International Workplace Relations Issues - Mergers And Acquisitions - Coursework Example

A Merger/Acquisition: Potential Problems and the Necessary International Workplace Relations for a Smooth Transition Executive summary The paper looks at human resources management from an international approach. It extends to give an argument towards the convergent or divergent approach to integration and merging up of businesses across nations. It extends to analyze the three main theories in International human resources management (IHRM), with a view to tackle the arguments behind their rationale of their formation. The latest move of many international companies to merge is captured with a view to outline the problems associated with it. The paper goes further to address the international workplace relations issues, with intention to find means that can promote smooth transfer of ownership when these mergers occurs. It ends with a concluding paragraph that addresses the issues discussed. Critical Overview The issue of companies merging has been a global concern in the business world; with scholars as well as laymen questioning who will ultimately gain with these changes. The multinational corporations continually are faced with dual pressure. This comes in two forms: one side demanding for the global integration aimed at global cost reduction; while the other side calling for responsiveness and differentiation approaches to business practices HR practice being at the centre stage (Aguilera & Dencker 2004, p. 1355–1370). The issue of duality in culture advocates that the international business practices which includes international human resources practices are pervasive yet portray some uniqueness; and these two impacts greatly on the global strategy in HR. It still is evident that the pressures that seeks for local responsiveness in Human resource practice are based on consumer tastes and preferences, the different infrastructure and the national systems of business that established by the host countries (Zajda 2005 p. 42-49). International human resource management also calls in for integration in business human resource practices; this is enhanced by the actions of companies in different countries to merge. The integration and merging of business companies could be analyzed via the integration-responsiveness analysis. The analysis is based on three main typologies: (a) Global Approach The focus of this strategy is to increase the profit margins of the business that merge up together. This implies that the approach tries to achieve this through minimizing costs by means of promotion of cost efficiencies based on two things; firstly, the economics of scale which relates to benefits due to large outputs that can be sustained when two or more companies merge. This is further attributed to the concept that producing more may require much addition of variable costs and little on fixed and permanent costs; therefore the profits would be maximized (Ferguson 2005 p.43-49). Secondly, the cost reduction is also arrived at due to the economics of location. This is related to the minimized proximity between companies that produce similar or differentiated products; therefore, it leads to minimal costs on importation, transportation and use of expatriates (Legare 1998, p. 32-41). (b) Multi domestic strategy This is based on focusing on maximizing local responsiveness. This implies that the businesses from different countries that come to merge are able to respond to the integration, by coming up with domestic policies that are directed towards the integration of the business and business practices such as human resource practice. This entails that as much as there is integration, the domestic policies may be maintained in the mix. (c) Trans-national approach This one focuses on rationalizing and the integration of the resources to achieve cutting edge cost efficiency. This efficiency is derived from the economies of scale due to high output and the economies of location due to the shift in positioning of the companies. This approach also seeks the sensitivity and ability of a business to respond to the needs that arise locally through the active exchange of relevant knowledge (Birkinshaw & Bresman 2000, p. 395-425). The significant thing to note in the above approaches is that they expound on an ‘ideal type’ of global strategy that business organizations may wish to apply to attain surplus outcomes. Theories of International Human Resources Management (IHRM) The management of the conflicting pressure for either integration/rationalization with differentiation is the basis for the theories behind International human resource management (IHRM). Integration/rationalization refers to merging of two or more companies, in a manner that it will attract low cost leadership and minimizing of costs. On the other side, responsiveness/differentiation of the companies with regard to their business practices of which our concern is the human resource practices. There are three main theories of International Human Resources management (IHRM), that relate to the impact of global processes on employment and work relations. They include: (i) The Economy Theory The economic globalization methodology is an approach that involves prediction of the operation of international markets in accordance with the universal principles. This is said to result in a ‘convergence’ of the national employment relations of a particular country involved in international HRM. (ii) The Institutionalized Approach Theory This theory defends that the global business forces or practices, including the global human resource practices are fluid in operation and this results into the divergent power struggles that are evident today. The proponents of the theory support that the challenges or problems that are faced by companies after merging are based on the divergent struggle for power (Evans 2004 p. 45-54). (iii) The Integrated Approach Theory This theory suggests that both the global trends of economies and the national based institutions form a strong base in the structuring of the international patterns of the employment relations. It extends to advocate for understanding of current economic global trends and contrasting this positively to the national based institutions; so that the international employment relations is actualized. The above theories are essential for one to be able to understand deeper issues involved in International human resources management (IHRM). The theories also have facilitated the grasping of the concept involved in IHRM. This makes IHRM to capture additional concepts such as the HRM issues and problems that come up as a result of internationalization of business, and the HRM strategies, practices, cultures and policies (Domsch 2007 p. 34-43). The Internalization of HRM Cycle This cycle adds in the cultural diversity dimension of different countries to the processes of recruitment and selection, training and development, reward and compensation, performance appraisal in addition to the issues of repatriation. The internalization of the HRM cycle also includes the following: (i) To ensure that the selection process is made important to the organization. It should go beyond just staffing on the basis of technical and managerial positions of a matter. (ii) Investment in management of international rewards. This is through ensuring that the managers are conversant with foreign countries labor laws, national employment systems that may include the benefits and value of currency fluctuation in a particular host country. (iii) Detailed International Human resource training and development. This is by ensuring that it varies and may take any of the three forms, that is, Centralized, Systematic and Local Emphasis here is that irrespective of the diverse business strategy that is taken, the interventions on training and development should be inclusive of cross cultural training that is associated with human resource (Salk & Brannen 2000, p. 191-202). Previous case studies HR research that has been carried out and the findings have revealed during performance appraisal especially on the part of the expatriates, should be specific to the needs of that expatriate. This is in a bid to ensure that the employee competencies, behavior, and motivation are effectively performed in the host country (Salk & Brannen 2000, p. 191-202). Traditionally, International human resource management (IHRM), had a focal focus on expatriates. However, today it captures a wide range of issue than before. Therefore, there are so many issues and problems that are encountered in practicing this field. It is further noted that the managers to need get aware that the violation of the psychological contract made with foreign staff after merging the companies, may cause a negative psychological reaction to those expatriates (Kane, Crawford & Grant 1999, p. 494-515). Problems Arising With Poor Management of HR When there is mismanagement of human resources, the impacts are worse. Things can even go to extremes if the company was created from merging, for it has double impact to the business and the stakeholders. Poor management of human resources may lead to the following problems: Decrease in commitment and motivation of workers. Human resources basically concerns with people, and if this people are not appreciated as they desire, it would lead to low commitment to work, alongside making employees demotivated. This unfortunately would always translate to either loss (Capron 1999, p. 987-1018). It always leads to ineffective management of change High employee turnover Harmony and team work problems PR problems International Work Place Related Issues A merger case between two or more businesses from different countries should be done with care so that the process is able to move smoothly right from negotiation, signing of agreements to the real implementation. To make this process smooth, the following issues should be addressed: The transfer should be done in an open, transparent, and systematic process. If the new management is convicted of the need to adjust the employees’ number upwards or downwards; they ought to base their recruitment and selection within the law and by matching the organizations new needs within the national system regulation. The new management should ensure that they should not temper HR policies, particularly with regard to compensation and pay without relevant consultations (Bratton 2001 p.46-60) The training and development of staff should be comprehensive and progressive. This is as opposed to the rush which ultimately may bring problems. A grace period should be given to allow for change (Salk & Brannen 2000, p. 191-202). The new management of the company should avoid being involved in drafting of flexible and non-standardized employment contacts. This can be in the form of open ended type of jobs for instance part time temporal terms and so on. There may also be need to employ the services of a change manager; who will assist to see to it that the process is run smoothly (Wright & McMahan 1992, p. 295-320). In all this, there’s the big debate convergence/divergent. This comes in as a common theme in International Human Resources Management (IHRM); that relates to comparative human resource management. It is a matter that has basis in the increasing globalization (Delery & Doty 1996, p. 802-835). It is a noble thought that while there are changes in Human resource practices. In many countries this is based on the environmental factors and universal best practice; and this has further left a gap between the national culture and HR practices with universalism. In essence, the economic variations as well as nationally established institutional profile make convergence a very simple and problematic issue. My take is there’s need for a convergence approach, however, this cannot be reached at by merging companies as a way of reacting to the market, but rather, the merging should be directed as a measure to respond to the market demands. The personnel in charge of the merging exercise should be skilled so as to go through the exercise. References Aguilera, RV & Dencker, JC 2004, The role of human resource management in cross-border mergers and acquisitions, Int. J. of Human Resource Management, 15 (8), 1355–1370. Birkinshaw, J & Bresman H 2000, Managing the Post-Acquisition Integration Process: How the Human Integration and Task Integration Processes Interact to Foster Value Creation, Journal of Management Studies, 37, 395–425. Bratton, J 2001, Human resource management: theory and practice, Routledge, Chicago. Capron, L 1999, The Long Term Performance of Horizontal Acquisitions, Strategic Management Journal, 20, 987–1018. Davilla, A 2008, Best human resource management practices, Taylor & Francis, Dalton. Delery, J & Doty, H 1996, Modes of theorizing in SHRM, Academy of Management Journal, 39(4), 802-835. Domsch, M 2007, Human resource management approaches, Ashgate Publishing, Beijing. Evans, M 2004, Policy transfer in global perspective, Ashgate Publishing, Ltd. Beijing. Ferguson, I 2005, Globalisation, global justice and social work, Routledge, Chicago. Galpin, T & Herndon, M 2000, The Complete guide to mergers and Acquisitions, Jossey-Bass Publishers, San Francisco, CA. Kane, B, Crawford, J & Grant, D 1999, Barriers to effective HRM, International Journal of Manpower, 20(8), 494-515. Legare, T 1998, The human side of mergers and acquisitions, Human Resource Planning, 21(1), 32-41. Meyer, S 2008, Globalisation, Culture and Work, GRIN Verlag, Chicago Storey, J 2007, Human resource management: a critical text, Cengage Learning EMEA, London. Salaman, G 2005, Strategic human resource management: theory and practice, SAGE Publishers,New York,NY. Salk, J & Brannen, M 2000, National culture, networks and individual influence in a multinational management team, Academy of Management Journal, 43(2), 191-202. Wright, P & McMahan, G 1992, Alternative theoretical perspectives on strategic human resource management, Journal of Management, 18, 295-320. Zajda, J 2005, International handbook on globalisation, education and policy research: global pedagogies and policies, Springer, New York, NY. Read More