Effect Of Merger And Acquisition On Human Resource


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Effect Of Merger And Acquisition On Human Resource

  1. 2. <ul><li>Underlying principles for M&A transactions </li></ul><ul><li>2+2 > 4 </li></ul><ul><li>Additional Value of “Synergy”- Merger of Bharti’s subsidiaries- Cellular and Infotel with itself </li></ul>
  2. 3. <ul><li>HORIZONTAL INTEGRATION : Buying a competitor- UB Acquisition of SWCL </li></ul><ul><li>MARKET EXTENSION - </li></ul><ul><li>New Markets Existing Service – Bharti’s foray into Rajasthan and Chennai </li></ul><ul><li>New Services Existing Markets - Bharti purchase of Comsat (VSAT and Broadband services) </li></ul>
  3. 4. ‘ 95 ‘ 96 ‘ 97 ‘ 98 ‘ 99 ‘ 00 ‘ 01 ‘ 02 ‘ 03 ‘ 04
  4. 5. $3,800,000,000,000 AOL–TIME-WARNER KMART-SEARS CINGULAR-AT&T CHICAGO TRIBUNE – LA TIMES J – CHASE BANK, etc. etc. etc. etc. 70% 50% “ of these ventures fail”….Perry & Herd, 2004 “ ..had lower shareholder returns than their industry peers”. Lebedow , 1999
  5. 6. <ul><li>In last 2 years India make some of the remarkable achievements to overtake business in abroad </li></ul><ul><li>Examples </li></ul><ul><ul><ul><li>Tata motors acquired jaguar and land rover </li></ul></ul></ul><ul><ul><ul><li>Aditya birla group acquired Atlanta based company called Novelis ( aluminum sheet maker ) </li></ul></ul></ul><ul><ul><ul><li>essar steel merged with algoma steel </li></ul></ul></ul><ul><ul><ul><li>even the it companies like Infosys , Tcs , Wipro acquiring small companies in europe </li></ul></ul></ul>
  6. 7. <ul><li>Reduction in mergers and acquisition from 148 to 125 in 2008 ( no of deals ) </li></ul><ul><li>fall of sensex 16% </li></ul><ul><li>About 50 % to 80% mergers fail due to : </li></ul><ul><ul><ul><li>Inability to integrate people into a new cohesive new entity </li></ul></ul></ul><ul><ul><ul><li>inability to make cultural integration </li></ul></ul></ul><ul><ul><ul><li>attitudinal problems </li></ul></ul></ul><ul><ul><ul><li>lack of commitment </li></ul></ul></ul><ul><ul><ul><li>lack of trust </li></ul></ul></ul><ul><ul><ul><li>poor morale </li></ul></ul></ul>
  7. 8. <ul><li>. </li></ul>Planning Combination Execution Issue Insecurity Uncertainty Adaptation Concerns What will happen to me? What’s going on around me? Am I ready to perform? How do I cope? Who’s looking out for me? How do I succeed here? Who are they? Who’s in control? Is the new better than the old?
  8. 9. <ul><li>Heskett, J.L., et al (1994). Putting the service-profit chain to work. Harvard Business Review, March-April, 164-174. </li></ul>Leadership Employee Satisfaction & Commitment Employee Quality & Productivity Customer Satisfaction & Retention Organizational Performance
  9. 10. <ul><li>Creating synergy between cultures such that employee at every level get satisfied </li></ul><ul><li>By calling meeting sharing ideas of the employees of both the companies </li></ul><ul><li>Using MBO ( management by objectives ) </li></ul><ul><li>Pre mergers meeting must be held </li></ul><ul><li>Try to tell why merger is neccesary </li></ul><ul><li>Try to have creative , open , frequent one on one communication about the upcoming changes </li></ul>
  10. 11. <ul><li>Manager must ensure that employees perceive actions by management as being fair, unbiased and evenly distributed across both companies </li></ul><ul><li>Manager must ensure that employees feel that management understands their acculturation demands and “feels their pain” and supports them as people </li></ul><ul><li>Managers should strongly encourage employees to abandon the old and embrace the new </li></ul>
  11. 12. <ul><li>Recognize that employees practicing extra role behaviors and enjoying high job satisfaction </li></ul><ul><li>When merging – look for partners whose company culture, practices, management styles are similar to your own – avoid discontinuity </li></ul><ul><li>When acquiring – promote past managerial successes in similar endeavors to build employee trust that management has done this before and can be trusted to be successful </li></ul>
  12. 13. <ul><li>Thank u guys for listening </li></ul>