Human Resources Planning in Mergers and Acquisitions Abstract Mergers and acquisitions (M&A) is a type of corporate strategy where two companies are consolidated to form a new company in case of merger and one company buys the other in case of acquisition…
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This project deals with the role of the human resources in cases of merger and acquisitions. Introduction Mergers and Acquisitions lead the way for enormous growth but it is not possible without having a competent Human Resources team which plays a critical role in making or breaking the M&A. Many businesses do not consider the human resources aspect as important to the M&A strategy but research shows that the biggest problems incurred when making a M&A transition are increased attrition, poor communication, key employees giving up their job, adjustment problems to new method implemented and cultural incompatibility. Though Mergers and acquisitions aim at the growth of the organizations but in reality, these are extremely difficult corporate practices in the sense that the expected synergy is often not achieved and follows a complex and exhaustive process of strategy implementation. The reasons behind a merger may vary for different cases, so the Human Resource involved should make a good assessment of the M&A process about the objectives behind the merger. Discussion A business needs to consider the following critical factors for a successful transition after the Merger & acquisition takes place: Pre-acquisition Due Diligence Audit: The due diligence portion of an M&A comes after the purchasing company makes the formal offer of purchasing to the other company. The management from the purchasing company undertakes an assessment to evaluate the financial as well as the strategic aspects of the deal. The potential suitor company evaluates the benefit structure of the other business so that the Human resources from the purchasing company specifically assess the benefits structure of the other company to find out if there are any existing or potential issues running in the latter which may cause a loss of a significant amount for the company as an offering. These problems may be any health insurance package or any pension plan which are not properly funded, the cost of employees’ compensation being not under control or pending employment lawsuits all of which may cause loss for the company after the merger. Every aspect of human resource should be considered to find out if the target company is compliant in their working with recruitment and manpower planning, compensation program, training and development program, Human resource information systems, Government compliance, employee relations and safety and environment issues. The due diligence should be carried out in areas of potential exposure so that action plans can be recommended when the deal is closed (Cartwright and Cooper, 212). Employee concerns: Human resource plays a vital role in the process of altering both the companies so that they can work together. This process may take a long time to be completed and adapted by all the employees of the company. When a Merger or an Acquisition takes place, the structure and working of both the organizations undergo some changes like altering departments, combining teams or eliminating unnecessary positions. In this process of change, the Human resource plays an important role in helping the employees adapt these changes. Human Resources communicate these changes to the employees and also clarify any queries or issues arising out of these changes (Gaughan, 9-10).They provide an avid description of the new roles and responsibilities the employee in the altered organization structure. Additionally, the HR team designs a unified process to deal with the arising human resource
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To realize potential, organizations can be beset with common difficulties, such as strategic confusion and occupation with day-to-day activities. Despite many attempts to push organizations forward, shareholder value often stagnates or even declines. The solution lies not in focusing on improving the current situation but rather in taking the step-changes necessary to realize the future requirements of the organization (Bebb, 2002).The incidence of M&A has continued to increase significantly during the last decade, both domestically and internationally.
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