APPROACHES TO MERGING STRATEGIC AND HR PLANNING

Add-on
Focus is on business planning HR Practices is an after-thought Line managers own the HR discussions with tangential involvement of HR professionals. Outcome- Summary of HR practices to accomplish business plans

..CONTD

Integration

Focus is on synthesis of HR and business plans Line managers and HR works with integration Highlights HR practices required for the success of the organization

Isolated
Focus is on the HR plans HR prepares the plan separately and present to the manager Agenda of HR function- outcome

PROFICIENT STRATEGIC CHOICES

Staffing choice Appraising choice Compensation choice Training and development Employee influence Work systems Building core competency and competitive abilities

HR STRATEGIC MOVEMENT PHASES

Investigate the environment Formulate strategies Identify competitive advantage Define organizational capabilities Identify HR practices Link HR strategy with business strategy Process of implementation

NATURE OF M&AS

A merger occurs when two organizations of equal size unite to form a new unit. Mergers are usually voluntary and involve stock

swaps or cash payments to the target

MERGERS MAY BE
Horizontal

Merger : when two organization producing a similar product combine. GAP Inc. controls 3 distinct companies, Banana Republic, Old Navy, GAP brand itself

Like

Vertical merger takes place when two organizations working at different stages in the production of the same product combine. Like Carnegie Steel. Conglomerate mergers take place when two organizations operate in different industries. A conglomerate is a large company that consists of divisions of often seemingly unrelated businesses.

Tata group, Reliance Industries and the Aditya Birla group.

CONGLOMERATES ARE CALLED DIFFERENTLY IN DIFFERENT LANGUAGES

Chaebols (Jaebeol): South Koreas business conglomerates. Samsung, Hyundai and LG Zaibatsu : a Japanese term meaning wealthy clique and refers to large family controlled banking and industrial and industrial combine. Four major zaibatsus are Mitsubishi, Mitsui, Sumitomo and Yasuda.

ACQUISITION .
Takes

place when a large company buys out a small unit or vice versa. Unlike merger no new organization comes into being, instead the small unit loses its identity and it becomes one with the large company, which continues to function in its name. the buyout is forced on the target it becomes a hostile take-over
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Where

MOTIVE BEHIND M&A

M&A are preformed in the hope of realizing economic gains

To provide improved capacity utilization

To make better use of the existing sales force To reduce managerial staff

To gain economies of scale

To smooth out seasonal trends in sales To gain access to new suppliers, distributors, customers, products and creditors To gain new technology To reduce tax obligation
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PITFALLS OF MERGERS
Undue

focus on financial aspects Employees lose personal effectiveness as a result of rumours, misinformation and worry Infrequent and irrelevant communication Perceived lack of authority and understanding of the employee when the new organization forms Leadership challenges and failure to articulate the communicate the vision and inspiration to the employees
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Figure 3-4

Impact of the human integration and task acquisition on acquisition outcome

IHRM Chapter 3

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Figure 3-5

HR activities in the phases of a cross-border M&A

IHRM Chapter 3

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PEOPLE-RELATED FACTORS THAT CONTRIBUTE

TO ACQUISITION SUCCESS

Retention of key talent

Effective communication Executive retention and

Cultural integration

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TYPES OF CULTURAL CHANGE

Top- down (Directive) Bottom-up (Empower) Side-to side (Reengineering)

STRATEGIES OF POST-MERGER OUTCOMES

Absorption Acquired company conforms to acquier cultural Degree of assimilation
HIGH

change in acquired company

Transformation both the companies find new ways of operating cultural transformation Best of Both Additive from both sides Cultural integration

LOW

LOW

Preservation Acquired company retains its independence cultural autonomy

Degree of change in acquiring company

Reverse Merger Unusual case acquired company dictating terms 16 cultural HIGH assimilation

HR INTERVENTIONS

Cultural and people issues that have a major impact on success / failure of crossborder M&A deals: of new board will occupy which job? culture

Composition Who

Accessing

Undertaking

a human capital audit and selecting the management team

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HR INTERVENTIONS2
Cultural and people issues that have a major impact on success / failure of cross-border M&A deals: Effective communication Retaining talent creating the new culture Aligning performance evaluation and reward systems Managing the transition Integration
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