| It is still the start of the 21st century and as per the | | | | pre-merger is to identify the reasons behind the |
| predictions, the world is moving at a brisk speed. The | | | | Merger and Acquisitions. As it was described earlier |
| people who catches up with the world right now will | | | | that there can be many reasons behind any merger |
| be able to survive others will not be able to follow | | | | and acquisition and one of those reasons is to get the |
| them. Same is the case with the companies of the | | | | talented employees in the organization through |
| 21st century. Companies today need to be fast | | | | merging. Standard Chartered acquire union bank |
| growing, efficient, profitable, flexible, adaptable, and | | | | (Merger in Pakistan) is one of the most crucial one in |
| future-ready and have a dominant market position. | | | | Pakistan. One of the reasons behind the acquisition |
| Without these qualities, firms believe that it is virtually | | | | was to get the key talent from union bank that will help |
| impossible to be competitive in today's global economy. | | | | them a lot. Some other HR issues that are being |
| In some industries such as insurance or banking, firms | | | | experienced by the companies that are into these |
| may move into new markets. In others such as | | | | mergers and acquisitions are: |
| pharmaceuticals or software technology, firms may | | | | § Forming Merger and Acquisition team or leader |
| work with smaller firms that have developed or are | | | | § Searching for any potential partner |
| developing new products that they can manufacture | | | | § Selecting a partner |
| and/or distribute more efficiently, while other firms | | | | § Planning and managing the process of |
| focus on their own internal growth, leadership and | | | | M&A |
| development. Regardless of industry, however, it | | | | § Planning to learn from any process |
| appears that it has become all but impossible in our | | | | The human resource team is supposed to have some |
| global environment for firms to compete with others | | | | activities in mind while having these mergers and |
| without growing and expanding through deals that | | | | acquisitions. An action or implication that is followed |
| result in mergers or acquisitions. | | | | from the above issues can be many. One of the |
| Mergers and acquisitions are increasingly being used | | | | actions would be to let the employee know about the |
| by firms to strengthen and maintain their position in the | | | | M&A and its effects on the company that will |
| market place. They are seen by many as a relatively | | | | definitely help the employees to be proactive about the |
| fast and efficient way to expand into new markets | | | | actions. A survey report suggests that HR issues are |
| and incorporate new technologies. Yet their success is | | | | best addressed through comprehensive planning and |
| by no means assured. To the contrary, a majority fall | | | | follow-through. Experience and learning from past |
| short of their stated goals and objectives. | | | | M&A activity can help inform the planning and |
| There are a lot of reasons for a company to merge | | | | follow-through, but this learning process must also be |
| with others or to acquire other companies. Some of | | | | well managed. Learning, knowledge sharing and |
| the reasons are as follow. | | | | transfer are acknowledged as important not only in |
| § For the sake of Survival | | | | M&A activities, but also in joint venture activity. |
| § Horizontal Mergers for market dominance | | | | Some of other actions that an HR professional can |
| § Vertical Mergers for channel control | | | | perform are: |
| § Hybrid Merger for risk spreading, cost cutting | | | | § Composition of team in an effective manner |
| § Growth for world class leadership and global | | | | § Cultural assessment |
| reach | | | | § Creating practices for learning and knowledge |
| § Acquisition of cash | | | | transfer |
| § Move Quickly into the market | | | | § Planning for the merger will help decrease the |
| § Flexibility | | | | problems later |
| § To Adopt good technology | | | | The most crucial second phase is known as Integration |
| § Gain core competency | | | | of partners. This phase include a variety of activities. In |
| § Financial Gain and Personnel Power | | | | general integration is the process by which two |
| § Talent, knowledge and skills | | | | companies combine after a merger or an acquisition is |
| Regardless of the reasons, there are basic | | | | announced and pre-merger activities are completed. |
| assumptions being made which includes. | | | | The most critical issue of this phase is to select the |
| § Pre-planning can help increase the chances of | | | | integration manager. That person should not be one of |
| success | | | | them who are already running the business, it could be |
| § Mergers and Acquisitions (M&A) are the | | | | on loan but he should only focus on the particular |
| fastest and the most easiest way to grow | | | | merger and acquisition. In a country like Pakistan, the |
| § Mergers and Acquisitions are difficult to do | | | | integration manager is not given any particular |
| § Creating Synergy is a challenge | | | | importance and they choose any person from the |
| § Molding culture is a challenge | | | | business for the task which an integration manager |
| Mergers and acquisitions can be successful but can | | | | should be performing. Some issues other than selecting |
| also leads towards big failures. The mergers and | | | | the integration manager which came under this phase |
| acquisitions are done to grow faster but it is not sure | | | | are as follow. |
| that the result emerges the same as it was thought. | | | | § Designing teams |
| Some failure can be explained by financial and market | | | | § Creating new structure |
| factors, a substantial number can be traced to | | | | § Retain key employees |
| neglected human resource issues and activities. | | | | § Motivating employees |
| Numerous studies confirm the need for firms to | | | | § Managing the change process |
| systematically address a variety of human resource | | | | § Deciding HR policies |
| issues and activities in their merger and acquisition | | | | The implications for the HR manager in this stage are |
| activities. In fact, industry research over the last 15 | | | | many but one of the most important one is to decide |
| years indicates that 50-70% of all mergers, acquisitions, | | | | who will stay and who will be leaving. The HR |
| and other corporate transformations do not achieve | | | | department should be very selective in their task, |
| their desired level of success, primarily due to people | | | | because the selection of the employees is one of the |
| issues. | | | | critical issues at the time of any merger. Many other |
| There are many reasons for the negligence of the | | | | actions should also be performed by the HR |
| human resource issues and activities. Some of the | | | | department. |
| reasons are as follow. | | | | § Selecting the appropriate candidate |
| § Lack of awareness that the human issues are | | | | § Creating new teams |
| critical most | | | | § Communicating is essential |
| § No spokesperson to articulate these issues | | | | § Establishing the new culture and structure |
| § The belief that they are too soft and therefore | | | | Overall, this second stage of integration in an |
| hard to manage | | | | M&A activity is extensive and complex. Whereas |
| § There is no model or tool to understand and to | | | | Phase 1 activities set the scene for M&A activity, |
| manage the human issues | | | | those in Phase 2 are the ones that make the activity |
| § The focus while Mergers and Acquisitions are | | | | come to life. |
| on other activities rather than on human issues | | | | Then comes the last phase that is the solidification of |
| § The Human Resource department in many | | | | the new entity. As the new combination takes shape, it |
| countries like Pakistan, India etc is not completely taken | | | | faces issues of readjusting, solidifying and fine-tuning. |
| under considerations. | | | | The HR issues that will be in this phase are |
| Experts point out that during a merger or acquisition, | | | | § Solidify leadership and staffing |
| human resources professionals should be involved | | | | § Assessing new culture |
| before, during, and after the transaction. HR systems | | | | § Assessing new strategies and structures |
| must be aligned, integrated, and differentiated. | | | | § Assessing new employees culture |
| Research has demonstrated that mergers for | | | | Some of the actions and implications of the HR |
| companies whose HR practices are fully integrated run | | | | department under this stage are as follow. |
| smoother and employees remain happier during any | | | | § Creating and evaluating new structure is |
| changeover. | | | | important |
| Selection, performance management and | | | | § Molding the 2 new cultures into each other |
| measurement, training and development, and | | | | § The concern of the stakeholder should be |
| compensation and benefits practices must all fit | | | | taken under consideration. |
| together to create a whole that is aligned with the new | | | | There are numerous conclusions that can be made |
| organization's goals. Audits of the HR systems prior to | | | | while talking about the HR issues and activities in |
| the merger can help identify any unrecognized | | | | mergers and acquisitions. Some conclusions are as |
| problems or liabilities. The goal, of course, is to align the | | | | follow. |
| HR practices with the new business strategy. | | | | § HR issues should not be neglected while having |
| The experiences of companies that are involved in | | | | any merger or acquisition because Human resources |
| mergers and acquisitions suggest a 3 phased model of | | | | are the real assets of any organization. |
| Merger and Acquisition activities. The three phases are: | | | | § Many organizations failed due to negligence of |
| (1) Pre-Merger (2) Merger - integration of partners (3) | | | | HR issues while their mergers. |
| Post-Merger - Advancement of the new entity. While | | | | § Keep track of the Human issues in all the 3 |
| these three stages are applicable to and encompass | | | | phases of the M&A, so that no issue remains |
| the larger set of business functions such as business | | | | unfocused. |
| strategy, finance, marketing, distribution, IT, and | | | | § Employee communications, retention of key |
| manufacturing, the issues highlighted here are those | | | | employees and cultural integration are the most |
| that reflect issues most closely associated with human | | | | important activities in the HR area for successful |
| resource management. | | | | M&A integration. |
| The first phase is the Pre-Merger which includes the | | | | Here are some recommendations for those |
| planning of the merger and acquisition. There are many | | | | companies which are looking to have any sort of |
| Human Resource issues along with other issues in the | | | | merger and acquisitions keeping in mind the human |
| first phase. One of the issues that can be arisen in the | | | | issues. |