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

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
International Islamic University, Islamabad
Tel: +923336334293
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...

References: Asquith, Paul (1983), “Merger bids, uncertainty and stockholder returns”, Journal of Finanical
Economics, Vol
Agrawal, J; Jaffe and Mandelker (1992), “The post-merger performance of acquiring firms, a
re-examination of an anomaly”, journal of Finance, Vol
Applebaum, Steven; Gendell, Joyl; Shapiro, Babara; Belistle, Pierre.andHoeven, Eugene
(2000), Anatomy of a merger: behaviour of organizational factors and processes throughout the
Azhar Hussain and Mohammad IM Ibrahim (2011), “Perceptions of Dispensers Regarding
Dispensing Practices in Pakistan: A qualitative Study”, Tropical Journal of Pharmaceutical
Borys, B. and Jemison, D.B (1989), “Hybrid arrangements as strategic alliances: theoretical
issues in organizational combinations”, Academy of Management Review, Vol
Barker, R.A. (1997), ``How can we train leaders if we do not know what leadership is? ' ',
Human Relations, Vol
Balmer, J.M.T. and Dinnie, K. (1999), ``Corporate identity and corporate communications ' ',
Corporate Communications: An International Journal, Vol
Carleton, R.J. (1997), “Cultural due diligence”, Training, Vo. 34, pp. 67-80.
Covin. Teresa Joyce, Kolenko. Thomas. A, Sighter. Kevin. W. Tudor. R. Keith (1997), “Journal
of Management Development, Vol
Cartwright, S. and Cooper, C.L. (1993a), ``The psychological impact of merger and acquisition
on the individual: a study of building society managers ' ', Human Relations, Vol
Davy, J.A., Kinicki, A., Scheck, C. and Kilroy, J. (1989), ``Acquisitions make employees
worry: companies ease the pain through effective communication ' ', Personnel Administrator,
Hunt, J. (1988), ``Managing the successful acquisition: a people question ' ', London Business
School Journal, Summer, pp
Langetieg, T. (1978), “An application of a three factor performance Index to measure
shareholder gains from merger”, Journal of Financial Economics, Vol
Loderer, C. and Martin (1992), “Post acquisition performance of acquiring firms”, Financial
Management, Vol
Marks, M.L. (1982), “Merging human resources”, Mergers and Acquisitions, Summer, pp. 3844.
Marks, M.L. and Mirvis P.H. (1997), “Revisiting the merger syndrome: Crises management
part-2”, Mergers and Acquisitions, Vol
European Journal of Social Sciences – Volume 26, Number 3 (2011)
Mayers, C. (1999), “Welcome to merger world”, Successful Meetings, Vol. 48 No. 9, pp. 76-6.
Nguyen, Han and Kleiner Brain (2003), “The effective management of mergers”, Leadership
and Organization Development Journal, Vol
Schraeder, Mike, Self R.Dennis (2003), “Enhancing the success of mergers and acquisitions: an
organisational culture perspective”, Management Decision Journal, Vol
Schweiger, D. L., Ivancevich, J. M. and Power, F.R. (1987), “Executive actions for managing
human resources before and after acquisition”, Academy of Management Executive, Vol
Tetenbaum, T.J. (1999), ``Beating the odds of merger & acquisition failure: seven key practices
that improve the chance for expected integration and synergies ' ', Organizational Dynamics, Vol.
Continue Reading

Please join StudyMode to read the full document

Become a StudyMode Member

Sign Up - It's Free