Mergers & Acquisition - Managing the HR Issues
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Keywords
HRM, merger, Acquisition, business, markets, financial, legal, Organizational culture, national culture, Power Distance, Individualism Vs Collectivism
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Conduct the 'HR' Due Diligence Review Contd...
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In June 1999, Shaw's Supermarkets acquired Star Markets for roughly $500 million. Shaw's at that time had 126 stores and about $3 billion in volume; Star had 54 stores and $1 billion in sales. That acquisition was Shaw's largest to date, growing revenue by roughly 50 percent and increasing its workforce from 20,000 to 32,000. It took eight months from signing the agreement to Federal Trade Commission approval. Completion of the acquisition and integration--operationally and culturally--of the two companies required human resources to play a major role. |
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• Integration of payroll benefits and HR-IS
• An ability to do all of the above with speed.
Source: Ruth N. Bramson, "HR's Role in Mergers and Acquisitions", www.findarticles.com
Compare and develop the strategy to integrate
The next step is of course to compare the structures and systems, and polices and procedures of the two merging organizations. Standardized systems and structures and policies and procedures have to be developed to suit the changed needs of a merged organization. The management has to take an unbiased view while choosing the best suitable systems and procedures. The interest of the organization, which would presumably be bigger in size, with an expanded business, has to be the main consideration for any decision. No ego hassles should prevent the management from taking the most desirable decision for the organization.
The most common issues for comparison and integration would be employee compensation administration, benefits and incentives, employee performance management and rewards system, training and development policy, career advancement prospects, organizational reporting channels and decision-making levels. The acquiring company might feel that its policies and systems should be continued with. It might feel that it is the same company, but larger in size with a change in the size and nature of business. The acquired company might feel that its strengths are crucial for the new merged entity to thrive. They believe that they have been acquired for their strengths. So, a balance between the expectations and demands of the two merging entities is required. The guiding factor would be organizational interest.