MG106 Assignment 1
Introduction
Many organizations today try to gain competitive advantage and expand their operations in order to be profitable, adaptable, innovative and dominant. An increasing method of expansion is through mergers and acquisitions (M & A). A merger is when “two companies come together to create a new entity”. An acquisition is when “one company buys another and manages it according to the acquirer’s needs”. (Schuler and Jackson MCC Working Paper No. 3).
In most cases of mergers and acquisitions, more attention is paid to legal, financial and operational issues. But executives who have been through mergers and acquisitions will tell you that the real key to getting the best out of a deal is the management of human resource.
The role of the human resource department in an acquisition is to provide input in managing the process of change, advise top management, oversee communication and manage learning process to name a few. Some times HR departments face several problems while supporting mergers and acquisitions. These include deciding which employee stays and which employee must leave; communicating the reasons for the M & A; forming the right team for the M & A and deciding on benefits and compensation as well as the policies and procedures.
In the past it has been noted that the role of human resource has not been given due importance while making decisions regarding acquisition of companies. “The role of HR becomes more and more complex, as HR needs to integrate its own practices and also provide for two more roles i.e. a strategic role for companywide integration and a support role for business unit transaction” (Galpin & Herndon, 2000)
If you look at the above figure it shows how important the work of the Human Resource department is in an acquisition.
The case study in question saw the acquisition of Partners Manufacturing by Scorecard Inc. Unfortunately the acquisition didn’t go well and the company had to be sold several years
Many organizations today try to gain competitive advantage and expand their operations in order to be profitable, adaptable, innovative and dominant. An increasing method of expansion is through mergers and acquisitions (M & A). A merger is when “two companies come together to create a new entity”. An acquisition is when “one company buys another and manages it according to the acquirer’s needs”. (Schuler and Jackson MCC Working Paper No. 3).
In most cases of mergers and acquisitions, more attention is paid to legal, financial and operational issues. But executives who have been through mergers and acquisitions will tell you that the real key to getting the best out of a deal is the management of human resource.
The role of the human resource department in an acquisition is to provide input in managing the process of change, advise top management, oversee communication and manage learning process to name a few. Some times HR departments face several problems while supporting mergers and acquisitions. These include deciding which employee stays and which employee must leave; communicating the reasons for the M & A; forming the right team for the M & A and deciding on benefits and compensation as well as the policies and procedures.
In the past it has been noted that the role of human resource has not been given due importance while making decisions regarding acquisition of companies. “The role of HR becomes more and more complex, as HR needs to integrate its own practices and also provide for two more roles i.e. a strategic role for companywide integration and a support role for business unit transaction” (Galpin & Herndon, 2000)
If you look at the above figure it shows how important the work of the Human Resource department is in an acquisition.
The case study in question saw the acquisition of Partners Manufacturing by Scorecard Inc. Unfortunately the acquisition didn’t go well and the company had to be sold several years
Bibliography: Bundy, B., & Hukins, E. (2009). The Impact of Culture on M&A. London: Mercer Limited. Galpin, T. J., & Herndon, M. (2000). The complete guide to Mergers and Acquisitions: Process Tools to Support M&A integration at Every Level Harrison, K. (n.d.). Good Communication is essential for successful mergers and acquisitions. Retrieved February 18, 2010, from Cutting Edge PR: Peterson, L., & Voules, S. (2007). Mastering M&A communication: Helping employees to deal with the deal PR Newswire. (1999). KPMG identifies six key factors for successful mergers and acquisition. Weber, Y., Shenkar, O., & Raveh, A. (1996). National vs. Corporate cultural fit in mergers and Acquisitions: An exploratory study