MERGERS AND ACQUISITIONS

Mergers and Acquisitions

Mergers and Acquisitions

Introduction

An ideal merger aims to retain a pool of the best features of the two merging organizations. Therefore, it is important to develop an effective plan of integration process, based on an open, honest and consistent communication strategy. This can make way for a successful merger.

Mergers and acquisitions have become a common phenomenon in recent times. A merger of the size like HP-Compaq has implications for the workforce of these companies across the globe. Although the merging entities give a great deal of importance to financial matters and the outcomes, organizational culture, and human capital are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the desired outcomes due to cultural and people related issues. The uncertainty brought out by poorly managed HR issues in mergers and acquisitions have been the major reason for these failures. Therefore, it is essential to study the impact of mergers and acquisitions on organizational change.

Organizational Culture

According to research, neglecting the intangible assets may lead to potentially disastrous consequences. One of the leading ways to failure is the inability to integrate two corporate cultures. As far as the impact of mergers and acquisition on organizational is concerned, it has been found that significant cultural difference and level of involvement between the two organizations remain . The organizational culture is composed of the unwritten rules of organizational operation - that "glue" employees to norms and values. The culture is developed by each organization which could be incompatible when two or more organizations are merged.

In cross-border operation, the phenomenon may be exacerbated by differences in values, ideas, expectations and attitudes toward work, styles management and a host of other cultural factors characteristic of each country.

If culture is ignored or neglected, the merger between two companies could lead to a continuation of old behaviors.

This could be detrimental to integration. The merged enterprise may encounter different attitudes and interests, and often opposition, among employees who try to protect their usual way of working and their emotional balance.

Companies that do not take steps to address the differences between the corporate cultures plan their own failure. Therefore, it is perhaps surprising that executives who have experienced a process of Merger & Acquisition have expressed considerable dissatisfaction with the post-merger culture; furthermore, it has been found that employees describe the first few months as a "culture shock" ...