It may be argued that the problems HR face when dealing with cultural differences are somewhat reduced during a take-over as opposed to a merger, as the dominant organisation will usually impose its culture on the subordinate organisation. However, even a so-called “merger of equals” usually produces an assertive organisation that appears to run the show, and imposes its culture on the other. Surely successful organisations would make concessions and combine the strengths of both companies to develop a new organisation? Whether it be a merger or take-over HR will invariably be involved with the bumps and grinds of culture assimilation. HR cannot prevent it, they cannot erase it; they just have to manage it.One way of avoiding or reducing potential problems and issues for HR during a merger or acquisition is to communicate. It is recognised by Kanter, Stein and Jick, (1992) that communication is the key tool within any change process.
It is critical to let people know what is going on, what will happen and how. It is vital that employees feel as if they are an involved, valued part of the process. This is one situation where the clic ‘no news is good news’ does not apply. Employees become concerned, as they sense something is going on and that some sort of change is imminent. Managers must try and alleviate a ‘them and us attitude’ by ensuring that employees are well informed, as without specific information, imaginations go into overdrive, rumours swirl and anxieties mount. After all, usually jobs are at stake.
Even for those who may not be directly threatened with redundancy, the idea of enduring a change in job title, supervisor and the benefits they receive is usually enough to create a disruption of epic proportions. To reduce or alleviate these types of problems HR must get involved from the outset and place heavy emphasis on quality employee communication, so that everyone is involved. It gives people a sense of empowerment and control in the merger process, minimising resistance to change.Newsletters, email, voicemail, teleconferences and Intranets all offer efficient ways to feed important information to employees, but this blitz of communication is often a one way process. Employees are over loaded with information that can only be described as irrelevant and confusing. Surely a merger isn’t a time for employees to listen to speeches and view video updates every week? Senior executives and HR managers must spend time discussing the proposed changes and how they will impact the workforce face to face. Communication must be a two way process and thus venting sessions and forums should be conducted.
This will give employees the opportunity to air their views, ask questions and get straight answers, which should help to alleviate most of the anxiety.However, we must remember that while most employees will welcome information about the larger issues involved in the transaction, most will be interested in learning how the transaction affects them personally. In particular, employees will want to know what changes they can expect once the deal is finalised and as the integration proceeds, about impending changes to their departments, and how their jobs will change.
It is imperative that any information passed from executive’s too senior managers, to managers, to supervisors and finally to employees is standardised so that everyone has access to the same details.The worst-case scenario would be for one supervisor to advise his/her employees during a consultation, that only ten employees would be made redundant and then for his/her equivalent to say that fifteen employees may face redundancy. If management hasn’t yet made firm decisions on matters that may affect employees’ jobs, then tell them so, and, whenever possible, advise them of the date when more information will be provided.
It is also essential that internal communications are co-ordinated and consistent with external communications to the press, customers and suppliers. Of course this is good in ‘rhetoric,’ but often the ‘reality’ is somewhat different. In the summer of 1994 Leeds Permanent Building Society in its pursuit for a compatible merger partner opened discussions with Halifax Building Society. On 25th November 1994 the merger was disclosed in The Independent. The announcement was precipitated by a leak to the press by a ‘reliable source’ and was somewhat premature, for the senior management team had plans in place to make a formal announcement on 12th December.
This was an unfortunate start, and as a result over half the staff learnt of the merger by means other than official company channels. (Cartwright & Cooper, 2000)HR is faced with another problem relating to job insecurity and redundancies. M&As will invariably lead to job losses and redeployment as a result of rationalisation and role duplication. M&As make everyone uneasy about their job security and thus adversely affect morale and motivation levels. ‘According to Maslow (1971) the basic lower-order, physiological and safety needs of employees are activated and predominate over any higher-order growth needs such as challenge and autonomy.
Until these ‘basic’ needs have been satisfactorily resolved, motivation and satisfaction levels are unlikely to increase.'(Cartwright and Cooper, 2000)The role for HR is to take the appropriate steps to help alleviate some of the anxiety associated with an uncertain job future by ensuring that the re-selection and redundancy procedures are handled both sensitively and fairly. ACAS prefer the points rating method as a way of deciding whom to select, where redundancies are determined using appropriate criteria such as measurable skills rather than age, sex or race. This will also reduce potential claims of unfair dismissal. However, it is inevitable that job losses will arise, but it is the way in which HR deals with these job losses that can reduce the problems they encounter. In a perfect world head count savings would be achieved through natural wastage i.e. early retirement schemes, a freeze on recruitment, transfers, job-shares / part-time work.
This strategy was adopted in the merger of Halifax and Leeds Permanent Building Society in 1994, which sent a powerful message to merged employees that they were valued by the new organisation and that their future was secure. However this is not always the case and redundancy programmes are sometimes the only option. After the merger, it is important that redundancy decisions are made quickly so that employees know where they stand and so that productivity is not too adversely affected.
Those who survive redundancy programmes may still be contemplating their resignation, during this turbulent time. Not only does HR have the problem of deciding whom to release from the organisation; they also have the problem of trying to retain ‘key’ members of staff. This doesn’t necessarily mean top executives.It may include other employees who are equally important to the workings of the enterprise i.e. technological experts. The fear of the unknown is a time when employees feel extremely vulnerable and thus some individuals may seek alternative employment in order to regain personal control of their circumstances.
Personal survival becomes an obsession and employee anxieties centre around the issues of “Will I have a job?” “Will I have to relocate?” “Is my current lifestyle in jeopardy?” Whether desired or not, turnover of top people is a fact of life, often exacerbated during a merger. Peter Drucker (2000) cautions:”It is an elementary fallacy to believe one can ‘buy’ management. The buyer has to be prepared to lose the top incumbents in companies that are bought.
Top people are used to being bosses; they don’t want to be division managers.” It is imperative that HR interviews employees to help establish any fears and expectations they may have regarding their continued future with the new organisation. This way HR can align their retention strategy around what motivates these employees.It maybe that an employee is motivated by ‘status’ and thus HR may choose to reassign his or her job title. However, it may be that only ‘monetary incentives’ will help retain talent during times of uncertainty. If this is the case, HR may have no other alternative but to offer ‘stay bonuses.’ For instance, if it were important to ensure an executive remained with the company for the first year of the merger, a ‘stay bonus’ would be paid out at the end of that year.
What this does, is send out an important message to these people – that they are valued and have an integral role in the new organisation.