Human Resources Management Merger & Acquisition

1. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 1
Assignment on International HRM
Amity International Business School
Amity University
Noida 125
SUNIL KR. AHIRWAR SECTION- ‘A’
COURSE- BBA-IB, V Sem. SUBMITTED TO FACULTY
ENRL NO- A1833312026 MS. SNIGDHA MALHOTRA
AMITY INTERNATIONAL BUSINESS
SCHOOL 2012-1015

2. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 2
Recent Merger & Acquisition IHR Challenges:
 Glaxo Wellcome -SmithKline Beecham: Glaxo Wellcome was a British multinational
pharmaceutical company in London, United Kingdom that merged with SmithKline
Beecham in 2000 to form GlaxoSmithKline.
 PFIZER-WARNER LAMBERT: Pfizer acquired Warner-Lambert, bringing two
most fastest-growing companies in the pharmaceutical industry and adding to
Pfizer’s global strengths and heritage.
 AOL-TIME WARNER: One of the biggest merger and acquisitions was that of
Internet service provider America Online and media giant Time Warner in 2000. The
merger thought to “lead the convergence of the media, entertainment,
communications and Internet industries, and provide wide-ranging, innovative
benefits for consumers” according to TimeWarner.com.
 Lenovo-Motorola deal may raise espionage concerns Google said it plans to sell its
smart-phone business of Motorola Mobility for $2.91 billion to Lenovo, the Chinese
technology company. But experts in Washington say the deal faces a key hurdle Wall
Street may not be aware of: the Committee on Foreign INVESTMENT in the United
States.
 TATA Chemical acquires US based Soda Ash Maker General Industrial Products for
$ 1 billion
 Standard Chartered Bank bought 49% stake for $34.19 million in UTI Securities and
Interpublic Group hiked its stake in Lintas India to 100% for $100 million
 UBS Global Management’s Acquisition of Standard Chartered Asset Management
Company for $ 117.78 Million
 HSBC Bank sold its Swiss private banking assets to LGT Bank for 12.5 billion dollar
 Tata Steel acquired UK based Corus for $ 8 billion.
 CCI approved Acquisition of Cement Plants of Jaypee in Gujarat by UltraTech.
 Indian shipping company Great Offshore acquires UK based Sea Dragon for US$ 1.4
billion
Indian companies announced merger and acquisition (M&A) transactions worth $8.4 billion
(around Rs.51,090 Crore) in July through 110 deals, an increase of 36% in transaction value
and a 23% increase in volume over July last year, according to Grant Thornton India LLP’s
monthly Deal tracker report. “We have witnessed an increase in inbound transactions but we
haven’t seen significant uptake in deals in the outbound space,” the report said. “We expect
2014 to be a bumper year as we see some activity in infrastructure, automotive and auto
ancillary space as new capacities is added in the two- and four-wheeler and commercial
vehicle segment.” Total deals concluded since the beginning of the year stands at $30.99
billion against $23.05 billion for the same period last year, the report said.
The country saw cross-border transactions worth $4 billion in July, a 517% jump against
$671 million in the same month last year. From January to July, deals worth $10.5 billion
were recorded in the cross-border transaction segment against $9 billion for the same period
last year, the highest in the last two years.
One of the biggest deals struck last month was Reliance Power Ltd’s acquisition of the
Karcham Wangtoo 1,391 megawatts (MW) hydropower plant in Himachal Pradesh and the
400MW hydroelectric plant in Vishnuprayag in Uttarakhand from Jaiprakash Power Ventures
Ltd for $2 billion.

3. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 3
HR Challenges: Human Resources face a number of challenges
during a Merger or Acquisition Include:
1. Identifying and communicating the reasons for the M&A to employees. Often
employees see change as dislocating and upsetting. HR must communicate effectively
and openly with all employees throughout the transition. Specifically, HR must
communicate with employees about the necessity for the change, explain how the
change will benefit them, and manage the stresses that accompany change.
2. Forming an M&A team and choosing and coaching an M&A leader. The team leader
must focus solely on the M&A rather than be involved in running the business, be
sensitive to cultural differences, lead the change process, and retain and motivate key
employees.
3. Assessing the corporate cultures. One company may be driven by a sales mentality
while another may be focused on innovation. Or decisions in one company may be
top down while the other may be used to more participative decision making. HR
must anticipate cultural challenges and take steps to integrate the two cultures.
4. Deciding who stays and who goes. HR must determine the new organizational
structure, and retain and motivate key talent.
5. Comparing benefits, compensation and union contracts and deciding on HR
policies and practices
The rapid changing business scenario in the market place, due to the globalization
phenomenon, growth in the outsourcing mode of working, the need to speed up growth, and
the shortening of product cycles, has forced companies to think about using "mergers and
acquisitions" as a part of their business strategy, to meet their business goals. Depending on
how the two companies see their position in the merger, they would broadly fit into one of the
four situations - rescue, partnership, adversarial, hostile. Regardless of the reasons for the
merger the objective is to produce advantages for both the buying and selling companies, that
is, the resultant entity should be greater than the sum total of the individual entities.
Value (A+B) > Value (A) + Value (B) While there are many reasons cited for failures of mergers,
the key area that has become very important, is to understand the process of managing the
human resources in a way where they are not only retained, but also collaborate effectively to
contribute higher levels of performance.

4. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 4
Possible HR Strategy which are Critical in the Issue:
 Detailed HR due diligence
 Employee communication
 Talent retention and selection
 Integrating the HR function
 Integrating pay and performance management programs
 HR planning and project management
 Leadership development
 Change management and culture
 Communicate with employees on the necessity of change
 Explain how change will benefit them
 Provide visible incentives for change
 Manage the stresses that go hand-in-hand with workplace change
 Get it done quickly, even as the market environment is changing
 Corporate brands and well defined reputation
 Capital and new streams of revenue
 Core competencies in management or business processes
 People who possess unique skills or customer relationships
 Needed elements of a culture or operating environment
 Management resources
 An inability to sustain financial performance
 Loss of productivity
 Incompatible cultures
 Loss of key talent
 A clash of management styles
 An inability to manage / implement change
 Objectives / synergies not being well understood

5. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 5
Recent Merger & Acquisition Fail & De-Merger: Volvo and
Renault
 In an industry where (a) transaction price and (b) cash vs. STOCK mix are front and center,
ownership dynamics are rarely the primary element of deal decisions. However the attempted
merger of Volvo and Renault in 1993 plainly illustrates the staggering effects of pro forma
ownership structure on the outcome of a transaction.
 What could have been a union that would save an astounding $5 billion in production,
engineering, and distribution synergies, ultimately precipitated a collapsed deal and the
resignation of a Chairman that had led Volvo for more than twenty years.
 However, Volvo was investor-held while Renault was owned primarily by the French
government. The combination of the two entities would leave Volvo with a 35% stake in the
new company and the French government in control of the remainder. While not inherently
detrimental, certain French comments about plans to privatize Renault implied that the
enterprise would effectively become a French company under French shareholder control.
 More importantly however, a number of analysts felt that the root of the problem was a
widespread sentiment — within both Volvo and Sweden — that one of the nation’s industrial
gems was being sold to a foreign government that was likely to ignore the interests of
Swedish employees.
 While there were clearly “too many cultural incompatibilities to make a merger work …the
CEOs of both companies decided to go forward anyway” explains Robert F. Bruner, dean of
the Darden Graduate School of Business at the University of Virginia. However “employees
at Volvo rebelled, ultimately forcing out the CEO. Volvo’s STOCK price cratered and the
brands of the two companies suffered.”
 Volvo Chairman Pehr Gyllenhammar woefully explained that, in considering the merger,
“business issues have been mixed with political and social ones”. “The massive and often
aggressive debate”, he lamented, “has created a powerful pressure on Volvo’s social fabric.
Management has not quite been able to resist these pressures.”
 Indeed despite continued support from Gyllenhammar, the combination of employee
pressure, public dissent, shareholder disapproval, and management revolt not only forced
Volvo to back out of the deal, but resulted in a slew of leadership resignations and threw the
future of the two carmakers into disarray.

6. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 6
 It was neither transaction price nor consideration mix that rendered this deal unworkable, but
rather the overwhelming impact of ownership on cultural dissent, which snowballed into a
sequence of costly events. Partner and managing director Dunstin Seale, of Senn Delaney,
perfectly summarizes the challenge, indicating not only that culture is the main catalyst of the
two-thirds of M&A efforts that fail to meet expectations, but that when it’s not the acquiring
company’s culture rejecting the foreign culture, it’s the acquired company’s culture rejecting
its new owner. In conclusion, focus on making cultural alignment a primary transaction
assessment area, communicating integration plans upfront, and maintaining sound judgment
of ownership dynamics. And you will be averting some of the biggest mistakes in recent deal
making history.
Suggestion to the Company:
The business strategy / need of a merger can be successful only when the merger contributes
a performance level that is greater than the sum of the individual performances. This also
means that the existing workforces would need to come together and derive synergic
collaboration benefits to generate higher levels of performance. This leads to the conclusion
that in any M&A, HR issues need to be addressed very effectively, and the teams not just
retained but also motivated to work together collaboratively. The success level is thus directly
proportional to the effective handling of the integration of human resources.
 Evolve a clear vision and business strategy of the merger during the process of negotiation,
and have it ready for communication across the two companies.
 Involve the HR early in the cycle of negotiations, to map the culture of both the companies,
and where necessary evolve a culture that suits the merged entity.
 Create a new Organization Chart, and take up a detailed audit of the competencies of the
employees to map their roles and responsibilities as aligned with the new chart.
 Establish a strong communication system, to proactively stall the arising fears and insecurity
amongst the people. Establish a single point of contact for the employees of the company to
talk to and seek clarifications / answers to their queries. This person should have easy access
to the Senior Management team to get their views to help clarify matters that arise.

7. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 7
Performance Management System of a Company:
Performance management is the systematic process by which an agency involves its
employees, as individuals and members of a group, in improving organizational effectiveness
in the accomplishment of agency mission and goals. Employee performance management
includes:
 Planning work and setting expectations,
 Continually monitoring performance,
 Developing the capacity to perform,
 Periodically rating performance in a summary fashion, and
 Rewarding good performance.
The revisions made in 1995 to the Government wide performance appraisal and awards
regulations support sound management principles. Great care was taken to ensure that the
requirements those regulations establish would complement and not conflict with the kinds of
activities and actions practiced in effective organizations as a matter of course.
Performance is the true litmus test for survival in the marketplace. High-performing
employees contribute superior performance, giving the companies they work for a
competitive advantage -- and their extra effort differentiates great organizations from merely
good ones.
Planning
 In an effective organization, work is planned out in advance. Planning means setting
performance expectations and goals for groups and individuals to channel their efforts toward
achieving organizational objectives. Getting employees involved in the planning process will
help them understand the goals of the organization, what needs to be done, why it needs to be
done, and how well it should be done.
 The regulatory requirements for planning employees' performance include establishing the
elements and standards of their performance appraisal plans. Performance elements and
standards should be measurable, understandable, verifiable, equitable, and achievable.
Through critical elements, employees are held accountable as individuals for work
assignments or responsibilities. Employee performance plans should be flexible so that they
can be adjusted for changing program objectives and work requirements. When used
effectively, these plans can be beneficial working documents that are discussed often, and not
merely paperwork that is filed in a drawer and seen only when ratings of record are required.

8. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 8
Monitoring
 In an effective organization, assignments and projects are monitored continually. Monitoring
well means consistently measuring performance and providing ongoing feedback to
employees and work groups on their progress toward reaching their goals.
 Regulatory requirements for monitoring performance include conducting progress reviews
with employees where their performance is compared against their elements and standards.
Ongoing monitoring provides the opportunity to check how well employees are meeting
predetermined standards and to make changes to unrealistic or problematic standards. And by
monitoring continually, unacceptable performance can be identified at any time during the
appraisal period and assistance provided to address such performance rather than wait until
the end of the period when summary rating levels are assigned.
Developing
 In an effective organization, employee developmental needs are evaluated and addressed.
Developing in this instance means increasing the capacity to perform through training, giving
assignments that introduce new skills or higher levels of responsibility, improving work
processes, or other methods. Providing employees with training and developmental
opportunities encourages good performance, strengthens job-related skills and competencies,
and helps employees keep up with changes in the workplace, such as the introduction of new
technology.
 Carrying out the processes of performance management provides an excellent opportunity to
identify developmental needs. During planning and monitoring of work, deficiencies in
performance become evident and can be addressed. Areas for improving good performance
also stand out, and action can be taken to help successful employees improve even further.
Rating
 From time to time, organizations find it useful to summarize employee performance. This can
be helpful for looking at and comparing performance over time or among various employees.
Organizations need to know who their best performers are.
 Within the context of formal performance appraisal requirements, rating means evaluating
employee or group performance against the elements and standards in an employee's
performance plan and assigning a summary rating of record. The rating of record is assigned
according to procedures included in the organization's appraisal program. It is based on work

9. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 9
performed during an entire appraisal period. The rating of record has a bearing on various
other personnel actions, such as granting within-grade pay increases and determining
additional retention service credit in a reduction in force.
 It's crucial for businesses to have systems in place to identify, recognize, reward, and retain
their top performers to achieve sustainable growth. Most companies understand this and
spend enormous sums acquiring a performance management system to help ensure their
success. Yet wide variation in employee performance persists despite this INVESTMENT.
 Though good processes are important in any performance management system, the human
element is the most important component in whether employees perceive the system as
effective. The relationship between an employee and his or her manager is the key factor in
driving those perceptions, and it accounts for the great variance in those perceptions among
the employees we studied. Our research with these 22 companies revealed that great
managers:
 Clearly communicated performance standards and what good performance in a role looks like
 Helped employees understand that the purpose of the performance management system was
to aid in their development; it was not just an activity required for pay or promotions
 A company might have a world-class performance management system in place, but the
system is only as effective as the managers who implement it. Companies that want to
increase organizational and employee performance and productivity should INVEST in
getting the right managers in place and support them in engaging their employees.
Rewarding
In an effective organization, rewards are used well. Rewarding means recognizing
employees, individually and as members of groups, for their performance and acknowledging
their contributions to the agency's mission. A basic principle of effective management is that
all behavior is controlled by its consequences. Those consequences can and should be both
formal and informal and both positive and negative. Good performance is recognized without
waiting for nominations for formal awards to be solicited. Recognition is an ongoing, natural
part of day-to-day experience. A lot of the actions that reward good performance like saying
"Thank you" don't require a specific regulatory authority. Nonetheless, awards regulations
provide a broad range of forms that more formal rewards can take, such as cash, time off, and
many nonmonetary items. The regulations also cover a variety of contributions that can be
rewarded, from suggestions to group accomplishments

10. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 10
Managing Performance Effectively Host & Home Country:
In effective organizations, managers and employees have been practicing good performance
management naturally all their lives, executing each key component process well. Goals are
set and work is planned routinely. Progress toward those goals is measured and employees
get feedback. High standards are set, but care is also taken to develop the skills needed to
reach them. Formal and informal rewards are used to recognize the behavior and results that
accomplish the mission. All five component processes working together and supporting each
other achieve natural, effective performance management.
Performance management has arguably been one of the defining trends in human resources in
recent years. Yet regular performance appraisals often have a negative effect on employee
morale. I suggest that the problem here is one of understanding the crucial difference between
performance appraisal and performance management. It might initially seem that this is
merely a matter of semantics and it is true that the two terms are often used interchangeably.
A good performance management system, however, goes far beyond performance appraisal
and should therefore avoid the negative connotations of that term.
Effective performance management should be concerned with positive development, both for
employees and for the organization. Performance appraisals produce groans all round and can
make employees feel they are being held under a spotlight, a situation that is hardly
conducive to good morale. Additionally, it can be very difficult to quantify some employee
strengths that nevertheless make a strong contribution to the effectiveness of the workplace.
Implementing a positive performance management system may require a fair amount of work
initially but, once the fundamentals are in place, it should run smoothly. Performance
management – used appropriately – can promote a business’s effectiveness. Effective
performance management should fulfill the following ten criteria:
1. Have clear, easily defined job descriptions for each and every specific position in the
organization.
2. Ensure that employees’ goals are aligned with those of the organization.
3. Establish priorities for both the organization and the employees.
4. Involve collaboration between managers and employees; two-way communication is
essential to successful practice. An organization that has a successful performance
management system in place will foster an open environment that allows for freedom
of discussion.
5. Obtain input from employees and provide a framework for managers to respond to
this.
6. Recognize employees’ accomplishments, even those that may be difficult to quantify.
7. Allow for frequent, continuous feedback, including informal feedback, that is both
positive and constructive; this could include 360° feedback that includes comments
from peers, customers and supervisors.
8. Provide employees with adequate resources and professional development
opportunities: courses, seminars, opportunities to attend conferences, mentoring, etc.
9. Give management the necessary information for decisions on promotion, salary
increases and terminations.
10. Be user-friendly.

11. Sunil
S u n i l K r A h i r w a r B B A I B , I H R M A s s i g n m e n t 5 S e m e s t e r Page 11
A performance management system that is, once implemented, relatively easy to
administrate, and that allows for managers to actively listen to their employees, will result in
a positive and productive workplace where everyone feels valued and respected. If goals for
future performance are set, they should be mutually agreed on and should be, ideally,
SMART goals: specific, measurable, attainable, realistic and timely. If competencies are part
of the performance management process, then each employee should have a competency
profile.
Above all, it is essential to foster a workplace environment where two-way communication is
encouraged and where feedback is mainly positive or constructive. Performance management
should focus more on encouraging and developing employees’ strengths and providing
opportunities for growth rather than annual appraisals that are directly linked to raises and
bonus payments.
Shift iQ offers companies a performance management system that is both efficient and user
friendly. Results from performance measurement initiatives can be analyzed instantly and
provide feedback that links directly to its Learning Management System, Compensation
Management System and its Talent Database.
A first-rate performance management plan is the key to creating an engaged and
aligned workforce—the hallmark of all successful businesses. Without one, your
organization could lose more than just time and MONEY – you could lose knowledge,
employees and, in the end, your competitive edge.
Sunil Kr Ahirwar
Amity International Business School
Amity University Noida-125
Mo: +91-9871836819
Email: sunil.ahirwar@student.amity.edu