Human Resources in Organisation Wordsmith - Case Study Example

Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: EXECUTIVE SUMMARY The report is concerned at looking into the roles of the human resource department of wordsmith in undertaking acquisition. It elaborate the major aspect that affect human resource structure and culture after acquisition and role of the organization in mitigating negative impact and encourage any positive aspects brought in from by the acquired firm. It is advisable for organization to take close attention to human resource department since they determine failure or success of any given acquisition and overall performance of the acquiring organization. Therefore, in this report we will draw attention to the aspects in human resource that are affected by acquisition both pre-acquisition and post-acquisition matters. The report will draw conclusion and recommendation for Wordsmith in order to improve from its current position to a more productive position since they have been concentrating only on financial perspective of the company they acquire thus human resource problem affecting business performance negatively. Table of Contents EXECUTIVE SUMMARY 2 INTRODUCTION 1 ASPECTS AFFECTED BY ACQUISITION 3 Organization culture 3 Employee concern 4 Changes in the organization role and structure 5 Employee benefit scheme 6 STAGES IN ACQUISITION AND HUMAN RESOURCE PROCESS 7 Strategic Planning and Organization process 8 Searching stage 8 Analysis and Offer stage 9 Unanticipated Turnover 9 CONCLUSION 9 RECOMMENDATION 10 REFERENCE 12 APPENDIX 13 Wordsmith Human Resource Environment 13 INTRODUCTION There has been a lot of acquisition taking place in the corporate world both within the country and globally. This is as a result of the changes in business environment and need of most of the organization to maintain its competitive edge in the market (Clardy, 2008). Therefore, acquisition of corporate or organization is expected to increase with time since it is consider the best way to boost company profit, counter competition and diversify company’s line of products or services. For example facebook move to acquire instagram and whatsapp was a move to curb competition on social media. The most important factor in acquisition is how to manage the acquired entity since new functions, capital and human resource is brought in to a different organization therefore, need to undertake successful integration is at the stake in order to achieve greater efficiency. Research has been done on the issues of acquisition and it is evident that the undertaking requires huge financial resource in order to undertake background check on pre and post-acquisition issues that may be encountered and rewards associated with it since it is very tricky and it can plunge acquirer into financial distress if it is not handled well. Among these aspects we have human resource that is maintaining the same human resource culture that was in the acquired firm previously since it is very important for the success of the acquisition. According to Buono and Bowditch research, they were able to come up with conclusion 70% of the acquired firms are still retained after five years but 30% are sold within five years after its acquisition. This is due to the failure of the acquired firm to achieve or give the reward expected according to the objective of the acquirer (Ge and Cao, 2014). It is therefore important to understand the faults made during acquisition focusing on the human resource department. This is due to its importance in the success of the acquisition since it is not taken seriously by many organizations during acquisition. Therefore, human resource department is given no or little attention since it is termed irrelevant in organization strategic planning such as acquisition (Ge and Cao, 2014). The report is therefore links between the human resource department of any organization to acquisition decision in its success or failure as a result of the aspects that affects human resource of the acquirer and the acquired firm. ASPECTS AFFECTED BY ACQUISITION Human resource department operate within a specified environment (Appendix) and therefore, it need to be regulated and be involved in decision making in order to address issues that might affect the business. They are four aspects of human resource that are affected by acquisition and need to be looked into closely. These aspects include organization culture, employee benefit scheme, employee concern and changes in the organization role and structure (Jerjawi, 2011). These factors affect acquisition in the following ways; Organization culture This is the most important aspect to be considered before and after acquisition and it is the role of human resource to give their take by closely monitoring the acquired and acquirer organization culture in order to come up with new and desirable organization structure to suite the two parties (Jerjawi, 2011). The organization structure entails things to do with how employees behave and taken care of in the organization. For example, goals, benefits given to the employees, rules and regulation. For instance if the acquired firm was paying for its employee insurance premium and acquirer does not, it will not be prudent to drop the benefit in order to fit to acquirer organization culture since key employee will leave the company thus leading to failure of the acquired organization due to lack of the expertise. Therefore, it is important to take into consideration organization culture in order to reduce labor turnover which adversely affect organization since every employee is looking for a better employment which gives him/her greater benefit (Lifrieri and Schuttenberg, 1971. Thus management style should be looked into keenly in order to achieve success in any given acquisition decision and it is the role of human resource department to do it. Employee concern According to Post‐merger processes cause problems for Nordea's HR team (2007), the most common aspect when employee is new in any organization is worry of adapting the new environment with new bosses and colleagues. In addition, fear of losing job due to failure to comply or easily adapt to the new environment or fail to have job satisfaction which is driving force for any given employee. In the case of acquisition, it is almost the same problem is encountered among the employees and it is the work of the human resource department to ensure that they carry out enough procedures in order to reduce employees’ worries and thus enable them to concentrate on the objectives of the company (Schroeder, 2013). These worries include; job security, income deviation, performance expectation, change in benefit scheme and uncertainty on employer or boss attitude. These worries affect the company negatively and it might lead to failure of merging the two organizations after acquisition. Therefore, it is important for the human resource department to consider helping the acquired company human resource to cope easily to the new organization in order to increase its productivity and ensure continuous success after acquisition (Schroeder, 2013). When employees are settled it is guarantee that they will maximize their performance thus failure to include human resource expertise in strategic planning can cost the acquirer greatly since the probability of failure is great than success. Thus it will be prudent to consider human resource department in any acquisition as important just like accounting and finance department (Schweiger, Ivancevich and Power, 1987). Changes in the organization role and structure Acquisition results to changes in job position and roles played by the employees from both companies i.e. acquired and acquirer. Thus it is important for the human resource to design a structure that will work and merge well to the changing business structure of the business after acquisition in order to avoid dissatisfaction or failure to meet company human resource requirements (Schroeder, 2013). The role of human resource in acquisition according to changes in organization role and structure includes; Channel of communication is key in any given company, it determines performance since mission, vision, policies and goals of the company needs to be communicated from the top management to the subordinate in order to have unity in command and purpose which lead to company success. Therefore, in changes of organization roles and structure it is important to ensure clear and defined channel of communication to ensure proper flow of communication both vertically, horizontally and diagonally. Establishment of proper communication network is core in acquisition and thus requires human resource to establish proper channel of communication to handle compliments and grievances to avoid labor turnover and strikes. Another factor that needs to be taken care of is the change in job position or description (Schroeder, 2013). It is important for the human resource department to match the job position with the employees from the acquired firm or lay clear roles and responsibilities in order to avoid duplication of functions or rivalry between the departments which might hinder success after acquisition putting the company in dangerous position of collapsing or hostile take-over. Therefore, this is an important role for human resource department in acquisition. The overall objective to monitor changes in organizational role and structure is to have teamwork among the employees from the acquired and acquirer in order to achieve common goal of the company. Teamwork is the core building stone to the success of any organization therefore, lack of teamwork will automatically lead to failure in business. Thus giving human resource all the reason why it is important in undertaking strategic plans such as acquisition of another company or firm. Employee benefit scheme Employee benefits which include pension schemes plans. Employee benefit schemes are core in any given organization and mostly it keeps employees working for the company since they are assured of secure financial source after retirement. Therefore, it is important to undertake due diligence in transferring this schemes from the acquired firm in order to ensure that there is no issue left untouched in order to avoid future problems such as retired employees going without their right share of retirement benefit which might lead to legal action taken by the employees or key employees leaving the company due to lack of secure benefit scheme (Schroeder, 2013). This will cost the organization highly and might even lead to company going into financial distress. Another factor that need to be considered is the fact that there is need to merge the two benefit schemes offered in order to avoid reducing employee benefit which might demoralize the employees thus leading to high labor turnover which negatively impact the performance of the organization which might lead to failure due to lack of employee expertise in the acquired firm. Therefore, it is the work of the human resource to carry out due diligence in determining the best employee benefit plan and ensuring proper transfer of the benefit scheme before acquisition process is complete for the success upon acquisition. It is also crucial in enabling business to avoid suits to breach industrial laws and laws of employment thus reducing cost. STAGES IN ACQUISITION AND HUMAN RESOURCE PROCESS There are three stages core to any company carrying acquisition in order to ensure success in the process. It is always considered to be an accounting and finance function but human resource is equally important in acquisition process. These stages include pre-merger stage, post-merger transition and post-merger integration. According to McCann and Gilkey (1988), there are seven stages to be considered in human resource function both in pre and post acquisition stage. The key stages of this model affecting human resource are elaborated below; Strategic Planning and Organization process The acquiring company needs to acquire a company that it fits its objective. Therefore, it is important for the organization to ensure their acquisition is in-line with the strategic planning and organization process (Jerjawi, 2011). Thus it is important to incorporate human resource at this stage in order to reduce effects of human resource which is mostly common in most failed acquisition. Searching stage Searching involves looking for the best business to acquire. It is therefore advisable to buy company that will add value and improve current financial position of the acquirer. In addition to financial synergy, it is important also to have managerial synergy and to bring in highly performing employees to the acquiring firms. It is important to consider top management and middle managers performance before taking acquisition process in order to have maximum return from the acquisition. This brings in human resource role in acquisition (Jerjawi, 2011). Analysis and Offer stage It entails determination of how the structure of acquirer and acquired company structure fit together. It is equally important to other factors such as finance and legal factors. The analysis is important on human resource since there is ability to determine and merge organizational structure to avoid employee dissatisfaction which will hinder performance after integration (Jerjawi, 2011). Therefore, human resource should ensure that the human resource structure of the offer fits well with the current company structure to avoid clash of the two. Unanticipated Turnover Acquisition of firm always brings in mixed feeling among employees. The anxiety leads to increase turnover which is common in every organization after acquisition therefore, human resource need to lay in strategies to counter this trend since employee turnover derail company employees with expertise (Jerjawi, 2011). Thus bring in human resource role in curbing the unanticipated turnover after acquisition of the acquired firm thus maintaining or increasing company productivity. CONCLUSION In conclusion, it is obvious that human resource involvement is crucial in strategic planning such as acquisition and Wordsmith business is not an exceptional or immune to the problem associated to human resource therefore there is urgent need to incorporate human resource in strategic planning in order to minimize instances where human resource is overwork or business being understaffed. RECOMMENDATION We therefore recommend the following in order to solve the current human resource problems and avoid future recurrence of the same in subsequent acquisition made by Wordsmith business; It is recommended that after acquisition human resource need to change roles and structure of the business in order to accommodate some changes brought in by acquired firm. This move will result to retrenchment or early retirement of some employees due to scraping of their position to avoid duplication of functions. It is therefore, prudent to look at compensation entitled to such employees and period of notice in order to avoid legal action taken by the employees or employee union. Alan idea is not feasible since we will be losing old employees with experience, therefore it will be prudent for redundancy to be spread in order avoid expertise and young who are needed to implement new ideas to the business. Secondly, we recommend that Gemma should develop HRIMS that will automatically schedule worker shifts and duties, payroll generation, generate performance report and have all data of the employee. In addition, it can be linked to biometric data register in which employee sign in and out electronically thus easing human resource function and cost. Thirdly, it is evident that there is great problem on human resource and is crippling company financial performance, thus there is need to undertake human resource development reduce expenditure and increase business performance. We recommend qualitative since it is more efficient since the problem faced is more on excess employees. Therefore, qualitative analysis will be required to eliminate unproductive functions and effectively assign workers to understaffed departments. Lastly, we recommend that the business should not outsource administrative since they are core functions for the business and outsourcing will affect the on how activities are carried out if the agent that these functions are outsourced to is not putting business interest at stake. But operational functions can be outsourced since it does not have much impact on the ownership of the business. We feel that upon implementation of above recommendation, it will tremendously transform business performance and employee satisfaction. Consequently, carry out successful acquisitions and merging of human resource functions. REFERENCE Clardy, A. (2008). The strategic role of Human Resource Development in managing core competencies. Human Resource Development International, 11(2), pp.183-197. Ge, Q. and Cao, H. (2014). Enterprise Merger of Human Resources Integration Problems Probing. JHRSS, 02(02), pp.27-32. Jerjawi, K. (2011). HR Managers’ Roles & Contributions in Merger Processes. ijhrs, 1(1). McCann, J., and R. Gilkey. 1988. Joining forces. Englewood Cliffs, NJ: Prentice-Hall. Lifrieri, T. and Schuttenberg, E. (1971). Effects of a merger on the human organization. Human Resource Management, 10(1), pp.27-31. Post‐merger processes cause problems for Nordea's HR team. (2007). Hum Res Mgt Intl Digest, 15(5), pp.36-38. Schroeder, H. (2013). Preparing for Merger: An Art and Science Approach for Organisational Development. ijhrs, 3(1). Schweiger, D., Ivancevich, J. and Power, F. (1987). Executive Actions For Managing Human Resources Before And After Acquisition. Academy of Management Executive, 1(2), pp.127-138. APPENDIX Wordsmith Human Resource Environment Read More