Effects of Merger on Employee Morale

Topics: Mergers and acquisitions Pages: 10 (3181 words) Published: August 5, 2011
The Effects of A Merger Or Restructuring On Employee Morale

Executive Summary
Mergers or Acquisitions are complex challenges for the management and employees too. There are major challenging employee related issues for the manager to make important decisions using organizational behavior principles. The employees need to be motivated and well informed about their future within the company. The steps for successful merger are applying various strategies discussed here to impact the merger effect as a blessing for the employee in order to boost the morale and confidence of the employee. Organizational behavior is essential and important for a successful merger of two very different companies.


Executive Summary2



Benefits Of Integration7

HRM Ѕtrаtegieѕ8

Ѕteрѕ Fоr Ѕtrаtegy Imрlementаtiоn11


Mergers and acquisitions have been essential tools of corporate growth and have become an attractive means by which to grow an enterprise. According to Cartwright and Cooper (1996), over 50% of North American business acquisitions failed as measured by an increase in shareholder value and additional studies revealed that the human capital element impacts more so than the financial factoring among the root causes of merger and acquisition failure (Cartwright & Cooper, 1996). As researchers narrow their focus on the issues surrounding the human capital impact on M&A success, new information is being developed in the area of employee morale and turnover intention and the impact these factors have on employees’ commitment to the new organization. Exploring how an acquisition impacts the employees of the acquired firm contributes to an understanding of how human capital impacts the success or failure of the acquisition (Luecke, 2003). With the increased M&A activity over the past years there have been an increasing number of studies conducted that have looked at acquired employees’ reactions to a merger or acquisition through various complementary lenses. This study established an additional view of the concept of employee commitment may be viewed as a pivotal component of employee morale and turnover intention. This study first explored mergers and acquisitions and briefly touched on the benefits of integration strategies. The second section defined and explored the history of the telecommunications industry. The third section investigated the impact human resources have on the success of M&As. The third part concentrated on employee morale and turnover. The final section uncovered the making of the telecommunication megamerger, and revealed the organizations being researched in this analysis. The purpose of this research is to provide a theoretical framework on the impact megamergers have on employee morale and turnover intention.

Merger and acquisitions (M&A’s) often refer to the facet of business scheme, and management considering with the buying, trading and blending of another company. According to Banal-Estañol and Seldeslachts (2004), mergers and acquisitions are often created to expand a current organization or operation aiming for long term profitability and an increase in market power. Mergers and acquisitions have continued to experience dramatic growth (Banal-Estañol & Seldeslachts). Record breaking megamergers have become commonplace across the globe, in spite of the disparity of failure versus successful stories (Feldman & Spratt, 1999). Mergers and acquisitions, historically have failed to significantly add value to the acquiring firm (King, 2004). Despite the goals established pre-merger, such as increasing shareholder value, expanding market share, and operating more efficiently, the key element to the success of a merger or acquisition is often overlooked, that key element being, human capital. Feldman and Spratt (1999) acknowledged that key people often leave with core technology, crucial customer...
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