Executive summary.For successful growth of a company the Human Resource manager has to play a bigger role in moving the company towards the direction it wants to be as specified by its mission.
The growth can be brought through merges and acquisition. Therefore mergers and acquisition provides the company with opportunities and hazards hence imposing a lot of challenges on the human resource manager. This is because when mergers and acquisition is not used effectively it can bring a lot of a decrease in the production. Generally the concept of mergers and acquisition has helped many companies to stay competitive in the market. The merger has helped these companies to save the cost and even acquire some relevant skills that can be used in the improvement of products by a company.
Most of the benefits brought to a company through merger and acquisition are just the same with the benefits brought by outsourcing. The only difference is that the two work under different principles.The whole process of merger and acquisition is very complex and therefore brings a lot of challenge to the HR who should ensure that the transition process is effectively done. The HR therefore has a responsibility to influence the various activities so that each company comes out a head and satisfied. During the merger and acquisition, the HR should ensure that cultural issues do not actually spoil the integration process of the two companies (Esther, 2004, pp83). This can be effective by ensuring that things are effectively communicated in all directions such as all the departments and across the organization as a whole. We cannot say that mergers and acquisition are always successful but the new team (leadership) need to work as a team despite the presence of cultural differences, personality differences, power issues and any other problem that might crop in.However, when effecting mergers and acquisition people differences and cultural differences are rarely being considered.
The HR is therefore advised to plan and execute the merger on the basis of boosting the market of the company’s products. It is the role of the individuals in the organization who will decide whether the merger will be successful or not. The main responsibility of the HR is to evaluate and ensure that the newly formed merger will effectively work without any problem cropping in. This therefore means that the customers and employees reaction will determine whether the combined company formed as a result of merger will be successful or close down.
Should the senior leader or stakeholder of the two companies come to positive agreement then the HR will have more powers and advantages to improve the effectiveness of the organization by addressing the cultural changes or differences but not being pushed along by them. If he is pushed along with these cultural differences then the new company that is to be formed through merger and acquisition might not meet its objectives (Light, 2001, p39).Introduction.Generally coming up with a successful merger and acquisition is very difficult.
The HR is always faced with a lot of issues that must be addressed. One of the issues the HR should consider is to look for possible measures to be used in bringing the staff departments together. This means that one of the HR department need to be eliminated to justify the merger. Losing department always bring a lot of argument as one side might feel sabotaged.
One of the outcomes of the merger is therefore the consolidation of staff department. If at all both of the HR department must be kept then a lot of issues of interdependence decisions, policies and services should be shared. However, the main company will have to take the responsibility of the dept to finance an acquisition.Strategic issues.Before the merger the HR has a challenge in his leadership to ensure that both of the organizations have a good strategy laid out in advance. This is because the moment the merger shall have taken place members will embark on their come responsibilities to keep a strategic perspective. The leaders of both the organizations must have a proper strategy that should contain how communication is to be made to their employees and customers and how culture should be merged. This is generally summarized in SWOT analysis.
The SWOT analysis tries to provide the strengths, weakness, opportunities and threats that a company faces both in the internal; and external environment.The SWOT analysis is done to the company before the merger. A broad survey of the culture should be undertaken in both the companies to verify the cultures differences that exist. The survey may be done by carrying out interviews to sampled population representing the two companies. Questionnaires are also sometimes may be used that contains a list of questions to be filled by different people interviewed. The HR thus should have the full information on cultural differences that exists in the two organizations (companies).
If not properly done group with same cultural value may team up to trickle down the innovations that may come up in the favour of he merger these are two conflicting ends that might force the HR to apply polarity management. The differences will tend to prevent disconcerting delays in the implementation of the take over (Amy, 2004, p42).Non-financial issues.Other important issues that should be considered are the non-financial issues. The HR should clearly understand whether the merger will provide more benefits as compared to forming an alliance without integrating the two companies. This is because a lot of benefits have been realized in companies forming simple partnership without integration. The HR should therefore know whether the company is to be form through merger or through acquiring some of the other company’s assets.
Another non financial issue to be checked is to identify whether people in the two companies are in apposition of working together. Whether acquiring a company or merging with it will destroy the properties or drive away the talent it has should also be addressed before the merger is effected for sooth takeover. Some companies blindly. Therefore if the real purpose of the merger is to acquire another company’s assets either in terms of a particular product or brand factories or patents then this should be clearly acknowledged or dealt up with before any negotiation starts. These are issues that should not be overlooked the HR and the leadership of the two companies at large. (Holson, 2000, p43).Cultural issues.
The HR should therefore collect some data by carrying out a proper survey before the merger. The measurement tools used in the survey or research must be effective to provide reliable and valid data. In the survey he should recognize whether the cultural values of the two organizations are compatible (Wallis, 2000, p65). Whether one culture will be dominant and the other less dominant should also be found out. This will help him come up with procedures on how the people falling under the different cultures will operate when brought on board or table for scrutiny. Key strengths, weakness, opportunity and threats of the organization should also be pinpointed out in the survey.
This will make the company have a healthy competition in the global market. These may include coming up with new skills that might help it improve production. Some times risk management techniques like outsourcing may be applicable in this case. Good strategic management will help the company realize its objectives. (Cresswell, 2001, p26).Another issue that the HR should address for a smooth take over during merger and acquisition is communication. A good communication strategy should be formed so that the employees and customers should always get informed at the right time on what is happening in their organizations.
It goes without a say that information liberates only when received at the right time. The HR will therefore be required to address the ways in which information will be communicated to two the parties in the different organizations. Possible alternatives of the merger are also scrutinized before the MSA is implemented. The possible alternatives might include greater integration with suppliers and partnership deals. (Viasic, 2000, p32).Always before merger and acquisition is effected each organization to be involved in the transition process should have its own strategy. Therefore each organization’s strategy should be looked at so that possible discussions can be formalized on how the merger will be formed. The HR thus will have to get very useful answers or solution by having talks with senior leaders from the two companies separately.
Difficult questions that might arise on the merger issues should therefore be addressed as early as possible to avoid any inconveniency that might slow down the whole prices of takeover. (O’Reilly, 2000, p69).The HR manager will be forced to raise the cultural issues during the survey. Cultural issues may entail low think on how job is to be performed (done). Values of people in the two organizations and how they view one another are some of he important issues to be aired out before the merger and acquisition.
Cultural differences are obvious though some may just arise in the process. For example individuals may at times request or ask for reward especially after coming up with new innovations and inventions. These should also be addressed. Positive reinforcement and rewards always keep the company moving towards the right direction. The employees of the company therefore should not be fooled by filling their ears with pleasant words without any action taken (Esther, 2004, p.73).
We believe that actions speak louder than words and the means that the employees will react more strongly when these pleasant words become taunts. In future they will automatically negate any good information or ideas that might come from the HR desk to address issues of improving the company’s success. The HR should therefore address issues on how individual employees and team group are rewarded for innovation.Since the HR is believed to be somebody who has a lot of skills in management he is therefore expected to be in a position of persuading corporate leaders to admit the truth to themselves and to the employees of the organization at large. The HR is therefore supposed to use his management skills to help managers and executives to communicate effectively with addressing power issues and low to deal with the cultural differences that might exist in their organization. In this case the HR is supposed to act as a coach for the team. The team will either win or lose depending on the relevant skills the coach has. (Taylor, 2000, p284).
Power and conflict is another key issue that might occur during the formation of mergers. This is a very sensitive area and the HR is required to be very tactful when dealing with power and conflicts issues. It is therefore necessary to bring conflict out to the surface and deal with power issues more humbly and honestly. Should one is to be appointed to take charge or control; this should be communicated as early as possible to avoid unnecessary guesswork by people on who is the boss.
More often people do usually engage in wars and arguments on this matter and as a result it has proved to be destructive to the two parties. Roles of each organization should be figured out to prevent malicious conflicts between the two parties on who to lead the other.(Habeck,1999,p102).Practically in many mergers and take over power sharing relationships automatically determines the operational changes but not quality concerns. Therefore the HR will actually play an important role in ensuring that the better of the two parties are preserved.
HR actually be required to make effective changes in the two teams. By understanding the key factors that make mergers succeeds, the HR has the responsibility to have a keen look on human issues as financial issues using appropriate technique. He should not forget that culture is the people way of living. Therefore organizational culture is an organization shared value beliefs and practices (Doz, 1998, p46). This is normally the key to achieving the laid down mission.
The HR must have enough understanding on skills to address cultural differences and work with both the companies to ensure that the goal it is meet is achieved.Rewards and motivation. To understand the human nature is very difficult. Human beings always tend to work effectively and efficiently when rewarded. The HR staff should therefore help the organization realize its objectives.
Motivation can be done in terms of money, giving bonuses and even sharing the profit realized by the organization. The HR will therefore come up with effective criteria on how profits realized will be shared. By rewarding people or employees they will feel that hey are progressing in a healthy manner and this will improve further advancement in the production line. Any positive improvement in the organization should not be ignored but should be rewarded however slight it might be (Deogun, 2001, p24).
Good appraisal should also be provided by the HR inorder to motivate the employers. It doesn’t necessarily mean that money is the only means of rewarding. At times the employees may feel comfortable when taken for tour.
All these should be addressed by the HR in the long run during the takeover.Otherwise mergers and acquisition (M&A) is an effective strategy for the participating organization to realize economies of scale and widen their reach. The M&A will also help the participating companies acquire strategic skills that might help the company have a competitive advantage both in the internal environment and external environment. It thus reduces the cost of operation. These benefits are possible when the HR plays his role of directing things to more towards the right direction.(Shannon,2000 pp.35-78).
Human issues.The human side of merger and acquisition activity is another factor to be considered by HR for smooth take over. This is an area which has been neglected during this process of M&A. A lot of attention is always being paid to issues such as financial, legal and operational elements of merger. Most of the executive who have been participating in the M&A deal have realized that in the current economy management of human side of change is the major factor of maximizing the value of the deal.
The human resource issue is therefore a major determinant of the success and failure of the M&A (Muller, 2001, p48). These may be divided into three stages. HR issues as reasons why the activity is to be initiated are discussed in this stage. The major reason why most of companies engage in M&A is to acquire talent and gain new skills. Another issue is the creation of dedicated senior executives to head the Merger and Acquisition process.Normally most of the companies that do participate in M&A had failed because they lacked a capable leader who could focus on the organization’s mission. Therefore the key reason for M&A failure is lack of a focused leader who can go out and look for potential companies to merge with or acquire. The leader should come up with a variety of different companies to form merger with and hold discussions on which one to be selected.
The selection process is very complicated because if wrongly done the M&A process is likely to fade and tarnish the possible success of the merger. Processes and activities that happen in stage one is thus as follows. We have identifying reasons for M&A, forming M&A team leader, searching for potential partners, selecting a partner, planning for managing the process of the M&A and finally planning to learn from the process. The HR therefore has a difficult task of choosing the appropriate leader to undertake all the above responsibilities. This shows that leadership needs to be in place where systematic and extensive pre-selection are essential.
The significant HR implications here results from the need to have an experienced and skilled leader for M&A activities. Many Chief Executive Officers have failed in this line because of failure to have a leader who is competent.The second stage involves integrating the two companies.
The HR issues includes selecting the integration manager, designing the implementation means, creating new strategic and structure of leadership, retaining key employees, communicating with and involving stakeholders and deciding on the HR policies and practices. The whole process of integration and combining should be carefully done. This is because with poor integration, productivity will seriously be down whereby employees will not deliver as they feel they are not satisfied because their interests are not put into considerations. A team should therefore be created represented by the two organizations that will be responsible for the transition and integration process.
Delegation of responsibilities and effective communication is therefore the major key issue. The HR should therefore decide on who stays and who goes, who is to perform on particular activity. This will help me know on how to establish a new culture, structure, HR policies and practices that is to be carried in the company that has been formed as a result of merger. (Webb,2002, p7).The integration manager will be responsible to oversee the M&A process. This person should be neutral therefore does not need to come from those running the business.
In most cases he should be part of the steering committee together with other top executives. The top executives form the team for setting the objectives of the integration and overseeing the progress of integration team across various M&A projects. The integration manager therefore serves as negotiator between the two parties, team leader, project manager, advisor, facilitator and relationship builder.
Therefore for the two organization to be integrated the integration manager should participate in preparing the staff for change. He should also ensure that proper understanding exists between the two participating companies.Much business formed by merger and acquisition always loses their key people after acquisition. It means that retention of key employees is crucial to achieving performance goals through the transition. This only works when a clear strategy is properly formulated since it will place the company in a competitive advantage. The HR therefore need to carry out a thorough assessment on the type of employees who are experienced in the organization by either serving for longer period or those who have brought a lot positive changes in the structure and in production where they work.
(Patrick,2002,p.137).The final stage of HR issues that HR need to monitor is known as solidification and assessment of the new entity stage. At this moment we have a new company working under new culture. During and when the combination process is taking place the new company faces a lot of issues. The issues faced include readjusting the system, solidifying and fine tuning. These issues are supposed to be addressed out varying degrees depending on the nature of the M&A process. It means that variation will result on whether the new company is formed as a result merger or acquisition.
The following HR issues therefore are addressed at this stage. Since the new company now have new leaders and staff, the new leadership is to be solidified in order to strengthen organization operations. It can be said that the former top management officials failed to move their organization in the right destination. The HR issue is assessing the new strategies of the new company need to be revised and assessed inorder to improve the business.
The new team that is selected should form a strategy that is geared towards cutting down the cost of operation and minimizing the new company formed through M&A realize a booming profits. The new culture should be integrated with the new strategies and structure for effective operation. This should include how the employees will be motivated as a result of innovation. Change is something which is inevitable in our companies today. The HR should therefore ensure the change introduced in the organization is geared towards achievement of the mission formed by it.
We are aware that the continuous and rapid developments in the field of computer software have brought a lot of changes in the global market. Many businesses ranging from small to medium size to large ones are nowadays restructuring their operations all the time to cope up with these changes. (Lanning, 2002,p 35)).Evaluation should also be done on the operations of the new company. This will help in making some adjustments on how to improve the products and services offered by the company. This should start with the piloting of the whole process. This is to ensure that the new team actually gets used with their roles and serves to their best. This is a new company that has just been formed.
Therefore HR implications and actions will include creating and evaluating the new culture. This has been discussed above. Since the new management team might have been formed by bringing some employees from the two organizations, then the new culture created should be evaluated and assessed.
The concerns of the stakeholders also need to be addressed and where possible their interest and demands should be satisfied. (Zadmach etal,2003, p560).The HR therefore has the following key responsibilities to perform after successful M&A has been carried out.
He should develop key strategies for the operation of the company formed. He should also at all the time access the management team of the other company to come up with suitable changes into his organization. This means that frequent analysis on the organization structure should be done to check on the strength and weaknesses of the company.
This will make it grow positively in a healthy manner. He should also be responsible in creating transition team. The transition team will be responsible for addressing both financial and non-financial issues faced by the organizations.Training if not left out is another issue that should be conducted for smooth takeover during the M&A process. Different department heads is to form part of management team of the new company should be trained. During training new skills are imparted that will help them improve in their services and activities. It is therefore the responsibility of the HR to ensure that proper training is provided to different employees that are to form the new company. Each member of the organization should know his role.
However, good results are always achieved through by rewards for motivation. The most complicated department that should be thoroughly dealt on is the information technology department. The IT staff should try to pass relevant information to the customers and employees.In most cases IT staff does face the problems of security when trying to implement their duties. There is some important information about the organization that should not be leaked out to the public. Therefore the networking should be properly checked to ensure that the organizations private and confidential information not stolen. Thorough training in all the departments thus is very necessary.
ConclusionRecommendation.Always mergers and acquisitions present a lot of profits and benefits to the company if takeover process is successfully done. For sure failures are also factors that might result in poor mergers in the organization. The whole process can only be successful if proper planning is done. The HR has the responsibility to ensure that before the merger both the organization have a clear strategy mapped out in advance. The leaders of the two organizations should have their strategies formulated which are to be considered in the M&A process. SWOT analysis best summarizes all that is to be contained in the new company to be formed.
These will entail the cultural differences staffing procedures and policies to be formed. For success of M&A key issues of mergers such as communication power and conflict and operational procedures will be handled. The HR manager therefore should develop a strategy that might help the company achieve its goals. A clear game plan is necessary to lead the process.
Conclusion. Mergers and acquisition when effectively applied by the managers of different companies can make the company realize its objectives. Companies that have been formed through mergers and acquisition have realized a lot benefits. A lot of costs are saved and new skills are obtained that might be used in further improvement in the company.
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