Merger and Acquisition

Topics: Mergers and acquisitions, Merger integration, Due diligence Pages: 10 (2967 words) Published: March 30, 2013
In recent years human resource (HR) managers have been encouraged to play a more strategic role in their organizations, especially in the case of extensive organizational change processes such as international mergers and acquisitions (IM&As). Today this requirement is even more acute since the past decade has been characterized by enormous growth in IM&As. In addition, it has been argued that the challenge in making M&As work is the management of people. In a case of IM&As the role of HR managers is very demanding because they needs to integrate HRpractices and, moreover, perform two other roles simultaneously: a strategic role for company-wide integration and a support role for business unit transaction. Considering the importance of human resource management (HRM) in IM&As, it is surprising how little is known about the role and activities of HR managers in these processes. This study addresses the existing research gap by investigating the role of HR managers in the IM&A process. Based on semi-structured theme interviews among corporate level managers in three Finnish international industrial organizations, the roles of corporate HR managers at different stages of the IM&A process are analysed. This study applies Ulrich's (1997) theory of the four HR roles in combination with the HR issues which are present at the different stages of the IM&A process. This paper demonstrates that HRM is an essential part of M&As and that HR issues are given a lot of emphasis throughout the process. In addition, HR managers play an important role in the IM&A process, although it is not self-evident in every case. Once a business has decided to merge with another company, one of the most important tasks is the combination of the two workforces into one. This task is primarily carried out by Human Resources (HR), and it is a critical and ongoing process that supports the entire merger or acquisition. HR must lead decision processes, prepare the company for integration and execute the actual reorganization. Throughout the process, they should also focus on building relationships with the new company.

What about M&A tools? In today’s mergers and acquisitions, an org chart is a requirement as it will make the process of workforce planning easier and quicker. A good software solution can help management combine workforces by using visualization and workforce organizational tools. Management can then set new budgets and organize the structure to best meet the new organization’s objectives.

Centralizing the data and personnel files helps in the allocation of resources, mapping out of the future company layout, and 'what if' analysis for possible reductions in force or promotions.

The role of HR during mergers and acquisitions can be separated into three phases:


▪ Analyze hierarchies and reporting relationships
▪ Identify key personnel
▪ Generate headcounts by department
▪ Roll up total workforce cost
▪ Audit the workforce for diversity and other characteristics ▪ Assess government compliance issues

Integration planning

▪ Model the workforce to determine optimal structure
▪ Conduct “what if” scenario planning to visualize merger integration ▪ Collaborate with department managers to plan resources and structures ▪ Identify duplicate roles and plan necessary reductions

▪ Plan optimal management and reporting hierarchies
▪ Determine pay structure and reward systems
▪ Determine retirement and benefits structure
▪ Align workforce costs with departmental budgets
▪ Determine HR technology

Integration implementation and communication

▪ Consolidate workforce data into a centralized organizational chart ▪ Share the integration roadmap with management
▪ Provide managers with adjusted Spans of Control and budgets ▪ Publish a view of the new organization to all employees ▪ Produce documentation of the merger process for auditors ▪ Capture a history of organizational changes as planning...
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