The number of mergers and acquisitions is constantly increasing. Due to such transactions, many companies have the potential to increase their competitiveness, take the leading positions in the market, and receive a big financial profit. However, despite potential benefits, mergers and acquisitions are a risky and complex procedure that should be carefully planned from the very beginning. When acquiring companies, it is very important to optimize the resources of the two parties, that is, to assess the person and understand what resources will create the optimal structure of the merged company. Further, it is significant to evaluate at all stages of the personnel policy to build the right training, motivation, placement, etc. Therefore, it is essential to consider those challenges that the leadership of a particular company can encounter in the context of mergers and acquisition when managing human resources and distributing responsibilities based on different aspects – cultural diversity, ethical issues, etc. Such an analysis will help to make an integrated assessment of the primary difficulties and possible solutions.
The Key Tasks the Management Faces in the Course of Mergers and Acquisitions
In the process of forming a new company based on two or more existing ventures, the management has to solve several organizational tasks that are mandatory for successful work. It does not mean working with potential customers or suppliers acting exclusively within a particular company. For this purpose, it is necessary to competently approach the solution of essential tasks and focus on personnel.
Thus, one of these tasks is to appoint responsible management positions. To do it, it is significant to assess the potential of each candidate for a certain post and build on the individual characteristics of possible leaders. Also, the management needs to transfer the entire system of payments and incentives to equivalent levels. It means that by establishing a correlation of the levels of motivated payments, a single system of monetary compensation should be created (Cartwright and Cooper 23). In addition, it is required to revise the existing model of career management processes and professional growth.
In this case, it will be necessary to identify individual promising areas for the development of employees and create appropriate conditions for successful work. Moreover, it is essential to not only offer workers a perspective but also to try to keep them in the company for as long as possible so that competent and experienced specialists could perform important tasks. Finally, a system of rewards and benefits should be brought into line. According to Cartwright and Cooper, the management of a particular company needs to create competitive types of wages and establish a mechanism for paying compensation to employees (152). When competently performing these tasks, the chances for successful work are high, and the productivity of labor will correspond to the wishes of the leadership.
Challenges from Changes in Culture
Accounting for differences in corporate cultures is an important condition for effective mergers and acquisitions. The more carefully the management will monitor compliance with certain conditions that are unique and special in each company, the greater the chance is that the collective of the enterprise will be cohesive and able to achieve high goals (Xing and Liu 2558). Moreover, the venture will have a good reputation in the business market and will manage to compete with other companies. Therefore, the formation of a new corporate culture becomes a key to successful integration, and the task of the management is to make efforts to achieve it. Nevertheless, some challenges may arise.
In the process of combining two or more companies into one, different principles of corporate order can be mixed, which is not always a good practice. As Gunkel et al. remark, for instance, one of the organizations can be guided by a hierarchical management model when leaders’ orders are unquestionably fulfilled, and a strict system of subordination is observed (397). Another organization, on the contrary, can propagandize a so-called flat system where the roles of leaders are conditional, and the whole collective works like a family (Gunkel et al. 397). In case one of these companies joins the other, certain problems may arise with mutual understanding in the team since most of the employees will probably not understand what form of communication the other side adheres.
To avoid such misunderstanding, it is essential to plan what measures will be taken to successfully integrate in terms of differences in corporate cultures. Also, it is equally important to conduct preparatory work with employees, which will be aimed at training for acting in a new regime. According to Xing and Liu, the enterprise that adjoins the other is forced to adapt to a new model of work (2553). It means that employees will have to understand what corporate order is typical for their new company and what principles of leadership are promoted there. To ensure that workers do not have to do it themselves, experienced and competent managers should provide timely training of personnel to work in new conditions and control that all employees are aware of the range of tasks. If these measures are taken, it is likely that a change in the type of culture will not significantly affect productivity and will not cause conflicts and misunderstandings in the team. Otherwise, it will be impossible to avoid problems and establish good corporate relationships.
Challenges Due to Workforce Diversity
Because the merger is a process of a complete reorganization of labor in the enterprise that is to join, serious difficulties arise with the performance of immediate duties. New equipment, new management, new colleagues – all these criteria have a stressful impact on employees who cannot always quickly adapt to changing conditions and become full participants in the work process. Moreover, the diversity of employees requires a special approach to the organization of work, and particular control should be performed (Gunkel et al. 399). Inherent qualities of the manager in this case, as Cartwright and Cooper claim, are the ability to find an individual approach to subordinates, rationality, and also responsibility for any decisions made (130). Nevertheless, even with all these features, a staff manager cannot always be successful because of the workforce diversity in his or her department.
The integration of enterprises requires consideration of the issue of employees’ characteristics. Thus, when this or that employee fulfills his or her duties, the management, as a rule, knows the peculiarities of the subordinate’s work, his or her strengths, and weaknesses. However, in the process of the emergence of a new enterprise through mergers and acquisitions, a large list of people appears who are completely unfamiliar with the new leadership (Vance and Paik 23). As a consequence, serious performance problems can arise due to the diversity of the workforce and the lack of the ability to monitor the productivity of each employee. To avoid it, it is significant to pay attention to an individual approach to subordinates to find common ground and earn the trust of the team. If employees understand that the leadership does not intend to make serious adjustments to the operating mode and the performance of immediate duties will be the main and only task, the staff will certainly be able to act in concert even despite the diversity.
Also, the goal of an individual approach is to identify potential team leaders among new employees and distribute responsibilities among them. The variety of workers will not be a serious problem if no irregularities in work are allowed. According to Vance and Paik, the task of leaders is to control the quality performance of assigned duties and job descriptions (20). It is hardly possible to expect newcomers to strive to work with maximum efficiency for the benefit of their new company. Nevertheless, as soon as the staff begins to work at the right place, the problem of workforce diversity will no longer be relevant.
International Staffing Practices
Staffing practices used in the process of mergers and acquisitions of companies in different countries are largely determined by the type of transactions and are regulated primarily based on the characteristics of the contract. The personnel of a particular organization can work efficiently and fruitfully, but if the company policy implies a different order of activity, the workers will have to reorganize their regime to comply with the wishes of the employer (Vance and Paik 30). All international personnel practices are based on the types of mergers and acquisitions, and much depends on the circumstances under which this or that agreement was concluded.
Thus, friendly mergers, for example, corporate alliances that occur for the sake of achieving a common goal and by mutual consent of the parties, usually provide for a loyal and individually oriented approach to employees. In such corporations, as Pike claims, the management team, as a rule, adheres to the principle of division of duties by the needs of the enterprise and takes into account the peculiarities of modern personnel policies (3). At the same time, there are hostile mergers when the leadership of the target company does not agree with the forthcoming deal and carries out several anti-seizure measures (Cartwright and Cooper 31). In this case, no personnel decisions are taken, and the primary line of work is the activity of assigning the enterprise without taking into account the characteristics of the personnel and the mode of its departments’ operation. Certainly, this type of merger negatively affects the productivity of work, and some difficulties arise in connection with the disagreements in a new team and the displeasure of many employees. Therefore, the type of transaction is directly related to the personnel policy implemented by a particular corporation.
Also, the professionalism of HR departments plays a significant role. The hiring of high-profile specialists is the goal of most large and small corporations (Pike 6). Today, one of the popular practices is to take into account the individual characteristics of employees when assigning them to specific positions. This approach to the organization of personnel policy allows maximally securing any type of production from undesirable disruptions during the work process and at the same time achieving high productivity of employees oriented towards achieving a good result and finding the most appropriate solutions to solving current tasks (Pike 10). Thus, the types of international personnel policies are inextricably linked to the terms of mergers and acquisitions transactions and are determined by the management’s approach to organizing the whole range of activities.
Ethical Issues Faced by Multinational Corporations
Among the problems that multinational corporations may face in the context of mergers and acquisitions, there are often complexities that have an ethical basis. It is especially true for personnel management since the organization of staffing work requires carefully thought-out practices, and failures to comply with the corporate code can lead to dissatisfaction among employees and the lack of willingness to perform immediate duties. Moreover, the more irresponsible the leadership refers to the observance of the rights and freedoms of subordinates, the greater the chance is that workers will eventually leave their positions and give preference to another employer. In order not to lose valuable personnel and effectively achieve the goals set in the process of agreement, it is essential not to allow problems arising from ethical dissensions (Vance and Paik 18). Nevertheless, such issues periodically occur, and they have to be dealt with to achieve the corporation’s sustainability and success in the market.
One of the difficulties is the possible discrimination of employees on different grounds, for example, sexual, racial, etc. As Xing and Liu note, in the process of work, a particular company focused on a specific business area adheres to certain rules, and their observance is traditional (2561). For instance, in the sphere of sales, it is customary to pursue a certain marketing policy aimed at specific consumers, and for this purpose, some specialists are involved who, in the opinion of the management, can develop the most effective strategy. However, today, according to Cartwright and Cooper, marketing work has no limitations on any grounds, including gender, race, age, etc. (176). If this or that specialist can cope with the task, he or she has the right to claim a place in the team.
Also, another ethical issue faced by multinational corporations in terms of mergers and acquisitions is preferences in favor of the dominant company and a prejudiced distribution of posts. Regardless of the terms on which the merger agreement was signed, whether it was a voluntary alliance or a hostile acquisition, the staff should not suffer because of the management’s problems. However, many leaders prefer to give preference to a close circle of employees, leaving out of the hands of those who turned out to be their subordinates because of specific circumstances (Pike 8). Such discrimination is a serious problem, and to solve it, it is significant that the leadership is aware of the need for a competent and reasonable approach to management focused primarily on success for the company. Otherwise, corporate ethical standards are grossly violated, and some employees are forced to excessive pressure from their employer.
Conclusion
Thus, the analysis of the challenges faced by different companies in managing human resources in terms of mergers and acquisitions helps to identify the primary spheres that deserve particular attention. Ethical problems and workforce diversity can be solved with the help of an individual approach to employees and by taking into account the specific features of the chosen area. A prudent management policy can help to avoid complexities in the merger process and achieve the maximum efficiency and productivity of subordinates’ activities.
Works Cited
Cartwright, Sue, and Cary L. Cooper. Mergers and Acquisitions: The Human Factor. Butterworth-Heinemann, 2014.
Gunkel, Marjaana, et al. “The Human Aspect of Cross-Border Acquisition Outcomes: The Role of Management Practices, Employee Emotions, and National Culture.” International Business Review, vol. 24, no. 3, 2015, pp. 394-408.
Pike, Barbie. “Mergers: What Ethical Leaders Can Do to Help Ensure Success.” The Siegel Institute Journal of Applied Ethics, vol. 4, no. 1, 2017, pp. 1-27.
Vance, Charles M., and Yongsun Paik. Managing a Global Workforce: Challenges and Opportunities in International Human Resource Management. 3rd ed., Routledge, 2014.
Xing, Yijun, and Yipeng Liu. “Linking Leaders’ Identity Work and Human Resource Management Involvement: The Case of Sociocultural Integration in Chinese Mergers and Acquisitions.” The International Journal of Human Resource Management, vol. 27, no. 20, 2016, pp. 2550-2577.