that there is a need for managers to have authority so as to instruct employees to perform their duties while being in charge of their actions. Pathak (2015) considers it to be the ability to give orders, which are obeyed or the ability to make decisions. The principle is both formal and informal of which is most suggested for managers.

The formality being the responsibilities, is the expectation of the association from the manager, though the informality being the authority, alludes to the leader's self- sufficiency to order, coordinate, and guarantee that he performs his obligations effectively. Pathak (2015) likewise, propose that both authority and obligation must be on par, which means, legitimate authority ought to be designated to meet the obligations. Fayol recommends that, a few individuals show the power and obligation to give orders. One of the normal mistakes of large organizations is that administration incorporates an excessive number of individuals, which may lead to conflict. When a few chosen individuals have the power to vote, the authority is conveyed down the chain and the procedure gets executed and further comes with responsibility. Fayol believed that since a manager must be in charge of his obligations, he ought to also have authority backing him up to achieve his tasks.

Another principle is the unity of command, which is also applicable to the study. Fayol was of the view that subordinates/workers ought to have one superior. If a worker gets orders from two bosses at the same time, then the principle of unity of command is ruptured. This means employees ought to get orders from and report specifically to

76 one supervisor. Fayol established this principle to be vital. “He felt that if it were violated, then authority is dented, discipline is in peril, directive disturbed and stability threatened”. A look into transcendent situations in many associations nowadays where work is collectively done in teams, essentially proposes that each team will have a facilitator or boss whom orders are received from, and this organizer is not the only or overall manager(Uzuegbu &Nnadozie, 2015). It is contended that this rule is rigid and needs change, particularly in consonance with current realities to numerous associations and "Fayol was not explicit to show if it means that only one person can give orders or whether two or more persons can give instructions/directives to employees, but not at the same time. In every organisation there is unity of command where every employee gets an order from their bosses”.

2.20.1.2 Fayol’s elements of Management

Fayol’s idea of establishing the first general theory of management was developed as a result of his belief that it was essential for managers to have a set of standards to lead their management. Fayol developed his ideas when public and private institutions were growing (Tompkins, 2005), which led to a need for management positions.

Research-based knowledge was needed to help the field of management development. Fayol distinguished a difference between “governing” and “managing” an organization (Tompkins, 2005).

According to Gordon (1963), administration was seen as a different and recognised field of human activity. In addition, the administration had been perceived as what administrators do. Gordon also emphasised that, the main purpose of administrators was seen as a capacity made of interrelated sub-functions known as planning, organising and controlling. As shown by Wren (2002), there are various obligations required from the administrative function. It deals with the organisation, choice, and

77 administration of the staff. The main role of the administrative management theory is to locate a decent harmony between the structure of the administration and the mission of the organization. It accentuates and ensures an emphasis on the significance of organizational effectiveness (Tompkins, 2005). Fayol’s administrative strategies underline managers creating an administrative tool to develop administrative standards. The purpose is to keep the association concentrated on its main goal and consistent enhancements.

According to Stead (2017), Fayol highlighted five elements of management within his theory that identify the kinds of behaviours managers should engage in so that the goals and objectives of an organization are effectively met. The five elements of management include:

20.1.2.1 Planning

The planning function includes creating objectives and constructing them in a reasonable manner. Administrators participate in both short-term and long-term planning, formulating a plan of action for the future, establishing the phases of the plan and the important technology to execute it. Furthermore, to decide what to do ahead of time, how to do it, when to do it, and who ought to do it. Planning demonstrates the way from where the association is, to where it aspires to be.

20.1.2.2 Organizing

When a plan of action is structured, supervisors need to give all things required to complete it; including raw materials, necessary apparatus, capital, and HR. Moreover, identify duties, group them into offices or divisions, and specify organisational relations.

20.1.2.3 Command

Managers need to execute the plan of action and further have a clear perception of the qualities and shortcomings of their personnel. Managers should lead its personnel in a way that accomplishes the objectives of the association and also allocate resources in a viable emotionally supportive network. Coordinating requires uncommon relational aptitudes and the ability to encourage individuals. One of the urgent issues in coordinating is the right harmony between staff needs and production.

20.1.2.4Coordination

Senior managers must work to harmonize all work-related programs to encourage organisational achievement. Communication is the prime planning mechanism.

Furthermore, they should synchronize the components of the association and must consider delegation of power, duty and range of control within units.

20.1.2.5 Control

The last component of the management includes the comparison of the activities of the staff to the plan of action and it is the assessment segment of the management.

The monitoring function assesses quality in all regions and identifies potential or real deviations from the association's plan, ensuring superb performance and pleasing outcomes, while keeping up a precise and problem-free atmosphere. Controlling involves managing information, measuring performance, and the establishment of corrective actions.

Fayol believed that administrative practices were critical to consistency and productivity in associations. The Administrative theory sees communication as an essential recipe for effective administration and a number of Fayol's practices are alive in the present work environment. The components and principles of management can

79 be found in current associations in a few different ways: as acknowledged practices in a few businesses, as revamped renditions of the first standards or components, or as remnants of the association's history to which elective practices and theories are being offered. These have been seen as necessary and significant in newly amalgamated municipalities including RMLM.

2.21.1 Bureaucratic Theory of Management by Max Weber

Blau (1956) states that “ bureaucracy can be defined as an organization that maximizes efficiency in administration, whatever its formal characteristics, or as an institutionalized method of organizing social conduct in the interests of administrative efficiency”. In this view, bureaucracy is viewed as upgrading effectiveness instead of harming it. When there is assessment on numerous literature, it is discovered that bureaucracy is depicted clearly either as good or bad. Such paired reasoning is obliged and cannot add to intentionally restoring administration.

In addition, Mulder (2017:1) states that “bureaucracy is an organisational structure that is characterised by many rules, standardised processes, procedures and requirements, number of desks, a meticulous division of labour and responsibility, clear hierarchies and professional, and impersonal interactions between employees”.

According to the Bureaucratic Theory of Max Weber, such a system was

“indispensable in large organizations structurally performing all tasks by a great number of employees.” As stated by the Bureaucratic Theory of Max Weber,

“management is the reason for the orderly arrangement of any association and is meant to guarantee proficiency and financial sustainability. Besides, it is a perfect model for management and its organization to bring an association's energy structure into the centre. With these perceptions, he sets out the fundamental standards of organization and underscores the division of work, chain of importance, rules and

80 impersonal relationship. The six management principles are known as: Task specialisation, Hierarchical Authority, Formal Selection, Rules and Requirements,

Impersonality and Career Orientation”.

Blau and Meyer (1987:19) describe the principles as bureaucratic characteristics as follows: Firstly, the primary characteristic of a bureaucratic structure according to

Weber is the normal activities of the organisation, which are executed in a fixed way as official duties. The division of work makes it possible to employ only specialised experts in each particular position and to make each of them responsible for the effective performance of their duties. The second characteristic is the principle of hierarchy. Each lower office is under the control of a more superior office. Every official in this administrative hierarchy is accountable to their superiors for their subordinates decisions and actions including their own. Any action beyond the commanded power of control to subordinates is considered as an illegitimate exercise of bureaucratic authority. Furthermore, bureaucratic power is focused at the top administrative level and those at the top have a duty to coordinate activities performed by the subordinates to encourage central planning and ensure discipline.

The third characteristic is that operations are governed by a consistent system of rules and comprise the application of those rules in specific cases. Standardised and explicit rules are intended to guarantee consistency in the execution of every task and to identify the responsibility of each member and their responsibility in the organisation.

The fourth obligations are conducted in a spirit of formalistic impersonality without hatred or passion. Impersonal detachment promotes objectivity and prevents irrational action, such as unfair treatment and favouritism or discrimination. This should not only prevail within the organisation, but also towards the clients. Finally, employees are

81 protected from arbitrary dismissal and can hold permanent positions. Employment is a career position and the system of promotion is based on merit or achievement.

These features encourage loyalty to the organisation.

It can be noted that the Bureaucratic Theory has been relevant for the RMLM as it contributes to enabling the organisation to have the capacity and ability to attain enhanced efficiency. Moreover, to solve distinctive organisational challenges, increase coordination and control including productive efficiency of employees.

2.22.1 Efficiency Theory Efficiencies can be gained through M&A. Efficiency is enhanced by taking advantage of specialised skills or target’s management, eliminating the idle resources, sharing expensive technologies between the acquirer and target, promoting products that are complementary to both organisations, reducing transaction cost and re-allocating existing expenses (Wolfe et al., 2011).

The efficiency theory suggests that, mergers occur because two firms have different strengths and weaknesses and different efficiency levels. This is known as differential efficiency theory. Through a merger, the efficiency of management of one organisation is transferred to an inefficient management firm which results in both social gain and private gain because it not only improves the performance of the poorly performed organisation but also saves the resources of the economy. It is also called the managerial synergy hypothesis because the excess managerial capacity is utilised in an organisation where there is a lack of such efficient managerial resources.

Differential efficiency theory is the basis for horizontal merger. If organisations carry out the business activities in a similar line of business, they become potential acquirers. The companies that are able to identify and segregate the business activities that are performing above and below average performance can improve the

82 performance based on such information. Here, firm involves superior managers as they have more experience in a particular line of business activity (Weston et al.,

2010).

It can also be noted that, the Efficiency Theory has been relevant for the RMLM as it contributes to enabling the organisation to have the capacity and ability to attain enhanced efficiency. Moreover, to solve distinctive organisational challenges, increase coordination and control including productive efficiency of employees.

2.22 Legislative Framework

2.22.1The South African Constitution, (Act 108 of 1996).

The Constitution of the Republic of South Africa, 1996 section 156(1) gives power to a municipality to exercise executive authority and the right to administer the local government matters listed in Part B of Schedule 4, and Part B of Schedule 5. In terms of Part B of Schedule 5, it is stated that “a municipality should have a solid waste management department with at least one qualified solid waste engineer in a management position, the middle management and general workers, budget allocation, equipment and infrastructure necessary for the function, and capital budget allocation for addressing backlogs”. Furthermore the 1996 South African Constitution, stipulates that local government must provide communities with equitable, affordable and sustained basic services, which include water and sanitation, electricity, waste collection services, and housing services. Nowadays the majority of municipalities and cities in South Africa face a lot of serious economic, social and environmental challenges related to service delivery of basic needs to the communities they serve.

As a result, there is a need to establish new and innovative mechanisms for financing

83 solid waste management so as to promote public health and environmental sustainability.

Also the Chapter 7 of the 1996 Constitution of the Republic of South Africa, talks about the duties of municipalities. Section 152 states that municipalities are obliged to deliver effective and efficient quality services to the communities they serve. Section 153 goes on to state that the municipalities should be developmentally oriented in the sense that it should develop programmes and strategies that should transform the lives of the citizens. These include Developmental Local Government (DLG) and Local Economic

Development through the development and formation of Integrated Development

Planning (IDP). Municipalities are regarded as the grassroots because of their nature and for the fact that they are close to the communities. Furthermore, Chapter 10 of the

Constitution provides basic principles governing public administration. Public officials when performing their duties should be accountable and services must be unbiased and reasonable. In many municipalities, services are very poor and compromise human and economic growth. Poor service delivery in the public sector has resulted in several protests and demonstrations throughout the country. Municipalities should provide basic services such as water and sanitation, electricity, waste collection, and street lights in the areas of jurisdiction in municipalities, there should be good human- resource management and career improvement practice,” to build human potential.

Lack of human resource and skills in a municipality slows service delivery which becomes a hard pill to swallow for the citizens.

2.22.2 The White Paper on Transformation of the Public Service 1995

The white paper was introduced in the year 1995 with the aim to give direction on the introduction and implementation of new policies and the transformation of the public sector. Strategies are not detailed in the white paper, so it is the responsibility of a

84 certain department to develop its own strategies. This white paper gave vision and mission for the South African public sector, such as Transformed public service which is representative, coherent, transparent, efficient, effective, accountable and responsive to the needs of all. The main mission of the White Paper is the creation of a people-centred and people driven public service, which is characterised by equity, quality and a strong code of ethics. The public officials in the Nxuba and Nkonkobe municipalities where not following the code of ethics when delivering services to the public, hence the need for amalgamation to form Raymond Mhlaba Municipality to improve service delivery. There are poor water and sanitation services in the municipality which has affected the municipality negatively. Continuous poor water and sanitation affects the health of mankind which is also a big challenge to the government. The main purpose of the White Paper is to improve service delivery in the public sector in order to meet the demands of the public.

2.22.3 The White Paper on the Transformation of the Public Service, 1997 (The Batho

Pele White Paper)

According to Reddy, (2002: 59) the White Paper on Transforming Public Service

Delivery. Batho Pele (1997)” provides a policy framework and guidelines within which the public service is expected to operate. This paper aims at building and delivering of public service, which is capable of meeting the challenge in improving the delivery of public services to the citizens of South Africa. Singh (2003:3) noted that Batho Pele is premised on the fact that a transformed public service will effectively be judged by one criterion, which is the degree to which it succeeds in effectively delivering services that meet the basic needs of all South Africans”. Batho Pele principles creates framework for effective and efficient service delivery to the public, which treats citizens more like customers and enables them to hold public servants to account for the

85 service delivery in which customers received. More importantly, the Batho Pele principles calls for a shift from a bureaucratic system, processes and attitudes, towards a new way of working, which puts the needs of the public first, better, faster, and more responsive to the need of the public (Singh, 2003: 4). The principles of Batho Pele include consultation, service standards, courtesy, access, information, openness, and transparency, dealing with complaints and giving the best value.

The Batho Pele white paper was published in the year 1997 and it has not been published as a Bill which means it remains a public policy document. The principles spelled out in the document have been incorporated in certain legislation. The Batho

Pele is applicable directly to national and provincial government, and it is also relevant to all areas of the public service such as local government and the parastatals. This white paper is primarily about how public services are provided, and specifically about improving the efficiency and effectiveness of the way in which services are delivered.

2.22.4 National Policy Basic Refuse Removal Services to Indigent Households, 2011.

The Government of South Africa has introduced a national policy called The Basic

Refuse Removal Services to Indigent Households. This policy was developed by the

Department of Environmental Affairs on 22 June 2011. The Refuse Removal Services to Indigent Household was mainly developed to cater for the poor and disadvantaged people who are unable to pay for basic services such as solid waste, sanitation, water and electricity The South Africa Environment Outlook Report, (2006:42) observed that almost 50% of the population in South Africa does not have access to waste services

(Department of Environmental Affairs and Tourism, 2000:12). Therefore, there is a need to introduce free basic services, to the poor and disadvantaged so that they can also enjoy the basic services in their communities. The majority of the people in South

Africa are very poor and they cannot afford to pay the full price for essential municipal

86 services. There are several pieces of legislation that support the national policy for

Basic Refuse Removal Services to Indigent Households, such as the 1996

Constitution of the Republic of South Africa, Municipal Systems Act, of 2000 and the

1997 White Paper on the Transformation of the Public Service.

According to the terms of Clause 74(2) (c) of the Municipal Systems Act, of 2000 (Act

32 of 2000), poor households must have access to at least basic services. Although many municipalities are facing a lot of challenges in service delivery, they should put efforts to make sure that all the people in their areas of jurisdiction are receiving basic services such as waste removal and disposal, water and sanitation, electricity and basic education. In addition to the above view, the1996 Constitution of the Republic of

South Africa: Clause 27 (1) (c) stipulates that everyone has the right to have access to social security, and if they are unable to support themselves and their dependents, appropriate social assistance should be provided. The White Paper on the

Transformation of the Public Service of 1997 further supports that service delivery is one of Government's eight priorities, meaning that the government should deliver efficient and effective services to its citizens. To achieve this, government of South

Africa has launched an initiative under the banner of Batho Pele- meaning 'People

First' in Sesotho. Batho Pele principles aim at improving the delivery of public services

(including waste management services).

2.22.5 The Municipal Structures Act 117 Of 1998

In order to cement the powers and functions of the municipalities on delivering of quality services to the public, the government has established the Municipal Structures

Act, 1998. The 1998 Municipal Structures Act, (Act 117 of 1998) provides for the establishment of municipalities, their internal structure and the division of powers between local and district municipalities. Some of the functions of municipalities

87 include, the determination of waste disposal strategy, the regulation of waste disposal and the establishment, operation and control of waste disposal sites, bulk waste transfer facilities and waste disposal facilities for more than one local municipality in the district municipality. Despite all the powers and authority were given to the municipalities in delivering quality services to the citizens, a significant portion of the population did not have access to basic services in both municipalities (Nkonkobe and

Nxuba) resulting in the amalgamation of the two in order to improve service delivery..

According to Chapter 2 of the 1998 Municipal Structures Act, (117 of 1998) it advocates for the establishment of municipalities in different categories, such as category A, B and C, and features and economic activities that form the establishments of different categories of municipalities.

2.22.6. Municipal Systems Act 32 of 2000

According to 2000 Municipal Systems Act, (32 of 2000) a municipality must within its regulatory and financial capacity establish and organise its organisation in a manner that would empower the municipality to:

“be receptive and attend to the needs of the local community; encourage a culture of open administration and responsibility among its staff; guarantee that its political structures, political office bearers and administrators and other staff individuals adjust their roles and obligations to the needs and goals stated in the municipality’s integrated development plan; set up clear relationships, and encourage working together, control and communication, between its political structures and political office bearers and its administration, on a decentralised basis: maximise efficiency of communication and decision-making within the administration; delegate responsibility to the most effective level within the administration, involve staff in management decisions as far as is

88 practicable and provide an equitable, fair, open and non-discriminatory working environment”.

Based on the above clause, it is imperative that municipalities should aim to transform the ,lives of the citizens in their areas of jurisdiction by delivering services to the communities, performing their duties in an honest, transparent manner and in good faith and does not compromise the integrity of the municipality. The public officials should be accountable for their actions when carrying out their duties. According to the available literature on Nxuba Municipality, the public officials were breaching the requirements of the Act and also the code of conduct, which guides their activities at their work- places. The financial reports submitted to the Auditor General shows a lot of irregularity in the financial reports. According to South Africa Local Government

Briefing (2015:11), the Auditor General (AG) has also consistently noted with concern that, adverse audits arise from financial statements which contain misstatements that are not confined to specific amounts, or the misstatements that represent a substantial portion of the financial reports.

As stipulated in the constitution the public administration must be development orientated. This study sought to improve human resource management and career development practice by providing recommendations to improve the organisational culture in merged municipalities as well as contributing on ways of improving the working environment of the new municipality. In addition, Chapter seven of the

Municipal Systems Act (32 of 2000), the (RSA, 2000) refers to local public administration and human resources. Subsection 50 mentions the basic values and principles governing local administration: “(1) Local public administration is governed by the democratic values and principles embodied in section 195 (1) of the

Constitution. (2) In administering its affairs, a municipality must strive to achieve the

89 objective of local government set out in section 152 (1) of the Constitution, and comply with the duties set out in sections 4(2) and 6 “(Republic of South Africa, 2000).

The preceding section alludes to the manner by which the organization ought to be organised. The municipality ought to be receptive to community needs, be focused on delivering efficient services, include employees in decision-making, communicate proficiently, allocate clear responsibilities, delegate duties adequately and give an appropriate work environment. This will not just guarantee ideal service rendering but also encourage a positive culture within the association.

2.22.7 Public Administration Act, 2014 (Act No. 11 of 2014)

The Raymond Mhlaba Local Municipality is guided by the Public Administration Act which advocates for efficient and effective service delivery to the public. Chapter, 6 of the Public Administration Act, 2014 (Act No. 11 of 2014) explicitly deals with ethics, integrity and discipline. Section 15 (1) of this enabling act provides, for the establishment of the Public Administration Ethics, Integrity and Disciplinary Technical

Assistance Unit. Furthermore, Chapter 8 Section 17 (1) of the Public Administration

Act, 2014 (Act No. 11 of 2014), establishes the Office of Standards and Compliance.

“In terms of section 17, the objects of the Office are to ensure compliance with the minimum norms and standards set by the Minister in terms of section 16, taking into account that the spheres of government are distinctive, inter-dependent and interrelated, by monitoring compliance by institutions with the minimum norms and standards in the public administration” (South Africa Republic), 2014:18).The

Amathole General Report Audit Report, (2015-16:17 ) shows that council certified irregular expenditure as irrecoverable without having conducted an investigation into every ward as required by section 32 of MFA.

The report further indicates that the consolidated financial statements were not materially misstated as management had written back the items that were not subject to investigation. With the establishment of the 2014 Public Administration Act,

Raymond Mhlaba hoped that the Office of Standards and Compliance would in future go a long way in enforcing compliance to minimise incurring irregular expenditure.

2.22.8 Municipal Modernization Act of 2016

The Section 8 of the Municipal Modernization Act states that on the effective date of the establishment of a newly amalgamated municipality:

(a) “all the rights and property of the municipalities that are amalgamated become

the rights and property of the newly amalgamated municipality; (b) all the debts,

obligations and liabilities of the municipalities that are amalgamated become

the debts, obligations and liabilities of the newly amalgamated municipality; (c)

an existing cause of action, claim or liability to prosecution is unaffected; (d) an

action or proceeding pending by or against the municipalities that are

amalgamated may be continued by or against the newly amalgamated

municipality; (e) a ruling, order or judgment in favour of or against the

municipalities that are amalgamated may be enforced by or against the newly

amalgamated municipality; and (f) by-laws and resolutions of the municipalities

that are amalgamated continue to apply to the newly amalgamated municipality

until repealed or others are made in their place by the newly amalgamated

municipality”.

From the above Act, it showed that the amalgamation of Nkonkobe and Nxuba

Municipalities was in accordance with the Modernization Act, which can be seen as

91 the properties and debts of Nkonkobe and Nxuba Municipalities are now under

Raymond Mhlaba Municipality and even the administration.

2.22.9 Companies Act NO. 71 of 2008

The above Act stipulates that a merger and amalgamation is defined in Section 1 of the Companies Act as a transaction entered between two or more companies in pursuant of an agreement resulting in:

“The formation of one or more new companies which holds all assets and liabilities of the amalgamating company immediately prior the implementation of the agreement of the amalgamating organisation or;

The survival of at least one of the amalgamating companies with or without the formation of the new company and all the assets and liabilities held by the amalgamating companies immediately to prior the agreement vest to the surviving amalgamating company together with the new company”.

2.22.10. Proposals for Amalgamations

According to Section 113 of 2008 of Proposals for Amalgamations, two or more profit companies, including holding and subsidiary companies, may amalgamate or merge if, upon implementation of the amalgamation or merger, each amalgamated or merged company will satisfy the solvency and liquidity test.

Two or more companies proposing to amalgamate or merge, must enter into a written agreement setting out the terms and means of effecting the amalgamation or merger and, in particular, setting out:

(a) “the proposed Memorandum of Incorporation of any new company to be formed

by the amalgamation or merger (b) the name and identity number of each

director of any proposed amalgamated or merged organisation; (c) the manner

in which the securities of each amalgamating or merging organisation are to be

converted into securities of any proposed amalgamated or merged

organisation, or exchanged for other property; details of any arrangement or

strategy necessary to complete the amalgamation or merger, and to provide for

the subsequent management and operation of the proposed amalgamated or

merged organisation or organisations; and the estimated cost of the proposed

amalgamation or merger”.

The amalgamation of Nxuba and Nkonkobe to form Raymond Mahlaba was also in accordance with the provisions of Section 113 of the Proposals of the Amalgamations

Act. The merger of these above municipalities was published in the Government

Gazette, and also the reasons behind the amalgamation was listed and this leads to the birth of a new municipality known as the Raymond Mhlaba Municipality.

2.22.11 Implementation of Amalgamations

According to section 116 of the Implementation of the Amalgamations Act of 2008, a notice must be issued by each of the amalgamating or combining organisations in the recommended manner and form to every known creditor of that organisation; “a notice of amalgamation or merger must include: confirmation of the amalgamation or merger (i) has satisfied the requirements of sections 113 and 115; (ii) has been approved in terms of the Competition Act, if so required by that Act (iii) has been granted the consent of the Minister of Finance in terms of section 54 of the Banks Act, if so required by that Act. After receiving a notice of amalgamation or merger, the

Commission must: (a) issue a registration certificate for each company, if any, that has been newly incorporated in terms of the amalgamation or merger agreement; and (b) deregister any of the amalgamating or merging companies that did not survive the

93 amalgamation or merger. An amalgamation or merger takes effect in accordance with, and subject to any conditions set out in the amalgamation or merger agreement”.

However, according to the available literature collected, it showed that the process of amalgamating Nkonkobe and Nxuba was properly followed, the notice of their merger was published in the Government Gazette and the reasons behind their merger were brought forth. Some of the reasons for the merger was to improve service delivery in the municipality, nevertheless Nxuba municipality was very small and also its revenue base was too small, resulting in the amalgamation of the two.

2.23 Empirical Framework 2.23.1 Municipal Amalgamations in Japan There is a lot of available literature on the merger of municipalities in different countries. According to a study that was conducted in Japan, the number of municipalities in Japan diminished from 3,232 in 1999 to 1,820 in 2006 by uprightness of the state metropolitan merger strategy. The merger approach planned to fortify the regulatory limit of municipalities for monetary decentralization and to diminish the aggregate use of municipalities’ methods for economies of scale. Hirota and Yunoue

(2014:4) express that past research on civil mergers has mostly centred around the basic leadership handle and the impact of mergers, and the subsequent economies of scale, on municipal uses. The aftereffects of these reviews differ broadly. The exact outcomes from a few reviews have affirmed that municipalities in Japan are given different motivators to take part in mergers.

Hirota (2007) announced that low monetary conditions, municipality elimination, and little municipal population are the elements driving city mergers. Specifically, the outcomes affirm that the particular conduct of the focal government influences municipal mergers. The particular conduct incorporates expanded local expense

94 assets and uncommon stipends. Most combined municipalities get special treatment from the central government. The conduct of local municipalities likewise influences the basic leadership concerning mergers. Hanes (2003) concentrated on the impact of amalgamations on nearby open uses in Sweden, and demonstrated that city mergers negatively affected the expenditure growth in consolidated municipalities due to economies of scale.

Furthermore, in another study that was carried out using information on Norwegian municipalities, Sorensen (2006) analysed political figures in merger choices and the normal productivity gains, demonstrated liberal awards made up for the impact of diseconomies of scale on city mergers. Since less populated municipalities can get bigger grants from the central government without merging, they did not consider the amalgamation to be essential. Regardless of the possibility that the central government guaranteed to keep up the level of stipends to small municipalities, some less populated municipalities decided not to take part in municipal mergers on account of the central government's absence of validity.

Dolley, Byrnes, and Chase (2007) and Geys, Heinemann, and Kalb (2007) concentrated on the separate impact of mergers on aggregate uses in Australia and

Germany. Dolley et al. (2007) found that city mergers enhance money related manageability, while Geys et al. (2007) found that consumptions of small municipalities ascend with population size. Utilizing board information on Japanese municipalities, Hirota and Yunoue (2013) found that mergers decreased municipal expenditures.

More so, in a study conducted, focusing on to what degree support for mergers affects organizational change over time from two organisations. The outcomes showed that

95 the cultural perception changed in time and relies on the perception employees had at the start of the merger. Motivation had an impact on the change. The level of acknowledgment and information of the representatives had no impact on this change.

The findings showed that the view of organizational culture at the commencement of the merger assumes an imperative role for the culture perception thereafter. The more employees are inspired, the more they are willing to change. In addition, the longer employees work at the organization, the more they are willing to change (Bhasing

2010).

2.23.2 Mergers in Quebec

According to Sancton (2006:4), when the Quebec government published its White

Paper on rebuilding municipalities in April 2000 (Quebec 2000a), it was evident that amalgamations in Quebec's real urban areas would occur. By June, the National

Assembly had endorsed Bill 124, a law giving the MEC of local government affairs the permission to amalgamate municipalities not contained within the enumeration metropolitan regions of Montreal, Quebec, and the Outaouais. A month before, the administration had delegated chairs of advisory committees for city structures inside these enumeration metropolitan zones. The report was made openly to prescribe the amalgamation of the considerable number of regions of the Montreal Urban

Community into another city of Montreal, but also called for 27 surprisingly self- sufficient districts, each of which would have its very own tax collection powers for nearby administrations and the authority to go into collective agreements with its very own employees.

2.23.3 Municipal Amalgamation in City of Tshwane

In South Africa, the City of Tshwane metropolitan municipality was set up in

December 2000 after the merger of different regions and gatherings. In May 2008, the

Minister of Provincial and Local Government announced the fuse of Metsweding area region and two neighborhood regions (Nokeng tsa Taemane and Kungwini) into the

City of Tshwane limits. This was in accordance with the Gauteng worldwide territorial system to lessen the number of districts in the Gauteng Province, and this merger happened in May 2011. The explanation behind the consolidation into the bigger metropolitan territory was to accelerate benefit conveyance and to empower groups from small districts to profit from the greater region's great framework and aptitudes expected to run extends effectively (City of Tshwane, 2011).

The merger had broad financial ramifications. The transitional costs were assessed at

R1.04billion, yet the Gauteng Department of Local Government and Traditional Affairs gave the City of Tshwane an erratic concede of just R20-million (Tshwane Budget

Office: 2011). The City of Tshwane likewise acquired enormous obligation from the fused regions. This obligation was to some extent the aftereffect of long haul contracts and legally binding duties made before the merger. The institutionalization of the

Information Technology and charging frameworks included some significant downfalls.

2.23.4 The Impact of Amalgamation on Human Resources Practice in Ethekwini

Municipality

A literature review has shown that the difficulties confronting eThekwini Municipality are the same as those experienced by various organisations in the midst of a merger or amalgamation. The amalgamation of the establishments for cutting edge training of the two technikons in KwaZulu– Natal (KZN), is a decent illustration. A significant

97 resemblance between the two mergers is the reasons and goals for the merger. “One noteworthy likeness between the two mergers is the reasons and destinations for the merger” (Jansen, 2002:128). For example, while issues of better service delivery and expanded economies of scale are essential, and given that the human aspects of mergers are progressively considered as the primary driver of merger disappointments

(Coffey, Garrow and Holbeche, 2002: 29), it is important that Raymond Mhlaba Local

Municipality likewise gives careful consideration to this part of the merger as it can be concluded that the amalgamation had been successful.

2.23.5 Overview of Nkonkobe Municipality

Nkonkobe Municipality was built up in 2000 and is made of Alice, Middledrift, Fort

Beaufort, Hogsback and Seymour/Balfour. As indicated by Nkonkobe Integrated

Development Planning (2012-17:11) Alice is an authoritative seat and Fort Beaufort is the managerial seat, the latter is located around 140 km North West of East London on R63 and is roughly 200 km North East of Port Elizabeth. The municipality is the second biggest local municipality covering 3 725 km2, and comprising 16% of the surface area of the Amatole District Municipality. Nkonkobe region is a wide open municipality that sits on the foot of the consistently forcing and magnificent mountain scope of the Winterberg (IiNtabazeNkonkobe). In Nkonkobe Municipality there was poor administration of funds in the municipality which trade compromised service delivery. The 2013/14 Audit Report demonstrated that adequate suitable proof was not submitted to help the amendment of blunders as per the Generally Recognized

Accounting Principles (GRAP), bookkeeping approaches changes in bookkeeping and mistakes as revealed in the note 47 to the united and separate financial reports. The municipality neglected to get an unqualified review report. Poor administration of

98 finance and irregular expenditure contributed to the amalgamation of Nkonkobe and

Nxuba in order to form a strong revenue base in the municipality.

2.23.6 Overview Nxuba Local Municipality

Nxuba Local Municipality is located in the Winterberg area of the Eastern Cape, under the purview of Amathole District Municipality. It is comprised of the towns Adelaide,

Bedford and Post Retief. The towns are embedded with architecture and saturated with history. The Municipality has a rich authentic foundation going back to the nineteenth century with numerous places of interest and heritage areas that need to be preserved. As indicated by Nxuba Economic Outlook (2015:2), the managerial and political seat is in Adelaide in spite of the fact that the different departments and their officeholders are dissipated and housed in independent bases in and out the Town hall. The Nxuba Integrated Development Planning (2010-2015:11) included that there is additionally a satellite administrative unit positioned in Bedford, while the

Municipality's organisational structure currently involves 160 positions which are partitioned into the Office of the Municipal Manager and three Directorates, which are

Corporate Services, Budget and Treasury, with Service Delivery and Infrastructure.

The municipality is generally reliant on grants and transfers from National and

Provincial Offices.

The Nxuba Municipality has a small revenue base which makes it difficult to deliver basic services to the community. Nxuba Final IDP Review (2015/2016: 11) established that Nxuba Municipality always attempts to pay its creditors on time, but is not achievable because of financial constraints and the challenges the municipality is facing in collecting the outstanding consumer debt of R56 million. The Nxuba

Economic Outlook of (2015: 23) noted that the grants in the municipality constitute

49.9 %, own revenue constitutes 50%, the total budgeted revenue for 2014/15

99 financial year adds up to R 92 381 140. This makes it difficult for the municipality to satisfy human basic needs as a result of, small revenue base. The financial challenges faced by this municipality is therefore, another reason that makes it to merge with the

Nkonkobe Municipality.

2.23.7 Amalgamation of Nkonkobe and Nxuba Local Municipalities

Raymond Mhlaba Local Municipality was officially set up in 2016 and is made of the now disestablished Local Councils of Nkonkobe and Nxuba. Alice remains as an authoritative seat and Fort Beaufort as the managerial seat, the latter is located about

140km North West of East London on the R63 and is approximately 200km North East of Port Elizabeth. The municipality is the second largest local municipality covering 6

474 km2 of the surface area of the Amatole District Municipality. Raymond Mhlaba

Local Municipality is a countryside municipality that sits on the foot of the mountain range of the Winterberg (Intaba ze Nkonkobe). According to Raymond Mhlaba Local

Municipality (2016/2017:4), the municipal head-offices are situated in Fort Beaufort

(as already indicated above) and the council meetings and other standing committee meetings are convened at Alice. The municipality has the following satellite offices:

Middledrift, Alice, Seymour, Adelaide, and Bedford. The Raymond Mhlaba area is neighbored by the boundaries of Makana Local Municipality, Blue Crane Local

Municipality, Amahlathi Local Municipality, Ngqushwa Local Municipality, Enoch

Mgijima Local Municipality, and the Buffalo City Metropolitan Municipality, (Raymond

Mhlaba Economic Review, 2016:2).

The merger of local government bodies came into effect following the declaration of the 1998 Municipal Demarcation Act of, No. 27 and the 1998 Municipal Structures Act of, No. 117. Accordingly, a variety of local councils all through the nation had to be converged by drawing up new limits in accordance with the act. The genesis of the

100 merger of Raymond Mhlaba is thusly, a result of the demarcation procedure. In the

2015 Eastern Cape Provincial Gazette, The Minister of Cooperative Governance and

Traditional Affairs (CoGTA) when assuming duties after the National and Provincial elections of 2014, willingly examined the status quo of municipalities in South Africa.

The results of the evaluation drove him to summon Section 22 of the Municipal

Demarcation Act by proposing the merger of particular municipalities as a method of addressing their functionality, viability, and sustainability.

In accordance with Raymond Mhlaba Economic Outlook (2017:11), the Raymond

Mhlaba Local Municipality has ward committees and each ward with 10 members totalling to 230 within its jurisdiction. “They are always invited to participate in municipal activities during the development and review of the IDP, Budget and the annual report review as required and amended in terms of the year 2000 Municipal

Systems Act of, no 32. With 156 000 individuals, the Raymond Mhlaba Local

Municipality housed 0.3% of South Africa's total population in 2016. Between 2006 and 2016 the population growth averaged 0.50% per annum which is more than half of the growth rate of South Africa as a whole (1.54%). The Raymond Mhlaba

Municipality IDP (2016-2021:11), noted that when compared to other regions,

Raymond Mhlaba Local Municipality accounts for a total population of 156,000, or

18.1% of the total population in Amatole District Municipality ranking as the most populous local municipality in 2016. In addition, The Raymond Mhlaba Annual Report

(2016/17:12) noted that the ranking in terms of the size of Raymond Mhlaba compared to the other regions remained the same between 2006 and 2016. In terms of its share,

Raymond Mhlaba Local Municipality was significantly larger in 2016 (18.1%) compared to what it was in 2006 (16.6%). When looking at the average annual growth

101 rate, it is noted that Raymond Mhlaba ranked highest (relative to its peers in terms of growth) with an annual average growth rate of 0.5% between 2006 and 2016.”

Both municipalities have a shared vision and mission of rendering services to the public. The accompanying vision of Nkonkobe has been received: To be an independent region that is receptive to the necessities of individuals. Nxuba

Municipality, an impetus in the advancement of maintainable and quickened improvement for all. Nxuba Municipality endeavours to render benefit greatness through a productive, viable, responsible and responsive neighbourhood government framework. As the municipalities have a shared vision, this shows to be an opportunity of them working towards the same goal, which indicates a positive outcome. In view of the above, both municipalities are committed to delivering services according to the

Batho Pele Principles Courtesy, Value for money, Consultation, Service Excellence,

Access, Openness and Transparency, Access, Information, and Redress.

The composition of the Council is as follows: African National Congress (ANC) 38 members, Democratic Alliance (DA) 5 members, and the Economic Freedom Fighters

(EFF) with a number of 3 members. The council consists of the ANC Mayor, Speaker,

Chief Whip as well as other Council members which include executive members from the Corporate Services, Engineering, Community Services, Sport, Arts and Culture,

Finance and Local Economic Development (LED) and Strategic Planning departments. The management consists of the Municipal Manager, Chief Financial

Officer, Senior Management: Acting Senior Manager: Community Services, Acting

Senior Manager: Engineering Services, Senior Manager: Strategic Planning and

LED), Acting Senior Manager: Corporate Services and Communications Officers. The municipality has 359 permanent staff members and about 120 office-based staff members.

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The municipality is expected to have a new organogram, but it has not yet been implemented leaving employees uncertain about their job positions. Employees remain demotivated as some may have to relocate to other offices. The quality of services has deteriorated because of reluctance on the employees, as a result, commitment and performance has also decreased. On account of the mentioned uncertainties and challenges, employees are dissatisfied resulting in leaving work early. The community is also affected as administration offices have been moved from the other entities which are costly for them. The system of communication with the community is also a challenge as there is no official website for the municipality. The merger has had a negative effect on the organisational culture, and because of these challenges, there is no definite stability to date.

2.24. The Positive and Negative Effect of Amalgamations on Organisational Culture

According to Madondo (2008), one of the greatest difficulties that combining associations confront is the manner by which to deal with culture change. The chaos theory recommends that while an association can exist in a steady or unstable state, the state most profitable of progress and new potential outcomes is the "edge of chaos". This theory implies that the association must have the ability to be steady, also to change or advance. Too much change may lead to disorder, lack of management and waste. The edge of chaos is where there is experimentation but within a system, is most helpful for developing organisational change, since the general population who are probably going to be influenced by the change are the ones who present it

(Holbeche, 1998:362).

On the same note, Chetty (2010) states it has been acknowledged, more particularly by progressive organisations, and that employees are greatly affected by mergers, which is an integral to its success or failure. The clashes of culture between the

103 merging organisations can present many problems as well. Culture concerns the internalization of sentiments, desires and the attitudes of the individuals within an association. Fundamentally, organisational culture exists in two dimensions, the first being the qualities shared by the individuals working in the association and furthermore, is the value of the association regardless of membership developments.

During merger transition and implementation of the former level, it impacts significantly on the newly merged unit, department, faculty or even the entire institution. Even when institutions are structurally similar, two institutions that differ culturally could result in conflict during the period following the merger. This frequently results in displeasure, nervousness, communication issues and feeling of uncertainty about what is to come. Tearle (2000) further notes a number of problems relating to culture after the merger, as well as during the implementation stage which includes the following:

 A feeling of being in a void

 No points in making new plans

 Bad publicity about the merger

 Counterparts attempt to get to know each other but do not trust each other.

 The ‘us’ and ‘them’ mentality develops

 New leadership is not working effectively

 Unclear roles

 The resignation of key people

 Low morale

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 Need to build new culture distinct from the previous institutions

It is vital that before the implementation period of the amalgamation, culture should be assessed. Organisational culture can be surveyed by a number of tools. A significant way of evaluating culture in amalgamating organisations is culture through profiling.

Culture profiling can be assessed from the view of the organisation as well as the employees through internal and external communication.

2.25 Organisational Structure

Organisational structure refers to the manner in which an organisation progressively organizes personnel and tasks in the most proficient way to meet its goals and

“maximise its effectiveness” (Distelzweig, 2012: 1).On the other hand (Meunier-Fitz

Houg and Piercy (2009) state that organisational structure is known as the way in which an organisation’s activities are divided, gathered, and composed into relationships between managers and employees. One of the most significant among many others is that organisational structure facilitates the effectiveness of an organisation (LeMeunier-FitzHugh and Piercy, 2009). Organisational structure emphasises certain values which have an impact on the advancement or limitation of innovativeness and development in organisations (Martins and Terblanche, 2003;

Miller, 2011).

Furthermore, “it is crucially imperative in determining organisational structure that team members ought to trust and respect one another, comprehend one another’s point of view and style of working, solve differences of opinion, communicate effectively, be open to new ideas and question new ideas” (Ashkenas, 2010). An organisation needs to maintain a flexible attitude with regards to its organisational structure. It will experience numerous revolutionary phases where the current structure

105 of the organisation will be questioned and made to change in order to improve and become effective (Ashkenas, 2011). Hence, it is important to distinguish an organisational structure to create a sound working environment.

2.26 Change management in amalgamations

Madondo (2008:17) states, for most part, change has the capability of being positive and negative. During any merger except if there is explicit communication, employees may feel threatened. It is of great importance that when a merger commences managers are equipped with essential skills to manage issues influencing employees, for example, vulnerability and redundancy. Holbeche (2006:84) proposes that one of the impacts of change is on the psychological control among managers and subordinates. Cohen (2005:87) points out a typically confused judgment in organisational change, is that training will be sufficient to prepare workers for their job changes. He contends that when people start preparing with no comprehension of the progressions and their specific impact, they invest quite a bit of their energy with how their jobs are changing and how they will be affected.

Schmidt (2002) argues that “after any amalgamation there is a high expectation of change particularly from the employees. Many employees are prepared and willing to start afresh. This environment is helpful so as to introduce the new organization, administration process, culture and human resources programmes, or even add new elements to those of the merging organizations. Since an amalgamation will bring significant changes for everyone in merging organizations, a good plan for managing change and helping employees adjust will accelerate and smooth the transition time frame”.

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The CoGTA laid it upon itself to come up with follow up strategies as change management interventions for municipalities that were amalgamated for the 2016

Elections in South Africa. The project management schedule (PMS) was developed by the department to track progress made by the affected municipalities towards the finalisation of various transition matters which include:

 Legal and policy matters;

 Human resource matters;

 Integrated development planning;

 Financial matters;

 Communication -related matters; and

 Institutional arrangements for the municipality

The department proposed transitional structures for amalgamated municipalities as change management interventions. These structures include, Provincial

Transformation Committee, Municipal Technical Change Management Committee; and Municipal Political Change Management Committee, which also have to report on a quarterly basis. Finally, organisations should demonstrate a willingness to walk an extra mile leading by example for employees to be committed. The implementation phase should be utilised as an opportunity to include, inspire and advise employees, more particularly on organisations that anticipate success (Madondo, 2008).

The literature review uncovers that as a major aspect of the on-going process of the amalgamation or merger, the management ought to have an explicit model of how to manage change during the change process. Cohen (2005:3) proposes that amid a merger, the management ought to assemble leaders that are focused, dedicated and

107 devoted and can lead change. He alludes to this as a controlling team, whose job is exclusively to manage change amid the merger. Schmidt (2002:243) contends that following any merger or amalgamation, there is an elevated expectation of change, especially from the employees. Numerous employees are prepared and willing to start afresh.

In addition, this environment is helpful to introduce the new association, the management process, culture, and HR programs, or even add new components to those of the consolidating associations. Since a merger will get considerable changes for everyone in the amalgamating associations, a good plan for overseeing change and helping employees adjust will quicken and smooth the transition time frame.

Carnell (1999:195) discusses the need to possess managerial abilities for effective organisational change. Another test that faces the merging association is anticipation to recoup the value each organization would have accomplished without the deal, in addition to extra premium payment and the costs identified with the amalgamation.

This desire suggests that there must be a noteworthy enhancement in the performance that outstrips the past performance of the individual associations prior to the merger. Thusly, to accomplish this desire, there is a requirement for a difference in mentality and mind-set. This change must be accomplished by presenting a change management intervention. This intervention should assist the association with unleashing discretionary efforts in the consolidated work-force, it ought to advance the commitment of employees in the improvement of a common vision and a reward system that perceives superior performance. Amid this period the management should help workers to make the change to the new association, while guaranteeing a constant focus on the everyday business of satisfying clients (Schmidt, 2002:240).

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Therefore, to accomplish this objective, the association ought to strive to get the dedication of the process from the workers. It would be naïve of the management to expect that workers would subscribe to the association without the association demonstrating some readiness to go the extra mile. In the event that workers do not buy into the deal, trusting to upgrade their professions, their teams, their business units, or the organization as a whole, they will oppose change (Schmidt, 2002:138).

Organizations that wish to succeed with the merger should utilize the execution phase as a chance to include, motivate and inform workers.

2.27. Communication

One of the fundamental causes of post-merger success is the failure to communicate.

Ncube and Vacu (2016) further recommend that it is imperative to facilitate communication for the amalgamation. CoGTA (2017), identified various transition measures which needed to be managed in respect of amalgamated municipalities towards the 2016 Local Government Elections (LGE). These matters which were monitored and guidance provided to ensure a smooth transition for the 2016 LGE also included communication related matters. Madondo (2008) suggests that it is better to

‘over-communicate than to under-communicate.’ Organisational effectiveness can be ensured when there is communication from the commencement of the amalgamation.

Contributions and ideas from employees can be known as the best way of making them involved in the entire amalgamation process and thus providing an indication of their expectations.

2.28 Impact of Mergers on workers or employees

Post- mergers affect the employees the most. Whenever there is a merger, there will undoubtedly be layoffs. In the occasion when another subsequent association is

109 thriving in business, it would require a less number of individuals to perform a similar errand. Under such conditions, the association would try to downsize the work force.

If the workers who have been laid off have adequate abilities, they may proceed onward for greener pastures. However, it is normally observed that the individuals who are laid off would not have assumed a critical job under the new organisational set up.

Even though this may not lead to drastic unemployment levels, nevertheless, the workers will have to compromise for the same.

This gives a reason for their expulsion from the new association set up. These workers would then search for re-employment and may have to be content with the compensation package than the previous one. Despite the fact that this may not prompt major joblessness levels, nevertheless, the employees will have to compromise for the same.

2.29 Impact of mergers on top level management

However, if the manager is well equipped with a degree or has sufficient qualification, the migration to another company may not be that troublesome.

The effect of mergers on senior management may include a "conflict of egos". There may be varieties in the cultures of the two associations. Under the new set up, the manager might be requested to execute such policies or methodologies, which may not be approved by him. At the point when such a circumstance emerges, the fundamental focal point of the association gets derailed and officials end up occupied by either settling issues among themselves or moving on. If the director is well equipped with a qualification or has the adequate capability, the relocation to another organization may not be troublesome.

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2.30 Challenges Affecting Organisational Culture

One of the biggest challenges that organisations face in handling amalgamations is culture change (Madondo, 2008). The CoGTA (2017) identified a number of challenges after the amalgamations had taken place in the various provinces which included:

2.30.1 Litigation over contracts

Litigation over contracts that were not honoured by previous entities is a huge challenge to the new entities, (a number of creditors are coming forth to litigate the new entities claiming millions of rands for either non-payment by erstwhile entities or early cancellation of contracts).

2.30.2 Service delivery

For instance, in service delivery, the inheritance of low revenue base municipalities has led to the depletion of cash reserves, thus affecting the new municipality negatively, to the extent of the provisions of basic services to the entire new municipality. The increase in indigent register versus decrease in Equitable Share allocation has a direct impact on service delivery.

2.31 Conclusion

Culture has been characterized as a lifestyle of a group of individuals. It is concerned on how employees see the qualities of their association, whether they like them or not.

In summary, the significance of organisational culture as an organisational variable of assessment cannot be overemphasized. Organisational culture plays a noteworthy role in encouraging employees. The topic of whether a culture is solid or not, does not emerge, rather what is imperative is that solid and positive cultures ought to be encouraged, while solid culture, with negative outcomes, ought to be debilitated. On

111 the same note, we should just encourage those components of the culture that will shape high moral models among employees. This, will therefore enable high profitability among employees and bring about organisational performance.

An effective change management intervention can bring to the fore those personal/cultural issues that might be overlooked by management and thereby stabilize the psychological contract.

It can, therefore, be presumed that the effect of an amalgamation on the organisational culture at Raymond Mhlaba Local Municipality is the same as different mergers. Issues encompassing individuals should be managed in a straightforward and effective way.

These issues should be given the quality they merit. The area of the management of change is crucial as it helps both administration and workers to adapt to the demands of change. An effective change management intervention can reveal those individual/social issues that may be ignored by the management and in this manner balance out the psychological contract.

This chapter has shown that organisational culture is an important weapon for bringing municipalities together. The study emphasised the significance of a solid organisational structure which facilitates the effectiveness of an organisation.

Furthermore, as amalgamations are likened to birth, it is likewise imperative to ensure well parenting by the management. It is on this account that change management interventions have been also identified as one of the important tools to ensure the success of an amalgamation. Human Resources, Litigation of contracts as well as

Service Delivery were identified in the study as some of the challenges affecting organisational culture after the amalgamation.

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CHAPTER 3: RESEARCH METHODOLOGY

3.1 Introduction

This chapter of the study discussed the kinds of methods that were applied in the conduct of this research. The chapter looked at how the data was collected and how this study was conducted. Therefore, the chapter serves to provide an outline of the research design and methodology used in collecting the data, and most importantly, the ethical consideration employed when interviews were conducted. “Also the choice of research methods utilised depends mainly upon the research methodology adopted, and the research questions addressed” (Wisker, 2008).

The methodology involves more remote than simply the strategies planned to be used to accumulate information. This section incorporated a thought of the ideas and theories, which underlies the strategies applied in the study. This section clarified how the qualitative approach applied drove the strategies utilized in collecting data, which included interviews and observations. Thus, according to Sivasubramaniyan (2012:1) research alludes to a search for knowledge. One can likewise characterize research as a logical and orderly search for applicable information on a particular subject.

Furthermore, research is a craft of logical examination. The Advanced Learner's

Dictionary of Current English sets out the significance of research as "a cautious examination or request, particularly through scan for new actualities in any part of information”. Benson and Filippaios (2016:4) state that “research methodology being the total set of means to discovering a new set of information or confirming on existing information, is the foundation on which any discipline is built “.

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3.2 Research Methodology The research methodology is a system of enquiry, which moves from the fundamental assumptions to the research design and data collection. Although there are a number of distinctions, but the most known categorization of research methods, is qualitative and quantitative. Kumar (2005: 26) also subscribes to the definition of research methodology as “a framework of procedures, practices, and rules that are employed by researchers in order to solve research problems. It is a way that explains how research can be undertaken. It focuses on research design, sampling techniques, and data collection methods, as well as data analysis methods”. Thus both qualitative and quantitative methods allude to distinctions about the nature of learning, how individuals comprehend the world and the reason for research. On the other hand, the terms allude to research strategies, which involve the way in which data is collected and analysed, as well as concepts derived from data. Different design logics are used for various types of study (Van Wyk, 2009:50), and of research have been distinguished into: exploratory, descriptive and explanatory.

3.3 Research Design

According to Mandondo (2008:26) research design plainly shows the strategies for collecting data either within a quantitative or qualitative process, and also the strategies for data collection e.g. surveys and interviews. The research design is the main plan for associating the conceptual research problems to the relevant (and reachable) empirical research. As such, the research design explains what information is required, what methods will be utilized to collect and analyse this information, and how this will answer the research question. The two information and strategies, and the manner by which these will be applied in research should be the most effective in

114 producing the responses of the research question and considering different requirements of the research (Van Wyk, 2009).

3.4 Types of Research Designs

According to Blanche, Durrheim, and Painter (2006:44), “the purpose of research is reflected in the types of conclusion the researcher aims to draw or the goals of the research”. Furthermore, the question that researchers should take into account is what they wish to attain through their study. There are three different ways in which research designs can be classified:

3.4.1 Exploratory

Exploratory studies are utilized to make preliminary examinations concerning generally unknown fields of research. They utilize an open, adaptable and inductive way to deal with research as they strive to search for new knowledge. For instance, interviews with relevant informants (Blanche et al., 2006:44). Moreover, exploratory studies are structured as open and adaptable investigations. They adopt an inductive methodology as the researcher makes a progression of specific observations and efforts to fix these together to increasingly shape the broad of speculative theories. De

Langen (2009), states that exploratory research is utilized to examine the full idea of the phenomenon and different components related to it. Moreover, explorative studies are employed when another area is being researched or when little is known about it.

3.4.2Descriptive

Descriptive investigations seek to describe phenomena, while exploratory studies create speculative insights, new inquiries and theories. Descriptive studies seek to describe phenomena explicitly, either through narrative type descriptions, categories or measuring relationships. Lambaart (2012:255), further concurs that descriptive

115 studies generally draws from naturalistic inquiry, which indicates a commitment to study something in its original state, to the degree that is possible in setting of the exploration field. Descriptive studies likewise aim for accurate observations, and the research design should concentrate on the validity (accuracy) and reliability

(consistency) of the perceptions, and the representativeness (Blanche et al., 2006:44).

As indicated by Burns and Grove (2003:201), graphics research “is designed to provide a picture of a situation as it naturally happens”. It might be utilized to legitimize current practice and make a judgment and furthermore to create theories (De Langen,

2009).

3.4.3 Explanatory

Explanatory studies seek to give “informal” explanations of phenomena. Experimental and quasi-experimental designs are utilized to establish if one variable causes another. Moreover, explanatory research designs should detail how the analyst intends to collect data and where she or he will search for this data. This type of research design is additionally intended to distinguish casualty and the focal point of the designs ought to be on eliminating the adversary hypothesis (Blanche et al.,

2006:44).

3.5 Research Paradigm

Parahoo (2006) characterized a research paradigm as a world view that exists from a general point, or a method for separating the complexities of the present reality to make ideas less complicated. In this way, a research paradigm involves the set of norms that ordinarily controls activity, by developing concepts that permit the study and understanding of a particular phenomenon (Wellington, 2008). The paradigms

116 mainly used in research in the social sciences are the interpretive, the critical and the positivist paradigms.

The interpretive research paradigm searches for understanding instead of clarification. It places emphasis on the human capacity as it tries to comprehend others through thoughtful contemplation, and reflection dependent on detailed narrative through direct perception, in-depth, open-ended interviews, and contextual analyses

(Cooper and Schindler, 2003). The critical paradigm centres around relationships of power and oppression, and aims to advance democracy by making changes in various social, political, social, monetary, moral and other society-orientated frameworks. The positivist paradigm applies distinct ideas to deliver productive outcomes, that is, it includes experiments and testing to gather information (Wellington, 2008).

In addition,” other researchers employ, the social constructivism as a paradigm to which human development is socially situated and knowledge is constructed through interaction with others. The main purpose of a paradigm is that it defines how the knowledge is extracted, how one thinks, talk, write and talk about this knowledge

“(Neuman, 2006). In this respect, the study was based on the social constructivism paradigm because the researcher had to interact with the participants to understand the phenomenon under investigation based on open-ended interviewing and direct observation.

Precisely, “the main functions of a paradigm are that it defines how the world works, how knowledge is extracted from this world, and how one is to think, write, and talk about this knowledge” (Neuman, 2006). In that respect, the study was based on the interpretive research paradigm in the form of qualitative research that would lead to

117 understanding the effect of municipal amalgamations on organisational culture: A case study of Raymond Mhlaba local municipality in Eastern Cape Province.

3.6 Research Approaches

Rahi (2017) states that “despite the existence of much research method, the classification of quantitative and qualitative methods are the most dominating methods”. In this study qualitative research was conducted and it required interviews.

Detailed descriptions of these two methods are stated below.

3.6.1 Quantitative Research

Grinnell and Unrau (2010) describe quantitative research as a scientific strategy whose roots can be recognized the positivist paradigm. This technique centres on new information in accordance with the challenges from a large population and analysis of the information, however it disregards a person's feelings and sentiments or the environmental setting. Johnson and Christensen (2008), express that the reason for the quantitative research technique is to test hypotheses, take a look at circumstances and logical results, and make predictions. Quantitative data depends on exact measurements utilizing organized and validated data collection instruments. The group studied normally consists of large numbers and statistics as well as specific variables. Objectivity is critical as the researcher and their basis is not known to participants, as a result, outcomes are generalizable findings that can be applied to other populations. Williams (2007) further agrees that “the research itself is independent of the researcher. As a result, data is used to objectively measure reality.

Quantitative research creates meaning through uncovered objectivity in the collected data”. The research objectives of a quantitative method are known to describe, explain

118 and predict. Moreover, the focus of the study is considered ‘narrow-angled’ as it tests a specific hypothesis.

Quantitative research includes collecting data with the objective that data can be assessed and to statistical treatment to help or invalidate "alternate knowledge claims"

(Creswell, 2003). Creswell (2002) affirms that quantitative research started in physical sciences, explicitly in chemistry and physical science. The researcher uses mathematical models as the strategy of the data analysis. Three historical patterns relating to quantitative research involve research design, test and measurement systems, with statistical assessment. Quantitative research moreover involves data collection that is commonly numeric and the analyst will in general use mathematical models as the method of data analysis. Moreover, the researcher utilizes the inquiry strategies to guarantee alignment with statistical data collection approach.

3.6.2 Strengths of Quantitative Research

The quantitative research strategy tests and approves the already built theories about how and why phenomena takes place to further test hypotheses that are developed before the information is gathered. Quantitative research can generalize research findings when the information is based on random samples of adequate size.

Additionally, it is valuable for getting information that enables quantitative predictions to be made. The researcher may develop a situation that removes the impact of numerous variables, enabling the researcher to solidly establish the cause and effect relationships. Data collection utilizing some quantitative strategies is moderately quick

(e.g., telephone interviews). The quantitative methodology likewise gives accurate, quantitative, and numerical information. Data analysis is generally less time consuming (utilizing statistical software). The research results are moderately independent of the researcher (e.g.,statistical importance). It might have higher

119 credibility with numerous individuals in power (e.g., administrators, legislators, individuals who subsidize programs). Finally, it is helpful for vast quantities of individuals (Johnson and Onwuegbuzie ,2004).

3.6.3 Weaknesses of Quantitative Research

The researcher’s classifications that are utilized may not reflect local public's understandings. The researcher may miss out phenomena, on account of the focus on hypothesis or theory testing, as opposed to the hypothesis or theory age (called the confirmation bias). Information produced may be excessively abstract and general for direct application to particular local situations, settings, and people.

3.6.4 Qualitative Research

In contrast, Rahi (2017) states that “the qualitative method is used to collect the in- depth details on a particular topic. This approach assumes that a single person represents the group feelings and emotions of a person are equally important to interpret which are ignored by the quantitative method”. Lichtman (2006) highlights the purpose of the qualitative research approach known as understanding and interpreting social interactions. Shank (2002) describes qualitative research as a “form of systematic empirical inquiry into meaning”. Systematic refers to “planned, ordered and public” then again empirical methods means this kind of inquiry depends on the world of experience. Researchers attempt to see how others understand their experience.

Qualitative data refers to open- ended responses, interviews, participant observations, field notes, and reflections. The population studied is normally in a smaller number, which is not randomly selected but consisting of words, images, and objects.

Subjectivity is expected by the researcher and their biases may be known to participants in the study, while participant characteristics may be known to the

120 researcher. The results are normally specialised or particular findings that are less generalizable. Moreover, the objectives mainly explore, discover and construct, hence, the focus of the study is considered ‘wide-angled’ as it examines the breadth and depth of phenomena.

Likewise, Simon (2016) notes that qualitative researchers are not only interested in the number of items or statements falling into each class, their major concern is usually in the different meanings, attitudes, and interpretations found within each classification. This study used the qualitative approach.

3.6.5 Strengths of Qualitative Data

The researcher can study dynamic processes (i.e., documenting sequential patterns

Qualitative research is helpful for studying an in depth set number of cases, useful for describing complex issues, gives individual case data and directs cross-case comparisons and investigations. Information depends on the members of own classifications of meaning. Additionally, qualitative research gives comprehension and description of individuals' personal encounters of phenomena (e.g. the insider's perspective). It can describe in rich detail phenomena, as they are located and implanted in local settings. The researcher quite often distinguishes logical and setting factors as they relate with the phenomenon of interest. The researcher can research powerful processes (i.e., documenting sequential patterns and change) and can utilize the essentially qualitative technique for a grounded theory, to inductively create a conditional, but informative hypothesis about a phenomenon. Qualitative research method can decide how members interpret constructs (e.g. confidence and IQ), while information is generally gathered in naturalistic settings and are responsive to local circumstances, conditions, and partners' needs (Johnson Onwuegbuzie, 2004:10).

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3.6.6 Weaknesses of Qualitative Data

Knowledge created may not sum up to other individuals or different settings as the findings may be different from the few individuals involved in the research. In qualitative data, it is hard to make quantitative predictions and hard to test hypothesis and theories with large members. Moreover, it may have brought down validity with a few administrators and commissioners of projects. It sets aside greater opportunity to gather the information when contrasted with quantitative research. Finally, data analysis is often time-consuming (Johnson and Onwuegbuzie, 2004:11).

3.7 Population

According to Neuman (2011:241), “a population is an abstract idea of a large group of many cases, from which a researcher draws a sample, and to which the results from a sample are generalised”. This study was conducted in Raymond Mhlaba Local

Municipality, and the population consisted of the administrative staff of the municipality. The municipality has a total number of approximately 120 office based administrative staff members. In this case, the researcher was charged with the obligation of choosing from the population, a smaller group for the study purposes, however, which is the illustrative of the larger group. Therefore, the small group is alluded to as the sample.

3.8 Sampling and Sampling technique

“A sample can be defined as a group of a relatively smaller number of people selected from a population for investigation purposes” (Alvi, 2016). The members of the sample are known as participants. Burger and Silima (2006:656) describe the main purpose of sampling as making generalisations of people and events that have not been observed. Sampling basically means selecting people/objects from a population, in

122 order to test the population for something. For the purpose of this study, a sample of

20 employees was drawn from the employees of Raymond Mhlaba Local Municipality.

These 20 staff members were interviewed as a representation of the population. A stratified random sample was drawn, the strata were formed from the various administrative departments to ensure adequate representation. The departments whose employees were interviewed included, Administration Managers, Corporate

Services, Community Services, Expanded Public Works Programmes, Labour

Relations, and Human Resources departments.

According to Hancock (2009) “the main methods of collecting qualitative data are individual interviews, focus groups and observation.”

For the purpose of this study, individual interviews which are semi-structured were used as the method of collecting data and as a research instrument.

3.9 Research Instrument

3.9.1Semi-structured Interviews

Skinner, Edwards and Corbett (2015) suggest that semi-structured interviews also known as focused interviews include open-ended questions focusing on the theme area the researcher needs to cover. The open-ended nature of the question characterizes the subject under scrutiny, but still gives chances to both the questioner and interviewee to talk about a few points in more detail. In the event that the interviewee experiences challenges responding to a question or just gives a brief response, the interviewer can utilize signals or prompts to motivate the interviewee to consider the question further. Furthermore, in a semi-structured interview, the interviewer has the opportunity to probe the interviewee to expand more on the response given or to follow the line of questions presented by the interviewee.

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Qualitative interviews are commonly semi-structured or unstructured. If the interview plan is too firmly structured, this may not allow the area of study under scrutiny to be investigated as far. Semi structured interviews will in general function well when the interviewer has effectively distinguished the various aspects he/she wants to address.

The interviewer can choose ahead of time what areas to cover, however is open and responsive to unexpected data from the interviewee. This can be especially imperative if a restricted time is available for each meeting and the interviewer needs to make certain "key issues" that will be covered (Skinner et al., 2015). For the purpose of this study, 20 employees were interviewed, these employees were from the administrative departments of RMLM. The administrative departments are more familiar with the day- to-day activities of the municipality and this was meant to ensure adequate representation.

3.10 Data Analysis

“Analysis of data in research involves summarising the mass of data collected and presenting the results in a way that communicates the most important features”.

(Hancock, Ockleford and Windridge, 2009:15).

The data collected from interviews were analysed by using content analysis. “Content analysis is known as a wide set of techniques for analysing the content of qualitative material. The goal is to identify important aspects of the content, present them clearly and effectively and provide reliability and validity checks” (Neuendorf, 2016).

Moreover, it is the process for the order of verbal or conducts information, with the end goal of characterization and summarization. Content analysis can be possible on two dimensions: Descriptive (What is the information?) and Interpretative: (what was implied by the information?). The study had interview guides which guided the participants to come up with themes and sub-themes.

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3.11 Trustworthiness

Babbie and Mouton (2005:277) posited that, “the key criterion or principle of good research is found in the notion of trustworthiness and neutrality of its findings or decisions”. Thus, the qualitative researcher should be as watchful as positivist researchers in ensuring trustworthiness, regardless of whether they utilize different terms, such as, validity and credibility to define the characteristics that determine the trustworthiness of their studies (Flick, 2007). Trustworthiness has four criteria, known as, credibility, transferability, dependability, and conformability. The first which is credibility, alludes to the relationship between findings and collected data, while transferability implies whether the findings can be reasonably exchanged to different settings.

“Dependability is the assurance given to people about the reliability of the findings from the raw social context, and conformability assures the public of the unbiased nature of the findings” (Lee and Lings, 2008). Therefore, to establish the trustworthiness of this research, the researcher made sure that the study yielded reliable results defined by production of similar results when carried out on similar groups of respondents in similar contexts, which are nonetheless not on the same site or carried out on the same subjects.

In order to ensure trustworthiness in the study, the research instrument developed for this purpose was shared with the individuals, which were the RMLM employees. The instrument was developed to guarantee that the researcher could generate the information required and to explore the effect of municipal amalgamations on organisational culture. The researcher tested the instrument for suitability of use, to establish whether the instrument explicitly addresses the main aims of the study under investigation.

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The research instrument used in this study was the interview guide. This was to find whether the instrument indeed measured what it was supposed to measure, given the context within which was applied. The process of sharing the instrument with the participants was done to ensure content legitimacy, which was majorly used in the developing of interview guides.

In order to ensure trustworthiness, the researcher also employed documentary research to supplement the information that was collected from the interviews. In addition, whilst conducting the interviews, observations were conducted and they gave an impression of the effect of municipal amalgamations on organisational culture. “In social science research, the use of different data sources to obtain the same information is known as triangulation” (Denzin, 1978). It has been noted that triangulation enables the research to construct a comprehensive understanding of phenomena under investigation.

The validity, accuracy and unwavering quality of the data are vital to the study as there are recommendations to be produced at the end of the study which could be utilized as an answer for the challenges discovered. Since this study intended to dig deeper into the employees' discernments, perceptions, and mentalities. The purpose of concentrating on a small area was to get a more profound view and comprehension of individuals' encounters, narratives and investigate the related emotions and observed the non-verbal articulation.

3.12 Delimitations of the study

The research was limited in the field of Public Administration. Furthermore, the research was limited to the Raymond Mhlaba Local Municipality in the Eastern Cape as it demonstrated feedback from a particular municipality. The findings might illustrate

126 the state of organisational culture in Raymond Mlaba Local Municipality, therefore, the outcomes cannot be generalised to other organisations. However, the findings might attempt to provide assistance to other municipalities experiencing amalgamations. As the 1996 South African Constitution (Republic of South Africa, 1996) requires and expects municipalities to give fair and orderly services, build local democracy, propel social and financial change, ensure protected and satisfactory surroundings, and

“create a generally viable and sustainable system of local government.” Moreover,

Chapter 3 of the White Paper on Human Resources in Public Service (Republic of

South Africa, 1997) states “both the operational needs of the organisation and the needs of the employees will be taken into account.”

3.13 Ethical Considerations

According to David and Rensik (2015:10), there are reasons why it is critical to abide by ethical principles in research. Vitally, to “advance the main aims of research, such as knowledge, truth, and avoidance of error e.g. prohibitions against fabricating, falsifying or misrepresenting research data promote the truth and minimise error.”

In adherence to research ethics, the participants of the research study were adequately sensitized about the nature of the research before the interview was conducted. Every source utilized in this study were properly sited. The researcher applied for ethical clearance from the UFH-GMDRC ethics committee. Participants in the study were asked to sign the consent before participating in the study. There was no personal information required from the participants and all data collected was treated with utmost confidentiality. The essence and benefits of the research, consequent upon implementation of recommendations were explained to participants.

The researcher explained to the participant that the research is voluntary and should

127 any participant want to withdraw his/her participation, such participant may do so without any penalty.

3.14 Conclusion

This chapter has presented the research design and research methodology with the target population, which was used for the purpose of this study. The major focus of this research is to view the effect of amalgamations on organisational culture in

Raymond Mhlaba Local Municipality, and with the methodology presented; the researcher was able to achieve the objective of this study. The following chapter will present the findings and data analysis.

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CHAPTER 4: ANALYSIS OF FINDINGS AND DISCUSSIONS

4.1 Introduction

One of the goals of designing a research instrument is that it must be connected to the research inquiries of the investigation, and that at the end of the inquiries, answers must be provided. This target must be accomplished if the objectives of the investigation are both clear and well structured. The objectives must determine what is to be accomplished, the end goal that can be estimated and accomplished, must be sufficiently practical to such an extent that the researcher can envisage or visualize accomplishment thereof, and in conclusion, there must be a target time frame. If the objectives of the research do not measure up to this standard, then the research instrument used will make an irrelevant involvement to the research.

4.2 Findings and Discussions

The objectives of this study are to assess whether the amalgamation has a negative or positive effect on the organizational culture, to examine that the current organizational structure is conducive for a sound working environment; analyse change management interventions provided after the amalgamation; make recommendations to the local municipality on the measures to be taken to provide quality service delivery, improved communication networks and challenges that affect organizational culture. In this section, the findings are discussed in light of the premise drawn from the sub-questions that guided the study.

The discussions are based on the findings generated from qualitative data collected through personal interviews which involved face-to-face interviews. According to

Tshabalala, (2008: 77” face-to-face communication is a two-way conversation initiated by an interviewer to obtain information from a participant. These two are strangers to

129 each other, and however the interviewer controls the topics and patterns of discussion”.

The interviews were held with the administrative management and employees as they are more familiar with the day to day activities of the Raymond Mhlaba Local

Municipality. However, the researcher also attended a meeting with the Municipal

Managers, Administrators, Supervisors and representatives of the Labour Relations

Department in the municipality. The study focused on the effect of amalgamations on organizational culture.

4.3 Themes and Sub-Themes Emerged From the Study

Table 4.1 below shows the themes and sub-themes used in analysing, and discussing the findings obtained from the participants. The analysis is based on the questions-to- questions basis.

Theme Sub-themes Issues raised

(a)The negative  Conflicts and The participants highlighted that the

effects of confusion amalgamation has a negative effect on

amalgamations  Service Delivery organizational culture as it brings

on conflicts and confusion to the local

organisational municipality, as the employees were

culture faced with some obstacles and have

fear of not knowing what will happen in

terms of the placement policy.

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 Preferential Participants stressed that employees

Treatment from other entities, such as Nxuba,

believe that they were not well treated

as their other counterparts in the same

jurisdiction.

The findings obtained from all the

 Management participants have shown that the

Communication municipality does not have proper

channels of communication, and as a

matter of fact, the amalgamation has

not brought any good effect to the local

municipality

(b)The positive  Remuneration Participants are of the hope that the effects of amalgamation will bring better amalgamations on remuneration or salaries to all the entire organisational culture municipality in the RMLM in the Eastern

Cape Province of South Africa

 Budget Participants emphasized that once the

municipality merged, there would be a

need for more allocation from the

government, for the expansion of the

communities’ basic needs. Importantly,

the merger would bring about

expansion on government expenditure

as more money would be spent in

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creating new communities projects, in

order to develop more jobs for the

masses and reduce poverty in the

municipalities.

c) The current  Weak It was highlighted that organisational

organisational organisational structure is not conducive for a sound

structure structure working environment, as all the

conducive for a responded emphasised that the

sound working organisation structure is very weak and

environment not properly structured to

accommodate an effective qualitative

communication strategy that could

bring about changes in the municipality.

Interventions made  Absence of All the participants admitted that there in adapting to interventions have been no interventions made after change management the amalgamation within the Raymond after the Mhlaba Local municipality amalgamation

Measures for  Promotion of Participants emphasized that the improving and cooperation and management should promote encouraging the unity within the cooperation and unity by having administrative municipality wellness programs e.g. in Nxuba to also management and include them and have them involved in employees day to organising.

132 day activities of the It was raised that the municipality

Raymond Mhlaba  Establishment of should also have camps where the

Local Municipality re-creational various departments participate to negative effect on activities enhance leadership skills and working organizational relations, to work together and come up culture. with strategies that may benefit the

municipality in the future.

 Provision of work The management should provide work

procedures procedures that will iron out the different

roles and responsibilities of employees

as there is fear of duplication of job

positions

 The Intervention The intervention of political leadership

of political of the ruling party, SALGA and CoGTA

leadership to suggest, monitor and evaluate the

 Conducting decisions of the municipality council

and review where necessary.

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 meetings at The management and other

regular interval to stakeholders should meet and discuss

discuss crucial issues with every satellite involved with

issues the merger.

Source: computer printout of a table derived from the data and findings of this study

4.4 Section A: Demographic Information of the Participants

This section aimed at getting participants background information in order to understand whether the effect of amalgamations in organizational culture in Raymond

Mhlaba Local Municipality of the Eastern Cape Province was positive or negative. Out of 20 participants targeted as interviewees for the interviews questionnaire, all 20 [N=

20 interview questionnaires were all presented and all the participants were all pleased to participate in the study and freely expressed their opinions as regards the investigated problems.

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Table 1: Biographical information and profile of the participants

Participant Age Gender Rank/position Municipality

before Merger

Participant 1 41- Male Manager Nkonkobe

Participant 2 41- Female Administrator Nkonkobe

Participant 3 36- Male Clerk Nkonkobe

Participant 4 31- Female Supervisor Nxuba

Participant 5 36- Female Manager Nxuba

Participant 6 41- Male Administrator Nxuba

Participant 7 46- Female Clerk Nkonkobe

Participant 8 51- Female Administrator Nkonkobe

Participant 9 51- Male Administrator Nxuba

Participant 10 46- Female Clerk Nxuba

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Participant 11 41- Female Administrator Nkonkobe

Participant 12 41- Male Manager Nkonkobe

Participant 13 46- Female Clerk Nxuba

Participant 14 31- Female Supervisor Nxuba

Participant 15 46- Female Clerk Nkonkobe

Participant 16 41- Male Administrator Nxuba

Participant 17 436- Female Manager Nxuba

Participant 18 36- Male Clerk Nkonkobe

Participant 19 51- Female Administrator Nkonkobe

Participant 20 51- Male Administrator Nxuba

The table above shows the age, gender, position and their municipalities before the merger. The majority were females and all came from different departments, which included the administrative departments: Cooperate Services, Community Services,

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EPWP, Labor Relations and Human Resources employees. Their ranks with their municipalities before the merger are shown in the table.

The twenty (20) participants that were interviewed gave their personal details as presented in table 2. Table 2 below presents a breakdown of the participants’ ages, gender, and level of education, marital status, and their positions at work.

Table 2. Demographic information of the chief informants

Code Age Gender Rank/position Marital Race Educational

Status Level

Participant 41- Male Manager Married Coloured Degree

1 45

Nkonkobe

Participant 41- Female Administrator Married Black Matric

2 45

Nkonkobe

Participant 36- Male Clerk Single Black Matric

3 40

Nkonkobe

Participant 31- Female Supervisor Married Black Degree

4 35

Nxuba

Participant 36- Female Manager Married Black Degree

5 Nxuba 40

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Participant 41- Male Administrator Single Black Diploma

6 Nxuba 45

Participant 46- Female Clerk Single Black Matric

7 50

Nkonkobe

Participant 51- Female Administrator Married Black Diploma

8 55

Nkonkobe

Participant 51- Male Administrator Married Black Diploma

9 Nxuba 55

Participant 46- Female Clerk Single Black Matric

10 Nxuba 50

Participant 41- Female Administrator Married Black Matric

11 45

Nkonkobe

Participant 41- Male Manager Married Coloured Degree

12 45

Nkonkobe

Participant 46- Female Clerk Single Black Matric

13 Nxuba 50

Participant 31- Female Supervisor Married Black Degree

14 Nxuba 35

Participant 46- Female Clerk Single Black Matric

15 50

Nkonkobe

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Participant 41- Male Administrator Single Black Diploma

16 Nxuba 45

Participant 36- Female Manager Married Black Degree

17 Nxuba 40

Participant 36- Male Clerk Single Black Matric

18 40

Nkonkobe

Participant 51- Female Administrator Single Black Diploma

19 55

Nkonkobe

Participant 51- Male Administrator Married Black Diploma

20 Nxuba 55

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Table 2 shows that there are various age groups of participants, gender, level of education, marital status, and positions of the participants that took part in the study.

The study was conducted with a total of (20) participants working in RMLM, in the

Eastern Cape Province of South Africa. These participants comprised of four (4) males and six (6) females that were all from former Nkonkobe, while four (4) males and six

(6) females were from former Nxuba. The participants that were interviewed composed of two (2) coloured from former Nkonkobe and the remaining (18) blacks were all from former Nkonkobe and Nxuba. The findings from this table show that the ages of the participants that participated in the study ranged between 31 and 55 years. As regards with the marital status, the findings from the interviews conducted as reflected in the above table show that from Nkonkobe, six (6) participants were married and four (4) were single, while from Nxuba, four (4) were married while six (6) were single.

The findings from the same table also show that two (2) participants were Managers, eight (8) were clerks and the remaining four (4) were administrators from Nkonkobe; while form Nxuba, two (2) participants were clerks, four were supervisors and four (4) were administrators. In addition, in terms of the level of education, the findings from the table show that from Nkonkobe in Alice is the Satellite office of the municipality, two (2) participants had degrees, six (6) had matric and two (2) had obtained diplomas; while, from Nxuba, two (2) had degrees, six (6) had diplomas and two (2) had a matric qualification.

4.5 Section B: Questions and Opinion Responses

Having discussed all the demographics of the participants the study focused its attention on the questions asked from the participants with the hope of getting themes and subthemes. The asked questions and their responses were as follows:

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Theme 1: The effect of amalgamations on organisational culture

4.5.1 The negative or positive effect of amalgamations on organizational culture

As evidenced in the study conducted by Denters et al. (2014), that amalgamations in most of the local municipalities have shown some negative effects to the citizens despite all efforts made by the government to improve service delivery within their communities. Hence, the negative effect of amalgamation on organizational culture in

Raymond Mhlaba Local Municipality was firstly analysed and discussed, followed by the positive effect.

4.5.1.1 The negative effect of amalgamation on organizational culture

All the participants that were interviewed admitted that they have different outcomes or perception of the effect to the amalgamation on organizational culture within the

Raymond Mhlaba Local municipality of the Eastern Cape Province, South Africa.

Some of the negative effects felt by the participants on the organizational culture were discussed below as:

 Conflicts and Confusion

The findings from the interviews conducted among the participants in Raymond

Mhlaba Local Municipality and regards to whether the amalgamation has a negative effect on the organizational culture shows that the amalgamation has brought conflicts and confusion to the local municipality, as the employees were faced with some obstacles and fear of not knowing what will happen in terms of the placement policy.

All participants indicated that it brought a lot of confusion within the municipality employees, to the point that it affected the service delivery and communities are dissatisfied. The following were the administration managers’ responses:

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There have been stumbling blocks as the employees have fear of not knowing what will happen in terms of the placement policy. The merger has been officially on paper, however, in implementation nothing much has been done as the current placement policy regards every employee as ‘acting’ in their positions until placement is officially implemented. This has caused immense confusion to employees.

Employees live in fear as they do not know what will happen in terms of

placement. Currently, the amalgamation does not have a good impact as there

is no clear communication among employees, services are not well delivered

and the community from the former Nxuba entity has shown dissatisfaction. The

municipality consists of two arms that are independent. In this instance, the

political arm had conflicts, which also affect the administrative arm leaving

employees confused.

These findings are supported by Chetty (2010), during merger transition and implementation of the former level, which had an impact significantly on the newly merged unit, department, faculty or even the entire institution. Following the period of the merger, when institutions are structurally similar, two culturally different institutions could however result in conflict. This often results in anger, anxiety, communication problems and feeling of uncertainly about the future. “When organizations merge, there is usually a clash of management styles. This clash generally permeates to the staff and it needs to be managed properly as it has the potential of dividing the employees and hinder the process of amalgamation. The ability to manage conflict is, therefore, crucial at this stage. The implementing team should be vigilant and proactively identify areas of potential conflict. Strategies to resolve conflict must also be devised. Assessment and selection of staff for the new company; integration or

142 new design of HR systems; and ongoing attraction, retention, and development of staff are among the most important people-related issues for integration” (Madondo, 2008).

 Service Delivery

The findings from the interviews conducted among the participants in Raymond

Mhlaba Local Municipality with regards to the negative effect of the amalgamation on organizational culture in the RMLM, showed that the amalgamation has brought about poor service delivery to the local municipality. This is indeed a fact because all the participants emphasized that services delivery have been affected in some areas such as Bedford and Adelaide in the former Nxuba, within RMLM and these have also hindered free and easy communication between the management and all the employees within the municipality. The following were the administrator’s responses:

Services have been affected more especially in the Nxuba entity as the

administration offices are moved to the former Nkonkobe territory. There has

not been a clear communication from the management to employees and thus

the way of working between employees is affected. This has more especially

affected service delivery. Nxuba employees have revealed that they are left out

and this has also affected services as well as the community, as there have

been protests concerning service delivery.

In supporting these findings, CoGTA (2017) stated that service delivery, and inheritance of low revenue base municipalities has led to depletion of cash reserves, thus affecting the new municipality negatively in the provisions of basic services to the entire new municipal space. Increase in indigent register against decrease in Equitable

Share allocation has a direct impact on service delivery. Furthermore, Maarten and

Geertsema (2016:663) stated that “in democracies, differences in preferences is

143 reflected by differences in public services”. Citizens will be discouraged if services they esteem are minimized after amalgamation. The local government may accordingly choose, for each service, the most noteworthy standard that existed before amalgamation (Park, 2013). For instance, the merger of a municipality that spends a lot on social services with a municipality that has a high-quality road network may result in a municipality which spends a lot on both social services and roads.

Amalgamation should be expected to have temporary effects as well. Firstly, there will be the costs of restructuring in different parts of the municipal organizations. New office buildings might be needed, IT systems have to be integrated, and regulations must be harmonized with lots more. Amalgamation and the uncertainties surrounding it may also have disruptive effects on managerial behaviour and organizational outcomes. Restructuring costs will start well before the official amalgamation date, and continue for several years afterward (Maarten and Geertsema, 2016:663). Many small municipalities are more efficient and more responsive to the needs of their citizens and have clearer accountability channels (Faguet, 2004).

 Preferential Treatment

Thirdly, the amalgamation on organizational culture in the RMLM as indicated by all the participants’ shows that the amalgamation has brought some negative effect to the local municipality. This is true from the findings obtained as all the participants stressed that employees from other entities such as Nxuba, believe that they were not well treated like their other counterparts in the same jurisdiction. Some employees’ within the RMLM were highly preferred than others according to the participants, which

144 may be due to one reason or the other best known by the municipality management.

Some of the responses given by the community services clerks include:

The amalgamation does not have a good effect on organizational culture as

some employees of other entities feel the other entity is preferred and favored.

The Nxuba entity feels that policies of the former Nkonkobe are used in the

current merged municipality leaving the former Nxuba employees left out. This

has led to a number of protests by the former Nxuba municipality. Most

programs are held at the former Nkonkobe community and this has resulted in

Nxuba wanting to operate as the former, as things are at a standstill from their

side. Nkonkobe was known to be a bigger municipality than the former Nxuba,

but the current policies used are those of former Nkonkobe. However, there has

been an evident frustration of the former Nxuba employees, and has affected

the daily operations of the entity.

This is in line with the study conducted according to Madondo (2008), “when organizations merge, one of the biggest challenges is to accommodate all people into the new organization. This process is usually the main source of anxiety as people worry about job security. Even where some guarantees are given that there will be no job losses, people still worry about their specific positions”. This perspective is within the same view with Mayo (2003: 241) who states that employees, especially in the lower ranks, feel threatened that an unfairly high number of positions will be granted to members of the dominant partner.

4.5.2 Positive effects of amalgamation on organizational culture

 Remuneration

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In contrary to the above mentioned, with a negative view or perceptions of the participants as regards the effect of amalgamation on organizational culture. The researcher also attempted to ask the participants if there is any positive effect of amalgamation on the organizational culture. It is quite interesting to emphasize that all the participants indicated that although there are more negative effects of the amalgamation on organizational culture than positive. They emphasized that at least the positive effect of amalgamation on organizational culture will bring better remuneration or salaries to all the entire RMLM municipality of the Eastern Cape

Province of South Africa. The following were some of the managers’ responses:

The merger opens more opportunities in terms of the budget as it depends on the size of the municipality. The bigger the municipality, the bigger the budget. Salaries also depend on this in terms of salary scales, some employees will earn more as compared to the former. Currently people are regarded as ‘contract workers’ so as to give others opportunities through Community Work Programs (CWP) and ensuring facility development e.g. creating parks. The former Nxuba employees are the ones who would benefit more, as their salaries would be matched according to the salary scale of the newly merged municipality.

In the same vein, the findings from the study conducted according to Dollery et al.,

(2007) Slack and Bird (2013), revealed that larger municipalities are in a better position, technically and financially, than their fragmented counterparts to provide an array of services. Furthermore, increasing scale enables fixed costs to be spread over a larger output.

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 Budget

Another most important positive effect of amalgamation apart from the

remuneration mentioned by the participants was budget. They emphasized

that once the municipality merged, there would be a need for more allocation

from the government for the expansion of the communities’ basic needs.

Importantly, the merger would bring about expansion on government

expenditure as more money would be spent in creating new communities

projects in order to create more jobs for the masses and reduce the poverty

within the municipalities. Administrators expressed their opinions as follows:

The amalgamation has the potential of presenting better opportunities as the

newly amalgamated municipality is now a bigger municipality. When a

municipality has a larger capacity, it will be given a much bigger budget. This

will also grant the municipality opportunities for having more community

projects that will not only benefit the municipality, but the community at large.

Services will be delivered more efficiently.

This is in line with the study conducted according to Maarten and Geertsema (2016:

661). “The most obvious effect of amalgamation is an increase in jurisdiction size.

Amalgamations are often inspired by the hope that size increase will improve production efficiency. One reason is that bigger size allows specialization, that is, an improved division of labour, resulting in more experienced or educated workers.

Furthermore, increasing scale enables fixed costs to be spread over a larger output.

Moreover, larger jurisdictions may be able to attract better administrators, and thus improve service levels or take on responsibilities that were previously avoided.

Another positive effect is that scaling up will reduce spill overs, thereby promoting allocative efficiency”.

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Theme 2: current organizational structure conducive for a sound working environment

Weak organizational structure

The findings from the interviews conducted among the participants in Raymond

Mhlaba Local Municipality with regards in whether the current organisational structure is conducive for a sound working environment showed that the current organisational structure is not conducive for a sound working environment, as all the responded emphasised that the organisation structure is very weak and not properly structured to accommodate an effective qualitative communication strategy that could bring about changes in the municipality. In addition to this, the top management finds it difficult to communicate from the top management level or structure to the middle managers, which could be due to improper coordination among the employees in the organizational structure. These were some of the perceptions of participants:

The current organizational structure is certainly not conducive for a sound working environment. There is no well-defined organizational structure with no communication from management, thereby making things more difficult. This makes it a challenge to having a conducive sound working environment, and makes it difficult for all employees to work as one entity towards the same goals.

In supporting this, LeMeunier-FitzHugh and Piercy (2009) states that it is significant that the organizational structure facilitates the effectiveness of an organization.

Organizational structure emphasizes certain values which have an impact on the advancement or limitation of innovativeness and development in organizations

(Martins and Terblanche, 2003; Miller, 2011). It is crucially imperative in determining an organizational structure that team members ought to trust and respect one another,

148 comprehend one another’s point of view and style of working, solve differences of opinion, communicate effectively, be open to new ideas and question new ideas

(Ashkenas, 2010). An organization needs to maintain a flexible attitude with regards to its organizational structure. It will experience numerous revolutionary phases where the current structure of the organization will be questioned and made to change in order to improve and become effective (Ashkenas, 2011). Hence, it is important to distinguish an organizational structure to create a sound working environment.

Theme 3: interventions made in adapting to change management after the amalgamation

All the participants that were interviewed in regards to the interventions made in adapting to change management after the amalgamation, admitted that there have been no interventions made after the amalgamation within the Raymond Mhlaba Local municipality in the Eastern Cape Province of South Africa. When the participants were asked about their opinions, they emphasized that there is the absence of interventions.

In addition, the absence of interventions has resulted in poor implementation policy and procedures and has also affected the quality of decision making and service delivery within the municipality.

This is similar to the study conducted by Madondo (2008:17), that for the most part, change has the capability of being positive and negative. During any merger except if there is explicit communication, employees may feel threatened. It is of great importance that when a merger commences, managers are equipped with essential skills to manage issues influencing employees, for example, vulnerability and redundancy. Holbeche (2006:84) proposes that one of the impacts of change is on the psychological control among managers and subordinates. Cohen (2005:87) points out

149 in a typically confused judgment of organisational change, training will be sufficient to prepare workers for their job changes. He contends that when people start preparing, with no comprehension of the progressions and their specific impact, they invest their energy with how their jobs are changing and how they will be affected. Thus, a vital aspect of change leadership and change management is managing the effects of change on staff (Stephens, 2010:31).

Theme 4: Recommendations on measures taken to provide quality service delivery and challenges affecting organisational culture

The findings from the participants showed that there have been no interventions made in adapting to change management after the amalgamation, and in providing of quality service delivery and challenges affecting organizational culture. However, there have been suggestions lodged and deemed as necessary by the participants to assist them in coping with the changes brought by the merger, and the managers’ suggestions were as follows:

Promotion of cooperation and unity within the municipality

The management should promote cooperation and unity by having wellness programs e.g. to include people in Nxuba and have them involved in organising.

In supporting these findings, the Municipal Systems Act 32 of 2000 clearly states that a municipality on a decentralised basis within its organisation should set up clear relationships, encourage working together, control and foster communication between its political structures, political office bearers and its administration.” To also “maximize efficiency of communication and decision-making within the administration; delegate responsibility to the most effective level within the administration, involve staff in the

150 management decisions and provide an equitable, fair, open and non-discriminatory working environment.”

Establishment of re-creational activities

The municipality could also have re-creational activities to enhance unity and activities such as sports. The municipality should also have camps where the various departments participate to enhance leadership skills and working relations, and work together to come up with strategies that may benefit the municipality in the future.

These camps should be initiated by the manager itself as well as the mayor.

Provision of work procedures

The management should provide work procedures that will iron out the different roles and responsibilities of employees as there is fear of duplication of job positions.

Needs for effective communication

There are needs to improve the quality of communication between the management and employees so that everyone may be able to work towards the same goal.

Devise plan

The intervention of political leadership

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The intervention of political leadership of the ruling party, SALGA and CoGTA suggest, monitor and evaluate the decisions of the council of the municipality and to review where necessary.

Conducting meetings at regular interval to discuss crucial issues

The management and other stakeholders should meet and discuss the issues with every satellite involved with the merger.

4.6 Conclusion

This chapter has successfully presented the findings of the study, discussed the findings and analysed the data based on themes and sub-themes obtained from the content of the data collected from the participants. The findings of the study have shown that in reality, amalgamation is necessary if effectively implemented when the need arise, in order to combine all resources together or have all resources under the control of a single entity, for the purpose of ensuring an effective co-ordination and proper control of resources. More importantly, the findings also show that there has been no intervention made in adapting to change management after the amalgamation within the municipality. It is on this note that the participants in this study suggested the measures to be taken to address some of the mentioned challenges identified in the study. In addition, the chapter has addressed all the research objectives and presented the findings. The next chapter presents the conclusions and recommendations based on the study.

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CHAPTER 5: SUMMARY OF FINDINGS, RECOMMENDATIONS, AND CONCLUSIONS

5.1 Introduction

This chapter comprises of findings, recommendations, and conclusions of the study.

The main objective of this study is to investigate the effect of amalgamations on organisational culture, in the Raymond Mhlaba Local Municipality in Eastern Cape

Province. Following the main objective are the sub-objectives, which examine if the current organisational structure is conducive to a sound working environment, to analyse change management interventions provided after the amalgamation and make recommendations to the local municipality on the measures to be taken to provide quality service delivery, improved communication networks and challenges that affect organisational culture. It is evident that as much as there are both negative and positive effects, the amalgamation mostly had a number of factors that had a negative influence and effect on organisational culture. These include communication, management, as well as change management.

5.2 Research Findings

The responses from the Raymond Mhlaba Local Municipality administrative employees, have shown that a municipal amalgamation has a negative effect on organisational culture more especially at the beginning of the amalgamation.

The study showed that it is important for managers to effectively communicate to all employees about the process of placement to eliminate fears and conflict. Some participants have indicated that one entity seems to be dominant than the other, and thus have expressed that there is preferential treatment from the management of the municipality.

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On the other hand, the participants have also shown that the amalgamation may bring better opportunities in terms of salary scales as the municipality will be more capacitated.

The participants have clearly stated that there has not been a defined way of working, between the two merged municipalities as placement has not officially taken place.

The primary cause is the lack of consultation and planning strategies on how to deal with the amalgamation and developments that arise. This has inflicted confusion within the municipality and has also affected the way in which services are rendered. This is due to the number of protests that have taken place.

The current organizational structure is certainly not conducive for a sound working environment. There is no well-defined organizational structure with no communication from management, thereby making things much more difficult. This makes it a challenge to have a conducive sound working environment and makes it difficult for all employees to work as one entity towards the same goals.

Participants have highlighted that the management has not provided any change management interventions to assist employees adjust and cope with the changes brought by the amalgamation.

The findings indicated that the amalgamation of Nxuba Municipality was a result of a small revenue base and poor management of municipal finances, which compromises service delivery.

The fusion of two organizational cultures can bring about differences in self-interests, which may become difficult for the new municipality to manage all the employees due to different organizational cultures.

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Furthermore, services have been affected more especially in the Nxuba entity as the administration offices are moved to the former Nkonkobe territory. There has not been clear communication from the management to employees, thus, the working relationship between employees is affected. This has more especially affected service delivery. Nxuba employees have revealed that they are left out and this has affected services as well as the community, as there have been protests concerning service delivery.

The findings from the interviews conducted among the participants in Raymond

Mhlaba Local Municipality in regards to whether the amalgamation has a negative effect on organizational culture, shows that the amalgamation has brought conflicts and confusion to the local municipality as the employees were faced with obstacles and developed fear of not knowing what will happen in terms of the placement policy.

The findings from the interviews conducted among the participants in Raymond

Mhlaba Local Municipality in regards to the negative effect of the amalgamation on organizational culture in the RMLM has shown that the amalgamation has brought about poor service delivery to the local municipality. This is indeed a fact because all the participants emphasized that services delivery have been affected in some areas such as Bedford and Adelaide in the former Nxuba, within RMLM and these have also

155 hindered free and easy communication between the management and all the employees of the municipality.

The amalgamation does not have a good effect on organizational culture because some employees of other entities felt the other entity was preferred and favoured. The

Nxuba entity felt that policies of the former Nkonkobe are used to the current merged municipality while leaving the former Nxuba employees left out.

The inheritance of low revenue base municipalities has led to depletion of cash reserves, thus affecting the new municipality negatively in the provisions of basic services to the entire new municipal space. Increase in indigent register against a decrease in Equitable Share allocation has a direct impact on service delivery.

Organisational culture is an important weapon for bringing municipalities together.

The study emphasised the significance of a solid organisational structure, which facilitates the effectiveness of an organisation. Furthermore, as amalgamations are likened to birth it is likewise imperative to ensure well parenting by the management.

It is on this account that change management interventions have been also identified as one of the important tools to ensure the success of an amalgamation. Human

Resources, Litigation of contracts as well as Service Delivery were identified in the study as some of the challenges affecting organisational culture after the amalgamation.

5.3 Recommendations and Conclusions

The Raymond Mhlaba Local Municipality has made an acceptable change in some areas, but it became clear through the analysis of the data that there is more to be done by the municipality. The researcher recommends the following for Raymond

Mhlaba Local Municipality:

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Culture and Structure:

Culture is a significant aspect that constitutes an organisation. Furthermore, culture includes everything in an organisation, which is the way people work together, work behaviour and the way in which communication flows between employees. Culture can be well established when the organisational structure is well defined, which facilitates the effectiveness and the development of an organisation. It is clear from the respondents that there has not been a working relationship between the employees of the different entities. The management needs to be considerate of the cultural differences as each entity has its way of doing things. Since there are a number of entities coming together, culture clashes are expected. A number of interventions would need to be made to introduce a new culture of the organisation which would include, conditions of service, a method of working and leadership development.

Need for effective communication

There is a need to improve the quality of communication between the management and employees so that everyone may be able to work towards the same goal. The bureaucratic hierarchy in organisations makes communication to be more difficult as employees are commanded to go under some channels, in order to submit their grievances, which also affects service delivery in many organizations.

Separation of politics and administration

The intervention of political leadership of the ruling party, SALGA and CoGTA to monitor and evaluate the decisions of the council of the municipality and review where

157 necessary. The administration in the municipality should carry out their duties without the interference of the political office bearers which also compromise service delivery at the expense of the public. Politics and administration should be separated to a larger extent.

Devise plan

The management needs to devise a plan in encouraging cooperation between the different entities to eliminate the ‘usual ways’ of the previously known municipalities and introduce one that will be inclusive of both entities . The municipality should create co-operative governance and intergovernmental relations with the provincial and national governments, so that when help is needed from local government, both provincial and national government should offer a hand, in order to have effective service delivery in the Raymond Mhlaba Local Municipality.

Consultation and Communication

When there is change in an organisation, it is imperative that the management takes the employees through consultation. In this way, employees will be able to trust and have confidence in the management. When employees are informed and satisfied, productivity will increase and services will be efficiently rendered.

Implementation of Placement Policy

It is important that during an amalgamation, all necessary and key aspects are made clear to the employees, and one of such is the placement policy as clearly stated by the respondents. This aspect seems to be a major concern and the main cause of fears from employees as their positions are not clearly defined. It is the responsibility of the management to gather and form a placement policy, communicate with the

158 relevant stakeholders such as the unions as well as the employees. This is to ensure that all stakeholders are satisfied with the outcome and as a result it will further pave way for a defined way of working and organisational culture. Thereafter, a new performance management model can be made to measure the performance of employees.

Provision of Work Procedures

The researcher has highlighted the importance of formulating and implementing a placement policy in the preceding section. Following, there should be the provision of a detailed work plan as well as work procedures, which will give clarity to what is expected from each employee as it entails a working guide. Work procedures will in this instance become a working tool or measure that can be utilised to measure performance.

Change Management Interventions

The absence of interventions has resulted in poor implementation of policies and procedures and furthermore affected the quality of decision making and service delivery within the municipality. It is evident from the research that quite a number of change management interventions will need to be made by the municipality to fully stabilize and align the organisation. In addition, a change management model will need to be made to assist in finding a way working within the organisation.

Promotion of cooperation and unity

A municipality should organise its organisation to set up clear relationships, encourage working together, control and communication, between its political structures, political office bearers and organization. A municipality should augment the degree of communication and decision-making within the administration, and delegate duties to

159 the most effective level within the administration, which include employees in management decisions as far as it is practicable, and to provide an equitable, reasonable, open and non-discriminatory working environment/workplace.

Encouraging community participation

The management and other stakeholders should meet and discuss issues with communities such as Local Economic Development Plan and Integrated Development

Planning. The community should be consulted about the quality of services they are receiving so that the municipality can improve its service delivery

Service Delivery

One of the most significant aspects within a municipality is service delivery. A municipality is known as a sphere of government, which is closer to the people, therefore, delivering services efficiently should be the main goal in every municipality.

When municipalities amalgamate, this means the number of the community to be served will also increase. As expressed by the participants, the manner in which services are delivered has been dissatisfying to some of the community members of the RMLM. One of the major reasons behind this was the shifting of administration offices to the former Nkonkobe territory leaving other entities on the cold.

Political instability is a major challenge, as a municipality consists of both the political and administrative sections. The political section or structure should not interfere with the administrative structure. Services can be improved if the 2 arms of the municipality would work well with each other and be independent according to their different roles.

To improve service rendering, councillors should be more involved in communities as service delivery mostly revolves around them, and they should be involved in the enhancement of war rooms known as ‘Operation Masiphathisane’ within the

160 communities. All stakeholders should come together to account and also give feedback on the progress of decisions that were agreed upon.

Advancement of Technology

Technology also plays a pivotal role in the amalgamation of municipalities. One of the major concerns included communication networks within the municipality as well as involvement with the community. Communication networks, such as the municipality website should be active and well operating on a daily basis. Information can be available on the municipality website for the community to see and make use of social media moving with modern technology. This would also improve service delivery as employees would be encouraged to be more transparent and accountable.

Technology changes require a long time to execute, and they convey the largest usage costs. Delays in structuring and executing technology integrations plans can genuinely affect customer service. The speed, and precision of accessible information to management and employees, and the acknowledgement of foreseen cost savings.

Pre-Merger Planning

This study has highlighted the significant effects that mergers have on employees. It suggests that some issues have to be dealt with by superior leadership and managerial qualities and skills. This, however, may not be sufficient to stem a conflict that arises during mergers. Hence new research should be conducted on ways to improve consultative merger processes with staff and other stakeholders. This type of applied research would assist in the practice of merger integration. Furthermore, research on related issues to understand the emotional aspects of the mergers and how they can be managed in future mergers, especially on the type of support services

161 can be established at the beginning of pre-merger planning and preparation to assist staff to adjust and deal with such change.

Establishment of Progressive Policy Framework and Strategies

As it has been stated in the previous sections, it is clearly noted that there is a need for new policies in relation with the amalgamation, as the amalgamated municipality is now a new organisation. This will pave way for a good working relationship and finding strategies in dealing with post-merger issues. There is a need for monitoring and evaluation policies, which will assist in measuring the progress of the amalgamation.

Furthermore, an intervention from the higher structures, such as the provincial and national sphere is needed to ensure effectiveness. The three spheres must be seen as acting together in giving effect to the mandate of a peoples’ contract at a local government level. The municipality should establish a comprehensive Monitoring and

Evaluation (M&E) system by convening an M&E committee, which will also ensure workshops as well as submission of progress reports by the various stakeholders.

Involvement in Community Programmes

The local government transformation must gain momentum. The immediate difficulties of service delivery require urgent consideration. There is hands-on local government engagement programme, such as Project Consolidate focuses on the collective efforts of activities that require critical consideration, whilst continually complementing existing initiatives. The characterising feature of this programme is the order to work in new modes that require pragmatic, direct and unified state-led action and support to the local government in critical areas of service delivery and transformation.

Establishment of a Research Department

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The municipality is more capacitated and further resides in an area of a well -known academic institution. This suggests that quite a number of research studies are yet to be conducted. A research office will assist any research organisation that requires assistance and also challenges the municipality to employ researchers, which will belong to the RMLM.

Finally, the difficulty or success of particular mergers depends on a number of factors, which are the partners between themselves, the structure and make-up of the institutions, the culture, and the organisational profiles. This study has helped open the door for further research in understanding the post -merger processes as they remain limited in municipal amalgamation literature. However, far more attention has been paid to company acquisitions or mergers and in particular, the impact of mergers in the financial performance of an organisation.

Areas for Further Research

1. Further research should investigate the emerging opportunities and challenges of

municipal amalgamations.

2. As it allude from the research study, further research needs to be conducted on

change management as well as interventions that can be employed.

3. Pre-planning and employee focused research on amalgamations.

It is hoped that further research may assist local government policy–makers, as well as other organisations that may be involved in mergers.

5.5 Conclusion

The preceding section summarized the study and how the study has been achieved and further makes recommendations and conclusions regarding the effects of

163 amalgamations on organisational culture in the Raymond Mhlaba Local Municipality in Eastern Cape Province. Briefly, the study learned that there are many factors that influence the effect amalgamations has on organisational culture. However, these factors can also be prevented if local municipalities would plan in time, make proper intervention plans and involve the municipal employees by having consultation sessions throughout the amalgamation process. The study concludes that amalgamation has mostly resulted in having negative effects on organisational culture, particularly at the beginning of the amalgamation. To some degree, there have been some positive effects shown, though there are areas that the municipality needs to work on to make sure that the Raymond Mhlaba Local Municipality in Eastern Cape

Province is fully functional in all the areas.

164

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Table 1: Biographical information and profile of the participants

Participant Age Gender Rank/position Municipality

before Merger

Participant 1 41- Male Manager Nkonkobe

Participant 2 41- Female Administrator Nkonkobe

Participant 3 36- Male Clerk Nkonkobe

Participant 4 31- Female Supervisor Nxuba

Participant 5 36- Female Manager Nxuba

Participant 6 41- Male Administrator Nxuba

Participant 7 46- Female Clerk Nkonkobe

Participant 8 51- Female Administrator Nkonkobe

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Participant 9 51- Male Administrator Nxuba

Participant 10 46- Female Clerk Nxuba

Participant 11 41- Female Administrator Nkonkobe

Participant 12 41- Male Manager Nkonkobe

Participant 13 46- Female Clerk Nxuba

Participant 14 31- Female Supervisor Nxuba

Participant 15 46- Female Clerk Nkonkobe

Participant 16 41- Male Administrator Nxuba

Participant 17 436- Female Manager Nxuba

Participant 18 36- Male Clerk Nkonkobe

Participant 19 51- Female Administrator Nkonkobe

Participant 20 51- Male Administrator Nxuba

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Table 2 Demographic information of the chief informants

Code Age Gender Rank/position Marital Race Educational

Status Level

Participant 41- Male Manager Married Coloured Degree

1 45

Nkonkobe

Participant 41- Female Administrator Married Black Matric

2 45

Nkonkobe

Participant 36- Male Clerk Single Black Matric

3 40

Nkonkobe

Participant 31- Female Supervisor Married Black Degree

4 35

Nxuba

Participant 36- Female Manager Married Black Degree

5 Nxuba 40

Participant 41- Male Administrator Single Black Diploma

6 Nxuba 45

Participant 46- Female Clerk Single Black Matric

7 50

Nkonkobe

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Participant 51- Female Administrator Married Black Diploma

8 55

Nkonkobe

Participant 51- Male Administrator Married Black Diploma

9 Nxuba 55

Participant 46- Female Clerk Single Black Matric

10 Nxuba 50

Participant 41- Female Administrator Married Black Matric

11 45

Nkonkobe

Participant 41- Male Manager Married Coloured Degree

12 45

Nkonkobe

Participant 46- Female Clerk Single Black Matric

13 Nxuba 50

Participant 31- Female Supervisor Married Black Degree

14 Nxuba 35

Participant 46- Female Clerk Single Black Matric

15 50

Nkonkobe

Participant 41- Male Administrator Single Black Diploma

16 Nxuba 45

Participant 36- Female Manager Married Black Degree

17 Nxuba 40

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Participant 36- Male Clerk Single Black Matric

18 40

Nkonkobe

Participant 51- Female Administrator Single Black Diploma

19 55

Nkonkobe

Participant 51- Male Administrator Married Black Diploma

20 Nxuba 55

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Appendix 1: Interview Guide

Interview Guide:

The Effect of Amalgamations in Organisational Culture: A case-study of

Raymond Mhlaba Local Municipality in Eastern Cape Province.

a. Title b. Department c. Age d. Gender e. Qualification

1. Has the amalgamation (merger) improved the way things are done? If

yes/no how?

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2. How has the amalgamation affected organisational culture?

3. How does this amalgamation provide you with better opportunities?

4. Does where you are placed matter, if yes why?

5. Are you fully conversant with the placement policy? If yes/no why?

6. Would there be a need for a new set of conditions of service and why?

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7. What is your view of the amalgamation having a significant impact on

the cultures of the different entities?

8. Are the other entity employees given preference over other employees

and how so?

9. How can you be assisted to be able to cope with all the changes

brought about by the merger?

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10. Is there a need for management intervention for employees to cope?

Please provide suggestions.

11. Is the current organisational structure conducive for a sound working

environment? If yes/no why?

12. Suggestions on how to improve quality delivery of services as well as

communication networks.

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Appendix 2: Informed Consent Form

Ethics Research Confidentiality and Informed Consent Form

Please note:

This form is to be completed by the researcher(s) as well as by the interviewee before the commencement of the research. Copies of the signed form must be filed and kept on record

(To be adapted for individual circumstances/needs)

I, Likhaya Hlubikazi Ndlela from the department of Public Administration is asking people from your community / sample / group to answer some questions, which we hope will benefit your community and possibly other communities in the future.

I, Likhaya Hlubikazi Ndlela is conducting research regarding assessing the Effect of Municipal Amalgamations on Organisational Culture: A Case of Raymond Mhlaba Local Municipality, Eastern Cape. I am interested in finding out more about the challenges in the implementation process. I am carrying out this research to help the community as well as the employees of Raymond Mhlaba Local Municipality as a whole.

Please understand that you are not being forced to take part in this study and the choice whether to participate or not is yours alone. However, we would really appreciate it if you do share your thoughts with us. If you choose not take part in answering these questions, you will not be affected in any way. If you agree to participate, you may stop me at any time and tell me that you don’t want to go on with the interview. If you do this there will also be no penalties and you will NOT be prejudiced in ANY way. Confidentiality will be observed professionally.

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I will not be recording your name anywhere on the questionnaire and no one will be able to link you to the answers you give. Only the researchers will have access to the unlinked information. The information will remain confidential and there will be no “come-backs” from the answers you give.

The interview will last around (30) minutes (this is to be tested through a pilot). I will be asking you a questions and ask that you are as open and honest as possible in answering these questions. Some questions may be of a personal and/or sensitive nature. I will be asking some questions that you may not have thought about before, and which also involve thinking about the past or the future. We know that you cannot be absolutely certain about the answers to these questions but we ask that you try to think about these questions. When it comes to answering questions there are no right and wrong answers. When we ask questions about the future we are not interested in what you think the best thing would be to do, but what you think would actually happen. (adapt for individual circumstances)

If possible, our organisation would like to come back to this area once we have completed our study to inform you and your community of what the results are and discuss our findings and proposals around the research and what this means for people in this area.

INFORMED CONSENT

I hereby agree to participate in research regarding assessing the Effect of Municipal Amalgamations on Organisational Culture: A Case of Raymond Mhlaba Local Municipality in Eastern Cape Province. I understand that I am participating freely and without being forced in any way to do so. I also understand that I can stop this interview at any point should I not want to continue and that this decision will not in any way affect me negatively.

I understand that this is a research project whose purpose is not necessarily to benefit me personally.

I have received the telephone number of a person to contact should I need to speak about any issues which may arise in this interview.

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I understand that this consent form will not be linked to the questionnaire, and that my answers will remain confidential.

I understand that if at all possible, feedback will be given to my community on the results of the completed research.

…………………………….. Signature of participant Date:…………………..

I hereby agree to the tape recording of my participation in the study

……………………………..

Signature of participant Date:…………………..

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Appendix 3: Ethical Clearance Application

The Chairman 01 March 2018 Research Ethics Committee University of Fort Hare Alice 5700

Dear Sir, RE: ETHICS CLEARANCE APPLICATION I am Likhaya Hlubikazi Ndlela (student number 201205948), of the Management and Commerce Faculty in the department of Public Administration. I wish to apply for ethics clearance to enable me to proceed to the field for the purpose of collecting data. I look forward to having your kind approval. Thank you.

Kind Regards

Likhaya Ndlela

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