A Merger Policy for Successful Integration into the Libra Group - Case Study Example

Introduction. In a growing number of organisations human resources (HR) are now viewed as a source of competitive advantage. There is greater recognition that distinctive competencies are obtained through highly developed employee skills, distinctive organisational cultures, management processes and systems. This is in contrast to the traditional emphasis on transferable resources such as equipment. Increasingly it is being recognized that competitive advantage can be obtained with a high quality workforce that enables organisations to compete on the basis of market responsiveness, product and service quality, differentiated products and technological innovation. HR management can play a role in environmental scanning i.e. identifying and analysing external opportunities and threats that may be crucial to the company's success. Similarly HR management is in a unique position to supply competitive intelligence that may be useful in the strategic planning process. HR also participates in the strategy formulation process by supplying information regarding the company's internal strengths and weaknesses. The strengths and weaknesses of a company's human resources can have a determining effect on the viability of the firm's strategic options. So, Human Resources of such companies as Solaris Hotel and Libra Holidays Group Public Limited take up a role of Business Strategic Partner. Translating business strategies into HR practices helps a business in three ways. First, the business can adapt to change because the time from the conception to the execution of a strategy is shortened. Second, the business can better meet customer demands because its customer service strategies have been translated into specific policies and practices. Third, the business can achieve financial performance through its more effective execution of strategy. Aims and objectives "We are the people who take pride in high professional standards. We are client focused. We stand behind our promise to deliver value for money and efficient client service. We already rank amongst the ten biggest tour operators in the UK. Our vision is to become one of the top 20 European tour operators. And we will achieve it." (11) So, Libra Holidays Group is the number one travel Group in tourism world. The Group is structured to include such fields of imposing operations as Tour Operations, Air Transport, Customer Service and Hotels. Investing on the capabilities of its people and strengthening its existing potentials in all fields of activity it anticipates its inclusion among the 20 leading tour operators in Europe. And the Libra Group has a global HR department. There are established procedures for recruitment and selection, training and development, and performance appraisal. The Solaris Hotel is a small Family Hotel with a high proportion of the staff which has worked there for many years. Recruitment of the new staff is usually on the recommendation of existing staff. Training tends to be mainly on-the-job by watching and working with more experienced member of employees. The staff is very flexible. And these two companies has decided to merge, Solaris Hotel is going to be a part of Libra Holidays Group. But there is a question: what are the changes required to enable the Solaris to become a successful member of the Libra Group That's why the aims of the topic are: 1) to suggest a series of proposals regarding the management style and performance management; 2) to define the main principles of the recruitment strategy; 3) to provide training and development processes for the staff. Main body What should be done to combine Human Resources functions when a merger happens The answer to this question depends upon a number of factors: the level of sophistication found in the Human Resources functions that exists; the charter of HR in the pre-merger organisations; and the capacity of those HR functions to meet the new demands. Well, to begin successful integration into the Libra Group Solaris company needs to provide the guidance and the process skills necessary to maneuver the challenges of a merger. The steps to integrate a combined HR functions are: 1. Perform an audit of the HR functions of both pre-merger organisations to review existing policies, procedures, and practices, it will give an opportunity to examine and compare the technical and practical dimensions of the HR functions. A human resource assistant needs to gain a sense of how organisations view themselves and what the management of both organisations expects from HR. 2. Choose HR leadership. The HR Director, Director of Operations, or other individual who will be responsible for HR activities must be the key architect and author of the HR function. This person should have the competence, skills, and experience necessary to integrate and build the new system, which needs to be appropriate to the staff, demands, culture, and expectations of the new organisation. 3. Select the best in all areas of HR practice. The HR leadership must assess the compatibility of the HR functions in order to create a comprehensive merged system that adds value to the new organization. This leadership will need to make specific choices based on existing policies, procedures, practices, programs, and processes - but should also take this opportunity to correct flaws in the current systems and to develop a superior system that will meet the evolving demands of a newly merged organisation. 4. Audit and review on a regular basis. . Once your system is in place, keep checking back to make sure your initial decisions made sense, are being implemented effectively, and are working well. Don't be afraid to make revisions as necessary. This will be a period of big change for the organization, so the HR function may need to be adapted over time. All these functions will be able to provide with the help of so-called coaching and development management style. In this case, managers act as employee trainers in order to achieve the best results for their company. This method is time intensive for the managers but helps to create a good bond between workers and management, rising moral and reducing workplace stress. This style will be able to help for Solaris staff's adaptation to the changes connected with the merger. As for performance management, it is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. A performance management system for Solaris's employees can be included the following actions: Select appropriate people with an appropriate selection process; Negotiate requirements and accomplishment-based performance standards, outcomes, and measures; Provide effective orientation, education, and training; Design effective compensation and recognition systems that reward people for their contributions; Provide promotional/career development opportunities for staff. Now, about the recruitment strategy, ensure that recruitment and selection processes effectively match applicant skills and interests with entity staffing needs, job requirements, assignments, and tasks in a manner which complies with objectives and applicable legislation. The purpose of the recruitment and selection process for Solaris Hotel is to define and keep sufficient and capable staff to assist the entity in achieving its desired objectives. And the main aim of the recruitment strategy is to keep people from "merger syndrome", an organizational response to crisis that can be observed at three levels. (1) At the personal level, people go through a state of culture shock, including reduced job performance and resistance to change, rumor mills of possible layoffs or reassignments drain energy and productivity, and feelings of fear and anger prevail, particularly among employees in the acquired company. At the organizational level, executives adopt a crisis-management mode; the quality and quantity of communication decreases; and decision-making becomes centralized. At the cultural level, there are dysfunctional culture clashes; in-group out-group bias; and stereotypes and chauvinistic biases become a source of hostility and distrust. Training and development process for the staff includes the following: conduct and supervise training and development programs for employees suitable to the aims of Libra Group. Increasingly, management recognizes that training offers a way of developing skills, enhancing productivity and quality of work, and building worker loyalty to the firm. Training is widely accepted as a method of improving employee morale. Other factors include the complexity of the work environment, the rapid pace of organisational and technological change, and new knowledge for the Solaris staff. In addition, advances in learning theory have provided insights into how adults learn, and how training can be organised most effectively for them. Training specialists plan, organize, and direct a wide range of training activities. Trainers respond to corporate and worker service requests. They may set up individualized training plans to strengthen an employee's existing skills or teach new ones. These programs are designed to develop potential executives to replace those leaving the organization. Trainers also lead programs to assist employees with transitions due to mergers and acquisitions. Training methods include on-the-job training; operating schools that duplicate shop conditions for trainees prior to putting them on the shop floor; apprenticeship training and electronic learning, which may involve interactive Internet-based training, multimedia programs, distance learning, satellite training, other computer-aided instructional technologies, videos, simulators, conferences, and workshops. Conclusion One of the main principles for a successful merger is in strategic factors in HR management, for example the degree of "strategic fit" or industry relatedness between the acquiring and the target firm. Only recently, research endeavors have begun to analyse the "softer", less tangible social, cultural, and psychological issues involved in integrating merging or acquired firms. Factors such as cultural fit, the pattern of dominance between merging firms, management style similarity, combining firms' preferred mode of acculturation, and the social climate surrounding a merger or an acquisition have increasingly been recognized to be of critical importance to merger success (1). So, all strategic principles, management style and performance management, the recruitment strategy, training and development programs, should be investigated with the needs of Libra Holidays Group and support the full potential of the human resources not only to the firm's advantages but to the workforce of the company. Recommendations For having successful integration into the Libra Group, a merger policy needs to carry out the people aspect of its mission, and to maintain effectiveness, cohesion, and safety. The HR function articulates roles, relationships, boundaries, and expectations within the organization and human resources assistant should remember about: The philosophy of an organization, it is expressed in statements defining its business values and culture. It expresses how to treat and value people. Articulating each of the partner organisation's philosophies is the first step in melding culture in a merger. The policies of an organisation, they express its shared values. In practical terms, merging personnel policies means rewriting those of the merging organizations to fit the new organization. More critically, however, it establishes guidelines for action on people-related business issues and HR programs in the new organization. The HR programs, the HR programs in an organisation are its human resources strategies. These strategies coordinate efforts to facilitate change, and to address major people-related business issues, both pre- and post-merger. The practices, they are the actions and activities of those in managerial, operational, and leadership roles within the organisation. These are particularly important in a merger, and contribute heavily to its success. The processes, the processes in human resources are the formulation and implementation of the previous four elements. They define how HR activities are carried out. The biggest challenge in the HR strategy is that the HR function tends to be underdeveloped in relation to the programmatic and finance functions in the organisation. HR has typically evolved out of the finance office, and is given the mandate of keeping things legal, maintaining records, and meeting the increasing external demands of state and federal agencies. References 1. Cartwright, S. & Cooper, C. L. (1996). Managing mergers, acquisitions, and strategic alliances: Integrating people and cultures (2nd ed.). Oxford: Butterworth & Heinemann. 2. Chatterjee, S., Lubatkin, M. H., Schweiger, D. M. & Weber, Y. (1992). Cultural differences and shareholder value in related mergers: Linking equity and human capital. Strategic Management Journal, 13. 3. Hatchcock B.C. (1996). The new-breed approach to 21st century human resources. Human Resource management, 2 (Vol.35). 4. Stahl, G. K., Pucik, V., Evans, P. & Mendenhall, M. (2004). Human resource management in cross-border mergers and acquisitions. In A.-W Harzing & J. van Ruysseveldt (Eds.), International human resource management: An integrated approach (2nd ed.). London: Sage. 5. Adams, B. (2001). Conducting Human Resources Due Diligence in a Merger/Acquisition. http://www.worldatwork.org/canadanews/canada/html/canv9n3-2.html 6. Conference Board Report. http://www.conferenceboard.ca/Boardwiseii/LayoutAbstract.aspDID=888 7. Developing Human Resource Strategy 6: Define required changes in the HR function http://www.walkergroup.com/private/developing6.html 8. Heathfield, S. Performance Management. http://www.humanresources.about.com 9. Working Conditions. http://www.bls.gov/oco/oco2001.html 10. http://www.lapiana.org/consulting/cases/yni.html 11. http://www.libraholidaysgroup.com/ 12. http://www.humanlinks.com/manres/articles/shrm.htm Read More