By Ayan Chakraborty Pratik Mohapatra

Issues and Concerns

Two-third of the big mergers and acquisitions fail Differences in the top management Absence of strategic planning ( For E.g. The Jet-Sahara Fallout ) Cultural disconnect

Post Merger Risks

Post Merger Risks contd.

Different Phases of M & A in HR

Pre- M & A phase assessment of differences role clarity management styles Post-M&A phase designation for employees compensation & PMS relation between management & trade unions

HR Activities in the Phases of M & A

Examples of M&A: Success & Failures

Acquisition strategy of GE Capital Successful model Pathfinder for acquiring firms 1. Pre-acquisition -> integration manager(cultural assessments, communication strategies) 2. Foundation building(team of executives from GE - acquiring company formed) 100 day communication strategy evolved 3. Integration phase(assessing the work flow, assignment of roles) 4. Assimilation (long term adjustment, internal discussions between the teams, reaping the benefits)

CASE: Daimler Chrysler Merger Failure

In 1926, the merger of two German automobile manufacturers Benz & Co. and Daimler Motor Company formed German company Daimler-Benz. Its Mercedes cars were arguably the best example of German quality and engineering.
In 1998, Daimler-Benz and U.S. based Chrysler Corporation, two leading global car manufacturers, agreed to combine their businesses in what was perceived to be a 'merger of equals'. The merged entity ranked third (after GM and Ford) in the world in terms of revenues, market capitalization and earnings, and fifth (after GM, Ford, Toyota and Volkswagen) in the number of units (passenger-cars and commercial vehicles combined) sold.

 In 2000, it suffered third quarter losses of more than half a billion dollars, and projections of even higher losses in the fourth quarter and into 2001. In early 2001, the merged company announced that it would slash 26,000 jobs at its ailing Chrysler division.
In May 2006, after a decade of disappointing results, Daimler finally sold Chrysler to private equity firm Cerberus Capital for 3.74 billion.

In 2006, the merged group reported a loss of 12 million euros. Without Chrysler, Daimler reported profits of 1.7 billion euros (1.3 billion) for the fourth quarter and a net profit of 4 billion euros for the year (3.8 billion euros in 2006).

Inferences

Analysts felt that though strategically, the merger made good business sense. But contrasting cultures and management styles hindered the realization of the synergies. Daimler-Benz attempted to run Chrysler USA operations in the same way as it would run its German operations. Daimler-Benz was characterized by methodical decisionmaking. On the other hand, the US based Chrysler encouraged creativity. While Chrysler represented American adaptability and valued efficiency and equal empowerment Daimler-Benz valued a more traditional respect for hierarchy and centralized decisionmaking.

HRs control
Train managers on the nature of change Technical retraining Family assistance programs Stress reduction program Explaining new roles Helping people who lost jobs(Outplacement) Post merger team building

Early HR involvement creates synergy HR involvement increases M and A success rates

HRs Role in Mergers and Acquisitions