Potential Problems after a Merger - Literature review Example

Name: University: Course: Tutor: Date: Human Resources Plan Question 2: There are many international mergers and acquisitions occurring across the world with companies in different countries. Because of these mergers and acquisitions, there is a great potential for problems to arise with poor management of the different companies’ human resources. What are the potential problems and what are the international workplace relations issues that need to be practiced to ensure that the transfer of ownership in a merger/acquisition goes smoothly? Layne, (2007: 33), clarifies that International mergers are growing day by day. From, Layne, (2007:36), International amalgamations are the kind of mergers that take place beyond a particular country’s boundaries. These international combinations are also referred to as the global amalgamations or the cross-border unification. Layne, (2007:30), argues that Majority of these mergers are associated with the need for globalization and the global reforms on finance. The international mergers take form in varied ways. For instance, a merger could be horizontal; involving organizations in the same level of production, vertical; involving organizations in different levels of operation, or conglomerate mergers; where a firm take over another in a completely different scope of production. According to Bragg, (2008: 11), international mergers too include congeneric amalgamations, reverse mergers, and dilutive mergers. In addition, accretive mergers are also practiced. The vertical, horizontal, and conglomerate mergers are the most common forms of international mergers (Bragg, 2008: 14). A merger of a multinational has impacts on the company growth but it affects the employees of these two organizations that are integrating (Layne, 2007, pp. 36). A merger does give reasonable advantage on financials and the outcomes, but it causes serious HR issues. At most, occasions, these mergers may fail to realize expected outcomes due to the people issues. The ineffective management of the Human resource issues in case of a merger or acquisition is one of the major causes of a disappointment (Bragg, 2008: 14). Potential problems after a merger Matters related to the management of HR issues arise after an international merger. These may be noticed in the pre-merger echelon or the post merger phase (Bruner & Arthur, 2009:87). It is critical for the organization to first take care of the due diligence issues in a merger to ensure the HR are at par with the organizational aims and objectives of the merger. Bruner & Arthur, (2009:86), argues that under premerger period, it is necessary to evaluate the issues that are likely to arise, which includes the organizational culture, the leader’s roles in the business, the organization life cycle, and the management styles that are adopted after an international merger (Bruner & Arthur, 2009:88). The International mergers have in most cases proven to be upsetting for the HR of the acquired firms. These mergers are associated with emergent of impacts that are frustrating and ranges from anger into depression on the organizational human resources Bruner & Arthur, 2009:88). From DePamphilis (2009:54), it is necessary for an International merger to address HR issues that may arise due to it amicably. These potential shortcomings would arise after, during or before the finalizing of unification (DePamphilis, 2009:55). One of the most critical potential problem include the HR turnover; this is the measure of the HR numbers that leave the organization for others after the merger (DePamphilis, 2009:56). An International Merger or acquisition in most cases lead to neglect of the HR issues that concern the employee from the acquired organizations hence causing dissatisfaction, and thus high turnover ratio (DePamphilis, 2009:54). It is thus necessary for the organizations management to take into considerations HR issues to avoid the likely high employee turnover after an international merger. Mergers do in most cases result to the loss of employee morale (DePamphilis, 2009:56). The employee is discouraged by the option of an organization to be undertaken by another. A merger kills the morale to work as hard as prior to it to uplift the organization. It is thus reasonable to argue that, a merger is likely to be hit by the loss of employee morale, which would lower productivity and deteriorate the responsibility that the employee had cultured into their minds towards the organizational success (DePamphilis, 2009:54). Motivation issues too are likely to emerge in unification (Miller, 2010:33). Employees perceive the merger as a last resort for the company they work for to have agreed to get into. From Miller, (2010:34), this is because they are very determined to see the organization regain its productivity and market position if it had lost track. An acquisition or merger of the organization thus does kill the motivation that the employee had towards increasing the organizational profitability (Miller, 2010: 36). On the part of the organization that is acquiring the other business, motivation issues do arise too. This is because the existing HR perceives the undertaking as and increment of responsibility at the same pay. Nobody wants to do more a job that is not as rewarding as they are supposed to, and as a result, the mergers affect the employee motivation on both the organization that is acquiring the venture and the business that is being acquired (Mejia, & Werner, 2008:102). Mejia, & Werner, (2008, pp. 104), argues that productivity of the HR is one of the potential issues anticipated in a merger. It is desired by the merging organizations to realize more production due to the combining of resources, but this is not the case in most of the mergers; the employees do not turn to be productive as it was expected (Mejia, & Werner, 2008:98). This associated with the fact that the work force is not familiarized with the organizational aims and objectives, which delays productivity. Mejia, & Werner, (2008:94), says that it is from such reasons that the overall productivity of the merged business goes down and it in some cases results to a total letdown of the merger. The changes in the HR policies will spur issues in a merger (Miller, 2010:33). There is likeliness of varying the policies on HR after a merger, which covers the issues related to proper management of the HR. Mejia, & Werner, (2008:108), argue that varying HR policies after a merger is critical. This is because the workforce may not take a merger well in first instance, as they perceive the organization would be trying to get the chance of misusing their skills and expertise (Miller, 2010:34). This is a potential risk likely to occur in a merger, it should be addressed before the mergers, and acquisitions are finalized. According to Bondarouk, Ruel & Looise, (2011: 96), issues on downsizing and employee lay-offs are critical and should be analyzed before an acquisition is settled. The risk of riots and strikes, after a merger is reasonable; this is because the integrated business would be trying to cut on its workforce and integrate responsibilities towards a more productive approach. According to Bondarouk, Ruel & Looise, (2011:92), the other issues that are likely to sprout in merger are the survivor syndromes and the stressing conditions at the work place. There is likeliness of experiencing the information system issues after a merger due to the increased responsibility of ensuring all the parties are able to communicate and exchange information efficiently (Bondarouk, Ruel & Looise, (2011:96). In summary, the above-discussed issues are the potential risks likely to sprout in HR after an international merger or acquisition. These problems should be addressed long before the acquisitions and mergers are finalized to ensure that they will not stall the organization operations and tarnish its corporate image. International Workplace Relations Needs of Address For a smooth acquisition and a merger to be realized, a number of the international workplace relations needs to be addressed. Sparrow & Brewster, (2010:67), argues that they are supposed to be practiced by the in charge of the various organizational departments with great emphasis on the HR subdivision. Human resource planning is one of the international HR issues that have to be undertaken (Sparrow & Brewster, 2010:66). From Jackson, (2002:56), this involve having workable approaches to the management of HR, and the issues that are related to them. HR planning encompasses, having the right mechanisms of recruitment and training, as well as the related fringe benefits to the workforce (Jackson, 2002:56). HR planning is supposed to take care of the workforce dismissal and promotion policies, and the ways of appreciating work well done. The practice of HR planning will thus ensure that an International merger is undertaken in a smooth way, and is successful (Jackson, 2002:55). Second, address of HR compensation, selection, and turnover is critical to the success of an international merger (Jackson, 2002:56). It is critical to have the HR policies on compensation and selection of the employee outlined in a way that is practical and reasonably supported by the affected persons. Bufond & Lindner, (2001:12), outlines that proper employee compensation approaches are practical in a merger. This is because they communicate to the employees on the ways that their work is appreciated; an approach that lowers the likeliness of experiencing conflicts. Bufond & Lindner, (2001:10), emphasize that governing principles on selection and turnover should be as per the internationally accepted standards if an international merger and acquisition exercise has to be successful. Chanda, (2009:24), argues that systems relating to performance appraisal are supposed to be reasonable in all means. This is because the acquisition exercise is not set to misuse the HR, but to try to use their skills efficiently to realize an increment in organizational productivity. Proper practice of the performance appraisal, does give a boost to international mergers (Bufond & Lindner, 2001:12). Corporate governance is an issue that requires address under international acquisitions. This relates to how the corporation s managed after the merger (. Bufond & Lindner, (2001:11). Good governance is likely to influence HR to the positive end as opposed to biased and haphazard kind. According to Bufond & Lindner, (2001:18), business acts do too require an address. Internationally accepted practice of employee development and relations is critical for the success of a merger or acquisition. Approaches towards development of HR are supposed to meet the international standards regarding the same (Briscoe, Schuler & Claus, (2008:82). How the organization and the employees relate is also critical and the mechanisms that are put in place to facilitate relations should be realistic as per the international standards. These are practiced to ensure that a merger or acquisition of the organization is successful and failure to which it would lead to hiccups in the process. From Bromwich, (1999:46), standardization is a work place relations issue that needs to be addressed too. It is critical to outline the child labor practice restrictions for instance, and the ways of improving the adult labor practices (Briscoe, Schuler & Claus, (2008:72). This is critical and an address is most likely going to facilitate the process of acquisitions and mergers. According to Bromwich, (1999:44), the practice, and the effects of bargaining rights has to be addressed. The bargaining rights are the union acknowledgment and the right of the organizational employees towards joining unions and using them to bargain for a change in policy and organizational administration approaches. Determination of who amongst the workforce is allowed to join the labor unions is essential for a success of business acquisition or merger (Bromwich, 1999: 41). In summary, it is critical to have all internationally accepted standards worked on if mergers and acquisitions have to be practical. It is necessary to have the international corporations address the issues that surround mergers and accusations in a way that is practical and realistic. Addresses of HR turn over ration, the loss of the employee morale and motivational aspects under potential problems is reasonable. This is in addition to the productivity expectations, variations of HR policies and matters that relates to downsizing and lay off. Working conditions should not be stressing. An address of HR planning, the compensation and turnover ratio, the systems of performance appraisals and corporate governance as well as the bargaining rights is necessary. References Bondarouk, T., Ruel, H., & Looise, J., 2011. Electronic HRM in Theory and Practice. The International Journal of Human Resource Management. NY: Wiley. Retrieved from Bragg, S., 2008. Mergers and Acquisitions: A Condensed Practitioner's Guide. NY: Wiley. Briscoe, D., Schuler, R., & Claus, L., 2008. International Human Resource Management. Human Resource Management Journal. NY: Routledge. Retrieved from < http://www.wiley.com/bw/journal.asp?ref=0954-5395://www.hrmthejournal.edu/> Bromwich, A., 1999. PeopleSoft HRMS Reporting. London: Prentice Hall. Bruner, R., & Arthur, L. 2009. Deals from Hell: M&A Lessons that Rise Above the Ashes. Business and Management Journal.NY: Wiley Retrieved from Jackson, T., 2002. International HRM: A Cross-Cultural Approach. Elsevier: Sage. Mejia, G., & Werner, S., 2008. Global Compensation: Foundations and Perspectives. Sydney: Routledge. Miller, E., 2010. Mergers and Acquisitions: A Step-by-Step Legal and Practical Guide. Manchester: Wiley. Sparrow, P., & Brewster, C., 2010. Globalizing Human Resource Management II. Human Resource Management Journal. Sydney: Routledge. Retrieved from Read More