ROLE OF HUMAN RESOURCE MANAGEMENT

Role of Human Resource Management



Role of Human Resource Management

Introduction

This case has been conducted against a backdrop of a rising number of firms engaging in international mergers and acquisitions (M&as). Previous research for the CIPD has charted some of the HR challenges involved in these deals and the report seeks to extend our understanding of these challenges by drawing on data from a major new survey of multinational companies (MNCs) in the UK. The survey covers 302 firms, the largest group being overseas-owned companies with more overseas employees than UK-based ones, and the other group is UK-owned MNCs with at least 500 employees, of which at least 100 are outside the (UKBRUINING, 2005, 345).

The HR function

Despite international M&As bringing a range of issues that HR practitioners must confront, the HR function is smaller in firms growing in this way than in firms growing through 'Greenfield' investments and is no bigger on average than those firms that had not grown at all. This raises questions concerning the researching of the HR function in firms growing through international M&As.

The characteristics of HR policies and practices

The report indicates that firms growing through acquisition are significantly constrained in handling pay and adopt a pragmatic approach to union recognition. They tend to devote fewer resources to training (albeit with national variation in this respect) and do not communicate more intensively with their workforces than other firms.

Background

The last few years have witnessed a sharp increase in international mergers and acquisitions (M&As). These tend to be cyclical, fluctuating markedly with the business cycle (Elwood,

1996, 7). Thus the wave of deals in the years leading up to the end of the last century was followed by a sharp slowdown between 2001 and 2003. By the end of 2005 they had recovered to levels close to the previous peak (see Figures 1 and 2) and almost certainly established new record levels in 2006.

The pick-up in international M&As is important for HR practitioners for a number of reasons, not least because there are some issues that must be confronted in all cross-border mergers, such as carrying out a due diligence process, compliance with TUPE legislation and communicating the key consequences of the merger to the workforce (for further details, see the CIPD guide (2003), International Mergers and Acquisitions).

The Survey

The analysis of the survey data is the first stage of two in an ongoing research project. It has served two main purposes. The first has been to provide an authoritative picture of the nature of MNCs that have made acquisitions in the UK, shedding light on the nature of the HR function, the characteristics of HR policies and the process of organisational learning. It has produced some intriguing, maybe even troubling, findings. One key finding is that, despite the inherent challenges of growing through acquisition and the demands that stem from being part of a co-ordinated approach to HR across borders, the HR function was smaller in firms that grew in this way (FAULKNER, 2002, ...