Case Study:
In the past, the decision criteria for mergers and acquisitions
were typically based on considerations such as the strategic fit of
the merged organizations, financial criteria, and operational
criteria. Mergers and acquisitions were often conducted without
much regard for the human resource issues that would be faced when
the organizations were joined. As a result, several undesirable
effects on the organizations’ human resources commonly occurred.
Nonetheless, competitive conditions favor mergers and acquisitions
and they remain a frequent occurrence. Examples of mergers among
some of the largest companies include the following: Honeywell and
Allied Signal, British Petroleum and Amoco, Exxon and Mobil,
Lockheed and Martin, Boeing and McDonnell Douglas, SBC and Pacific
Telesis, America Online and Time Warner, Burlington Northern and
Santa Fe, Union Pacific and Southern Pacific, Daimler-Benz and
Chrysler, Ford and Volvo, and Bank of America and Nations
Bank.
Layoffs often accompany mergers or acquisitions, particularly if
the two organizations are from the same industry. In addition to
layoffs related to redundancies, top managers of acquiring firms
may terminate some competent employees because they do not fit in
with the new culture of the merged organization or because their
loyalty to the new management may be suspect. The desire for a good
fit with the cultural objectives of the new organization and
loyalty are understandable. However, the depletion of the stock of
human resources deserves serious consideration, just as with
physical resources. Unfortunately, the way that mergers and
acquisitions have been carried out has often conveyed a lack of
concern for human resources.
A sense of this disregard is revealed in the following
observation:
Post combination integration strategies vary in tactics, some
resemble to “marriage & love’ but in reality collaborative
mergers are much more hostile in implementing forceful decision and
financial takeovers. Yet, as a cursory scan of virtually any
newspaper or popular business magazine readily reveals, the simple
fact is that the latter are much more common than the former.
The cumulative effects of these developments often cause employee
morale and loyalty to decline, and feelings of betrayal may
develop. Nonetheless, such adverse consequences are not inevitable.
A few companies, such as Cisco Systems, which has made over 50
acquisitions
(https://www.cisco.com/c/en/us/about/corporate-strategy-office/acquisitions/acquisitions-list-years.html),
are very adept in handling the human resource issues associated
with these actions. An example of one of Cisco’s practices is
illustrative. At Cisco Systems, no one from an acquired firm is
laid off without the personal approval of Cisco’s CEO as well as
the CEO of the firm that was acquired.
Q3
Interview someone who has been through a merger or acquisition. Find out how they felt as an employee. Determine how they and their coworkers were affected. Ask about the effects on productivity, loyalty, and morale. Find out what human resource practices were used and obtain their evaluations of what was helpful or harmful.
Suppose a sports goods manufacturer merges with another sports
equipment manufacturer. Prior to monitoring and evaluation, each
company has its own employees dedicated to production, advertising,
analytics, accounting and other work. After concluding an agreement
with M&A, some employees may be laid off. In the short term,
this means that employees for both companies may need to relocate
or be fired.
Although mergers and acquisitions are commonly used as an umbrella
term to represent two companies merging to become a single company,
the two terms have slightly different meanings.
Merger is when two corporations merge to form a new entity. Mergers
usually involve companies of the same size, called equal mergers.
Shares of both joint ventures were transferred and new shares were
issued for the joint venture.
Acquisition is when one company takes over another company and the
acquired company becomes the owner of the target company. In other
words, the acquired company no longer exists after the acquisition
as it was held by the buyer. Equity of the acquired company
continues to trade. However, the shares of the target company are
no longer traded and its shareholders acquire shares in the
acquired company. However, the ratio of the buyer's share to the
target company's stock is based on the terms of the purchase. This
is usually not done one by one.
Understandably, employees of the target company will feel anxious.
Those who hired them may no longer make important job decisions.
Beyond the actual change of release or relocation, the
continuation, performance and loyalty of the surviving employee
depends on the effectiveness of the monitoring and evaluation
process itself.
Mergers and acquisitions can affect the stress levels of the
employees involved. Many mergers require the approval of local
authorities, lawyers and regulators, who can withdraw this process
for more than a year. The time required to complete the merger can
be difficult for employees of both companies involved.
Uncertainties arising from mergers or acquisitions are indicative
of the Company's employees. This uncertainty can manifest itself in
a negative way if the employee does not agree to the change. It
makes sense to assume that employees who feel threatened or
intimidated may be less effective than those who feel safe and
satisfied.
Historically, mergers and acquisitions have typically led to job
losses. Much of this problem is due to unnecessary operations and
inefficient efforts. Threatened jobs include executives of target
companies and other senior executives who are often given a delay
package and released. However, the management of the acquired
company will try to increase the combination of costs to help
finance the acquisition of shares, which usually leads to job loss
for unwanted employees.
For example, if two banks merge or if one bank is acquired, the
combined bank will have no longer needed operations and a sales
office. The new entity may not need all the branches and may not
need two mortgage departments, two corporate accounting offices or
two verification departments that process all deposits. Of course,
all unnecessary positions in the target company will not be
eliminated, as the combined company will have more customers and
operational processes. However, a merger company will not need all
the people from both companies in the area unnecessarily. In
practice, the employees of the target company usually take on the
main responsibility of no longer being needed.
Case Study: In the past, the decision criteria for mergers and acquisitions were typically based on...
Case Study: In the past, the decision criteria for mergers and acquisitions were typically based on considerations such as the strategic fit of the merged organizations, financial criteria, and operational criteria. Mergers and acquisitions were often conducted without much regard for the human resource issues that would be faced when the organizations were joined. As a result, several undesirable effects on the organizations’ human resources commonly occurred. Nonetheless, competitive conditions favor mergers and acquisitions and they remain a frequent occurrence....
Case Study: In the past, the decision criteria for mergers and acquisitions were typically based on considerations such as the strategic fit of the merged organizations, financial criteria, and operational criteria. Mergers and acquisitions were often conducted without much regard for the human resource issues that would be faced when the organizations were joined. As a result, several undesirable effects on the organizations’ human resources commonly occurred. Nonetheless, competitive conditions favor mergers and acquisitions and they remain a frequent occurrence....
CASE Study - Cisco Mergers and Acquisitions strategies In the past, the decision criteria for mergers and acquisitions were typically based on considerations such as the strategic fit of the merged organizations, financial criteria, and operational criteria. Mergers and acquisitions were often conducted without much regard for the human resource issues that would be faced when the organizations were joined.1 As a result, several undesirable effects on the organizations’ human resources commonly occurred. Nonetheless, competitive conditions favor mergers and acquisitions...
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