Wahla

Topics: Mergers and acquisitions, Management Pages: 13 (3357 words) Published: May 28, 2014
European Journal of Social Sciences
ISSN 1450-2267 Vol.26 No.3 (2011), pp. 473-480
© EuroJournals Publishing, Inc. 2011
http://www.europeanjournalofsocialsciences.com

The Role of Transformational Leaders in Mergers /
Acquisitions: A Case Study of Faysal Bank Ltd
Ch. Mazhar Hussain
International Islamic University, Islamabad
E-mail: mazhar.hussain@iiu.edu.pk
Tel: +923018100945
Muhammad Aamir
International Islamic University, Islamabad
E-mail: maamirbzu@edu.pk
Tel: +923226184006
Khalil-ur-Rehman
International Islamic University, Islamabad
Tel: +923336334293
Abstract
This study examined the key roles of Transformational Leaders to reduce or increase the level of stress among employees of the acquired firms and to make the mergers / acquisitions a success or a failure. For this purpose, in-depth interview technique was used. Interviews conducted from seven respondents revealed that the Transformational Leaders were fully involved in the integration process. However, they did not cater the emotions, apprehensions, moral and integrity values and reservations of the employees during and after the acquisition process, which leads the employees towards uncertainty and strain. As a result, employees of acquiree are leaving the organization after acquisition or anxiously searching for new jobs. The study concluded that the Transformational Leaders seems to be failed to play a vital role in managing stress and uncertainty among employees during the acquisition process.

Keywords: Transformational Leaders, Mergers / Acquisition, Acquirer and Acquiree

1. Introduction
This paper analyzes the key roles of Transformational Leaders to reduce or increase the level of stress among employees of the acquired firms and to make the mergers / acquisitions a success or a failure in Pakistani Banking sector. To achieve the objective of the study, in-depth interviews were conducted from top, middle and lower level management of the two private limited banks in Pakistan, who had recently integrated. One of the reasons to select this acquisition is that the Acquirer bank (Faysal Bank Ltd.) had a local background, while the Acquiree bank (Royal Bank of Scotland Ltd.) had a multinational background.

Mergers and Acquisition is a reaction to major change forces. These change forces enhanced the intensity of competition in result of that merger and acquisition took place. The main purpose of merging and acquiring new firms is usually to improve overall performance. Mergers and acquisitions 473

European Journal of Social Sciences – Volume 26, Number 3 (2011) in corporate industries is an important public policy issue. The issue of consolidation in these industries remains contentious as of the vague impact; it might have on product quality, perfection and innovation.

Researchers are not the only group showing an amplified interest in organizational performance after the mergers and acquisitions. Investors and the stakeholders are also reflecting an increased sensitivity to the impact of mergers and acquisitions.

Mergers are commonly defined as the combination of two organizations into a single organization. On the other hand acquisitions are defined as the purchase of one organization from another where the buyer maintains control. (Borys and Jemison, 1989). The remaining portion of this study is organized as follows. In section-2 a brief glimpse of literature regarding the role of Transformational Leaders during the merger / acquisition process is discussed. In section-3 a conceptual framework is formulated and a model is provided regarding the role of Transformational Leaders in stress management during a merger / acquisition process. Section4 explains the research methodology adopted. In section-5 results of the in-depth interviews are discussed. Section-6 reveals the limitations of the study. The last but not the least section concludes the study on the basis of results.

2. Literature Review
Mergers characterize one of...

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