HRM & International Mergers and Acquisitions
Parinetha Srikanta Rudraradhya
The human aspect has always taken a backseat during mergers and acquisitions. It is ironical because companies, brands and finances exist primarily because people have created them. When two firms come together to join forces, they often over-exaggerated benefits and synergies, have high expectations, downplay firm politics, ignore culture distances, and almost always, disregard the human element. This may explain why 65-70% of mergers fail (Pucik et al, 2011). The problem lies in the fact that the Human Resource Management is often seen as not ‘hard’ enough and as a localized function (Williams, 2013). The Human Resource Department can make an impact to mitigate issues such as cultural, institutional, political, communication aspects, strategic planning, etc. However, in this report we shall focus on cultural and communicational issues as they are areas in which HR has not been involved consistently throughout the process. But they happen to be areas in which the increased role of HR can significantly change success rates of mergers.
HRM policies are often ignored during M&As. They should be given strategic importance as they will be able to subtly make the transition in culture to accommodate both companies’ values by creating a unique culture and create training systems that reduce the ineffectiveness and costs of turnover in the new environment (Faulkner et al, 2002) One of the most important issues to be dealt with among transition team members is the new culture and how to find common ground (Appelbaum, 2000A). This common ground will be the basis for the transition team’s objectives. Daimler Chrysler merger’s failure was based purely on the fact that no common ground was established culture-wise. We can see how the acquisition of Edeling by Royal Biscuit is doomed...