Key Stakeholders and Human Resource Challenges - Case Study Example

Running Header: KEY STAKEHOLDERS, HR CHALLENGES AND RECOMMENDATION FOR OVERCOMING THEM: CASE STUDY OF MERGED SCHOOL OF BUSINESS Key Stakeholders, HR challenges and Recommendation: Case Study of Merged School of Business Name Course Name and Code Instructor’s Name Date Mergers are major projects that are undertaken by firms and as such their success or failure depends on the stakeholders involved (Leenheer, Christiaens & Meersman, 2010). Project stakeholders refers to all entities whether within or without the firm which are involved in the sponsorship of the project or have an interest in the success of the project or who may influence the project completion whether positively or negatively (Fenwick, & Bierema, 2008). A project stakeholder can also be defined as any individual or a firm that is involved actively in a project or whose interests could affect either positively or negatively the execution or successful implementation of the project (Luftman, Brown & Balaji, 2011). Projects need stakeholders for the successful execution and completion of the project. Thus, it is extremely important that project stakeholders be identified and managed appropriately (Ulrich & Brockbank, 2005). This is because their influence can be either negative or positive (Jackson, Schuler & Werner, 2011). In the case of All Star University, stakeholders include the government, private investors who had invested in Redbrick Institute. Other stakeholders are employees from both Sandstone University and Redbrick Institute of Technology and respective students as the main consumers. The final stakeholders in this case are labour unions and business community. Government interest in All Star University is to please the consumers in this case being the students and their sponsors (parents and guardians). They are also interested in the promotion of public interest in this case ensuring that graduates from the University are able to be absorbed in the labour market and spur economic growth of the country (Leenheer, Christiaens & Meersman, 2010). The government is also interested in helping out the disadvantaged groups such as marginalized communities (Reilly & Williams, 2006). Private investors at All Star University are interested in the provision of quality education to its consumers. This is exemplified by the way pay system at previously private owned Redbrick Institute of technology where lecturers were paid based on their performance implying that performance is emphasized (Fenwick, & Bierema, 2008). They are also interested in getting returns on their investment and that is why they are interested in delivering quality education that can attract more students and for its graduates to be absorbed in the labour markets as a marketing strategy (Leenheer, Christiaens & Meersman, 2010). This is why practical experience and teaching experience were emphasized at Redbrick Institute of Technology. The employees’ interests’ at All Star University are conflicting based on the differences in their previous employers. The culture of employee relations that existed in Sandstone University and that at Redbrick Institute of Technology is different and as such, the interests of respective employees from these firms differ (Leenheer, Christiaens & Meersman, 2010). Whereas employees from Redbrick are interested in practical preparation of students for job market employees from Sandstone are interested in research and publications (Buono, 2009). In addition, employees whose background is Redbrick Institute of Technology have developed a culture of being rewarded for the work performed and as such are interested in being top performers (Fenwick, & Bierema, 2008). On the other hand, the culture cultivated at Sandstone University is for equality and as such expect that employees in the same rank and classification be paid same rate of salary and hence are not interested in performance. It seems as if Redbrick University was customer oriented while Sandstone University was firm oriented (Luftman, Brown & Balaji, 2011). This is because Redbrick Institute of Technology valued the interests of its customers (students) and hence emphasized on the need for quality practical education for its students to ensure smooth transition into the job market (Ulrich & Brockbank, 2005). On the other hand, Sandstone employees were interested in the reputation of the firm as a research-oriented firm that emphasized lecturer’s research and publication. The interests of consumers (students and parents) are to access education that promotes efficiency and diversity in order ton foster innovation. They are also interested in cost effective education that is both quality and affordable (Leenheer, Christiaens & Meersman, 2010). They are further interested in educational institutions that are competitive in the market and which are accountable to parents in terms of their performance (Luftman, Brown & Balaji, 2011). The students are interested in their future contribution to the economy and as such, Redbrick courses, which offered this to students, were very popular among students since they modelled students for business community. The labour unions are interested in protecting the interests of employees at the firm. Most unionized employees in the case are those whose background is Sandstone University (Jackson, Schuler & Werner, 2011). These employees belong to the left-wing Tertiary Academics Union. The union helps the employees to negotiate for employment terms and conditions (Leenheer, Christiaens & Meersman, 2010). This is why employees from Sandstone were paid based on seniority, rank and classification of the employee rather than their experience and performance (Armstrong, 2010). Some employees from Redbrick were also unionized and belonged to the right-wing Australian University Teachers Union (Galagan & Oakes, 2011). This union encourages private consultation and performance based pay system. The interest of business community is having a skilled labour force that meets the needs of the changing business environment (Fenwick, & Bierema, 2008). They can influence how many students enrol at All Star University since if they feel that the education being offered at the firm does not meet employment needs, then they will not hire graduates from the institution and few students will be attracted to study at it (Luftman, Brown & Balaji, 2011). Thus, they need to consider the views aired by the business community. One of the major HR challenges facing All Star University is the varying background corporate culture of the two institutions, which merged. Studies have indicated that corporate culture is one of the major determinants of failure or success of mergers (Jackson, Schuler & Werner, 2011). This is based on the fact that most people resist change and as such any differences in corporate culture between two merging firms can hinder smooth merging process since the people involved may be unwilling to change (Luftman, Brown & Balaji, 2011). It has been argued that cultural change is the most difficult issue to address during mergers since ones life is founded on culture (Buono, 2009). This is evident at All Star University. Whereas former employees at Sandstone University cultivated an equality culture, where employees were paid based on their qualification and class those from Redbrick institute of technology cultivated a culture of performance-based payment (Fenwick, & Bierema, 2008). Thus, payment at Redbrick was not necessarily in accordance to ones qualification but rather his/her performance. Another cultural difference seen in the case is that Redbrick emphasized teaching and practical education whereas Sandstone emphasized research and theoretical teaching. The differences in culture have resulted in resistance to changes in the corporate culture (Armstrong, 2010). Most resistance has emanated from Sandstone former employees who are opposed to performance improvement and reduction in costs of running the institution. In addition, the pending layoff of 20% of employees has created anxiety, insecurity and stress, which is corrupting moral and has decreased productivity. Studies have indicated that people who are most employable in other places may be on high demand and may probably leave the institution. Since there are many universities in Australia, which are research oriented, former employees of Sandstone who are most qualified may resort to leaving All Star University at detriment of research work at the firm (Leenheer, Christiaens & Meersman, 2010). On the other hand, given that former employees of Redbrick were performance oriented they are more employable in other institutes which are performance oriented who are not interested in academic qualification of the employee but rather their experience and performance. Another HR challenge facing All Star University is labour union role in the merger (Armstrong, 2010). It is noted in the case that two opposing labour unions represent employees of All Star University. One of the labour union, left-wing Tertiary Academics Union, represent former employees of Sandstone University while the right-wing Australian University Teachers Union represent almost half of former employees of Redbrick. Most un-unionized employees are from Redbrick. It is argued that active involvement of labour unions during and after mergers is essential for successful merger. However, we are not told whether this is took place during the merger of the two firms (Fenwick, & Bierema, 2008). Union involvement is important in determination of employment conditions and terms under new structure of the merged in situations. The pending layoff of about 20% of employees’ at All Star University is bound to elicit outcry from labour unions representing different employees. Given the fact that the labour unions may not have been involved in the merger process, the un-unionized groups of employees from Redbrick may be disadvantaged and as such, they might be the victims of layoffs (Ulrich & Brockbank, 2005). In this case, such a step might be detrimental to the firm because it might create anxiety and insecurity among un-unionized employees. This might result in reduced output from these employees. Studies have shown that job losses during mergers are mainly driven by the need to reduce numbers (Luftman, Brown & Balaji, 2011). Thus, the concern of employees is usually how selection decisions are carried out. Thus, the HR at All Star University faces a challenge of ensuring that the procedure to be employed in retrenching 20% of its employees does not disadvantage one group of employees and at the same time does not elicit conflict between the firm and the various unions representing its employees (Buono, 2009). Another HR challenge that is confronting All Star University is the unanticipated turnover. Studies have indicated that due to uncertainty in job security after mergers employees tend to prepare themselves for the worst scenarios and as such begin looking for employment opportunities elsewhere. It is argued that employees who are most valued by a firm, those that the firm does not wish to lose after a merger, are amongst the first ones to leave the firm (Fenwick, & Bierema, 2008). Thus, All Star University HR faces the challenge of retaining the highly talented employees from the two institutions that merged. It is estimated that firms experience up to 47% unanticipated job turnover among its executives in the first year of the merger and over 75% with three years of the merger. Among those who leave first are the best performing managers (Ulrich & Brockbank, 2005). It is thus argued that without planned HR intervention strategy the merger might be unsuccessful. Therefore, even though All Star University plans to lay off 20% of its employees it might have to deal with the issue of unanticipated employee turnover especially among the talented ones who the firm values most. The HR at All Star University is also facing communication challenge. It seems like there was no effective communication between the management and employees during the merger process and after the merger process. This is reflected in the dissatisfaction of employees with the merger especially employees from Sandstone University (Leenheer, Christiaens & Meersman, 2010). It is argued that the success of a merger is highly dependent on the employee communication during the merger process. Merger failures have been attributed to lack or poor communication (Ulrich & Brockbank, 2005). Employees often become anxious and uncertain when they are kept in darkness during merger process and as such, they are likely to develop defensive mechanisms such as seeking jobs elsewhere and resisting change at the firm (Aswathappa, 2010). In addition, lack of communication culminates in increased confusion and loss of loyalty and trust among employees that is often results in failure in mergers (Luftman, Brown & Balaji, 2011). It is argued that since some information ought to be concealed from employees during mergers in order to meet regulatory requirements in addition to safeguarding the value of the firm on the stock market and the proposed merger, there is need to thoroughly and effectively communicate after the finalization of the merger deal (Fenwick, & Bierema, 2008). This implies that employees need to be involved sufficiently in the post merger integration process. This allows for issues affecting the employees to be granted the appropriate attention (Buono, 2009). Failure to do so may impact negatively on the success of the merger. Since All Star University is a product of a merger, the HR is faced with the responsibility of communicating efficiently with the employees on the matters affecting them. Studies have indicated that most HR managers are not involved in the process of merging two institutions (Mclvor, 2010). As a consequent one of the major challenge of HR in such scenarios that they are not trained during and after the merging process to handle employee issues that arise after mergers. In addition, it has been argued that training is an essential component of aligning post-merger activities and processes in order to attain a smooth integration process (Leenheer, Christiaens & Meersman, 2010). It is unlikely that HR managers at All Star University were involved in training to enable them deal with post merger employee issues and as such, they might not be in a position to make informed decisions that impact on employee in relation to issues such as changes of employee roles and job losses (Fenwick, & Bierema, 2008). The challenge facing All Star University is that most of top management might not have received the essential training in dealing with post merger employee issues and as such, they might not be well prepared to handle the newly formed organization (Buono, 2009). This could be the reason behind the 10 million loss incurred by All Star University in the last financial year since top management was not trained to handle the issues affecting large organization that emerged after the merger. Although not a direct HR challenge, but All Star University is facing customer loss challenge that is linked to loss of employee. The case reports that the student demand for All Star University’s courses has been on decline and the firm is facing pressure from local business, students and the government to introduce more business based subjects into the curriculum (Fenwick, & Bierema, 2008). This pressure is an indication that the structure of the new firm was not re-structured to take into consideration the needs of the society. Furthermore, introduction of new courses implies that the firm needs to acquire more employees to handle such courses contrary to the need of the institution to lay off 20% of its employees. Thus, the HR seems to be faced with the challenge of meeting new customer demands and to balance this with firm’s employment policies (Luftman, Brown & Balaji, 2011). It seems that some of talented employees might have left the firm during the first few months of the merger and therefore All Star University was not able to bring in innovative courses to satisfy the needs of its customers and hence students are seeking this knowledge elsewhere. Even though the case does not cite conflicts among the top management from the two institutions that merged, the HR of All Star University seems to face the challenge of power politics among the employees of the firms that merged. It is argued that power struggles can be a major impediment to successful mergers. It is also argued that power struggles can result in employees not laying focus on business issues but instead direct their efforts toward self-interest. As shown in the case former employees of Sandstone are still angry with a teaching University and the focus that has been directed toward cost and performance (Fenwick, & Bierema, 2008). It seems that these employees are interested in having their culture being perpetrated in the new institution even though the management has decided to implement customer-focused culture that existed at Redbrick Institute of technology. As outlined above, there are various challenges facing the HR of All Star University. It is recommended that each of the challenges be addressed effectively in order to ensure that the firm becomes a top performing in terms of service delivery and financial outcomes (Leenheer, Christiaens & Meersman, 2010). All Star University need to encourage cultural pluralism and cultural blending to handle the competing claims that have arisen among employees after the merger. Training has been argued to be one of the best ways of integrating two conflicting corporate cultures during mergers (Fenwick, & Bierema, 2008). As such, All Star University need to train its employees on the culture that it has adopted, cost reduction and performance based, in order to inform its employees on the merits of this culture and how it will attain the firm’s goals and objectives (Ulrich & Brockbank, 2005). To handle the cultural difference among its employees, All Star University needs to find ways that are practical and to reconcile the cultural difference. Studies have established that a measured and selective approach that recognizes existence of varying culture in the merging firm determines the success of the merger (Leenheer, Christiaens & Meersman, 2010). All Star University needs to carry out cultural audit of the firms that merged to form it in order to establish the differences and similarities. This will help All Star University to minimize cultural conflict6s arising from its policies and hence allow it minimize such conflicts. In order to handle union issues, All Star University need to have employee representatives to air the needs, expectations and other issues affecting employees in the newly merged institution. The institution need also to engage the unions representing its employees in devising protocols for communicating sensitive issues to its employees (Fenwick, & Bierema, 2008). The union can provide advice on employment issues such as hours of work and lesser redundancy provisions. To address the communication challenge facing All Star University we recommend that the firm be involved in thorough communication with its employees (Sims, 2007). The HR has to ensure that communication provided to All Star University employees does not result in confusion and mixed messages. The HR need to ensure that messages delivered to employees is done in an honest manner and is focused on positive side of the merger (Leenheer, Christiaens & Meersman, 2010). It is argued with effective communication a firm can be able to influence the market and employees. All Star University need to communicate regularly and clearly on any planned changes such as the pending lay off and the process that will be followed to reduce anxiety and confusion at the firm (Leenheer, Christiaens & Meersman, 2010). The management needs to communicate to employees the goals and objectives of the merger, which took place between the two firms in order for the employees to be able to work toward attaining these goals, and objectives. The management ought to also keep the employees informed on the progress of the merger (Luftman, Brown & Balaji, 2011). A two-way communication needs to be encouraged to allow employees who are dissatisfied to air their views and suggest ways in which their concerns can be handled (Cohen, 2010). This will enable the employees to feel that the firm is involving them in decision-making process in issues affecting them. If All Star University involves all of its employees in communication, employees will be encouraged to accept the merger and reduce the feeling of insecurity being experienced at the institution (Fenwick, & Bierema, 2008). The University also needs to communicate extensively with its customers to re-assure them of the level of service being delivered. This ought to be continuous to maintain sense of continuity and to reduce the feeling of uncertainty among customers. In order to curb unanticipated turnover at All Star University, the firm needs to adopt measures aimed at improving the retention rates of the talented people from the two institutions that merged (Kenton & Yarnall, 2009). It has been argued that thorough and truthful communication with the workforce plays a significant role toward retention of talented employees. By communicating effectively, All Star University will be able to reduce the sense of insecurity among its employees and will grant the employees a positive picture about their future at the institution (Fenwick, & Bierema, 2008). Thus, the communication will help All Star University to win the trust of its employees and hence reduce employee turnover rates. Retention of employees is also argued to be dependent on the pay and reward strategies employed by the firm after the merger (Beaman, 2008). The strategy need to reflect the goals and objectives of the newly established firm in this case All Star University. As discussed above most employees who were previously employed by Sandston University seems to be dissatisfied with the pay and reward system that has been adopted by All Star University due to its focus on cost reduction and being performance based (Leenheer, Christiaens & Meersman, 2010). The firm needs to have involved the employees in adopting this structure and explaining to them how this strategy is in line with the goals and objectives of All Star University (Luftman, Brown & Balaji, 2011). In addition, the firm need to communicate to employees promptly about the pending 20% lay off of its employees and to reassure the remaining workforce that there will be no redundancies. This will motivate remaining employees to direct their efforts toward improving their output and hence successful performance of the firm. To address the challenge of lack of training of HR and other top management, the firm needs to organize seminars and workshops to train the top management on how to handle the expanded firm (Leenheer, Christiaens & Meersman, 2010). This will allow managers to engage employees all levels of the firm in order to allow employees to feel that they are part of decision-making process and hence cultivate their support for the attainment of the goals and objectives of the firm. By addressing the above issues related to employees, the employees will be committed to their job at All Star University and hence they performance will be improved. This will in turn result in customers having renewed confidence and trust in All Star University. This will also help the firm win over the confidence of business community to employee graduates from the school. As a consequence, more students will be attracted to study at the institution. However, to increase customer confidence, the firm will have to intensify communication with its customers through media promotions and corporate social responsibilities. References Armstrong, M. (2010). Armstrong's Essential Human Resource Management Practice: A Guide to People Management. 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