H.J Heinz Company is a well-established firm that operates in the US food industry. The firm has attained global market recognition due to its comprehensive internationalisation strategy. The firm is renowned for its nutritious and delicious convenient food products (Heinz 2015).
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Despite its past market success, Heinz is focused on optimising its economic sustainability through formulation and implementation of effective corporate level strategies. One of the corporate level strategies that the firm has integrated in its strategic management entails the formation of merger and acquisition (Market Watch 2015).
On 25th March 2015, Heinz announced its ambitious plan to merge with Kraft Foods, a US-based food company. The merger agreement will lead to the establishment of a new entity, which will operate under the name “The Kraft Heinz Company”. Heinz will have control of the new entity (DiChristopher 2015).
Heinz shareholders will have a 51% stake in the new entity. The new firm will become the third largest food enterprise in North America. It is expected that the merger will increase the sales revenue of the two firms to $28 billion (Market Watch 2015).
Over the past decades, a number of merger and acquisition failures have been experienced due to ineffective post-acquisition integration processes (Lakhman 2011). One of the reasons for the failure is the lack of or poor adoption of strategic organisational management practices. The Heinz-Kraft merger is not shielded from failure.
Despite this aspect, undertaking the intended merger between the two firms will present a major challenge to Heinz management team due to the complex issues associated with mergers and acquisitions.
First, some employees might perceive the merger as a threat to their job. Moreover, the two firms are characterised by distinct organisational culture, which they have developed over the years.
The lack of or poor management of the existing organisational culture differences can lead to the failure of the merger. This aspect underscores the importance of integrating effective strategic human resource management practices in order to deal with possible culture shock and employee resistance.
One of the critical strategic management issues that Heinz management team should consider in its quest to implement the merger is effective people management. Failure to take into account the two issues will increase the risk of failure (Holbeche 2007).
The purpose of this research is to evaluate how H.J Heinz Company can successfully undertake the intended merger with Kraft Foods by appreciating the concepts of employee involvement and engagement during its merger process. This move will culminate in the attainment of effective post-merger integration.
The research study will be based on the following research question.
- In what ways can Heinz Company adopt people management as one of the strategic management practices in its quest to foster organisational performance?
Culture is one of the fundamental aspects in the existence of organisations (Schmitz 2009). Gill (2002) argues that can lead to a reduction in an organisation’s cost of operation through effective coordination of the employees’ efforts. Consequently, it can translate into attainment of a higher competitive advantage.
However, most organisations do not appreciate the importance of culture in the course of implementing diverse change initiatives.
A study involving over 100 senior organisational executives engaged in 700 merger and acquisition deals between 1996 and 1998 revealed that 83% of the M&A’s did not attain the desired outcome (KPMG 2000).
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On the contrary, the M&A initiatives led to the destruction of organisational value (Gill 2012). Gill (2002) further argues that the failure emanated from the existence of poor people and cultural management practices.
The strong correlation between people and culture management to organisational performance underscores the importance of incorporating effective HRM practices (Holbeche 2007).
Vazirani (2012) cites a number of factors that contribute to the failures of mergers and acquisitions. According to Vazirani (2012), imitation of the merger and integration strategy has greatly contributed to M&A failure.
This aspect underscores the existence of a gap in organisations’ commitment to formulate and adopt unique people management strategies. Moreover, failures in mergers and acquisitions also arise from the adoption of ineffective leadership practices.
According to Kiessling and Harvey (2006), most organisations do not adopt a knowledge-based view in their people management practices.
Privately held knowledge comprises a fundamental source of an organisation’s competitive advantage. Thus, employees are fundamental intangible organisational resources.
However, the capacity to tap into the tacit knowledge held by the employees is only possible if effective employee involvement and engagement strategies are adopted. This goal can be achieved by integrating the cultural orientation model, which is concerned with understanding the individuals’ cultural dimensions (Sparrow 2009).
Moreover, the extent to which organisational manager understands the employees’ appreciation of the organisational culture is subject to the type of leadership style. According to Cummings and Worley (2014), employee involvement is aimed at increasing the employees’ input in the decision-making process.
Employee involvement culminates in the attainment of high organisational performance while at the same time taking into consideration the employees’ wellbeing. Cummings and Worley (2014) further contend that employee involvement increases the employees’ level of motivation and hence their productivity.
Thus, ignoring employees during major organisational change initiatives may be counterproductive due to increased resistance to the intended transformation, which in extreme situations might culminate in turnover intentions (Galpin, Whittington & Maellaro 2012).
Thus, an organisation may experience loss of key talent hence hindering the attainment of the projected outcome. In a bid to promote effective employee involvement, organisational managers should integrate the path-goal theory.
According to Griffin and Moorhead (2014, p.337), subordinates are ‘motivated by their leader to the extent that the behaviours of that leader influence their expectancies’.
The study will be conducted by integrating the literature survey design. Consequently, the study will obtain data and information on the concept of employee involvement and engagement from credible sources such as peer-reviewed journals, books and reports conducted by credible institutions.
However, the study will only evaluate past studies on change initiatives by different organisations. The choice of the aforementioned source of data will ensure that the data obtained is credible hence providing insight to Heinz Company’s management team on how to implement the two concepts in its merger and acquisition process.
The data collected will be analysed qualitatively in order gain in-depth understanding of the importance of employee involvement and engagement during merger initiatives.
Contemporary business organisations are operating in an environment that has progressively become turbulent. Thus, their long-term sustainability depends on the efficacy of their strategic management practices. One of the issues that businesses will continue to face relates to change. The change may be either intentional or unintentional.
Irrespective of the nature of change, it is imperative for organisational leaders to integrate effective change management practices. In its quest to undertake the intended merger and acquisition, it is imperative for Heinz Company to adopt effective strategic management practices.
One of the areas that the organisations’ management team should focus on entails effective strategic human resource management practices. One of the most pertinent SHRM issues that organisational leaders should take into considerations entails employee involvement and engagement.
The study’s findings will provide Heinz Company management team a better understanding of how to undertake employee involvement and engagement in the M&A process.
Cummings, T. & Worley, C. 2014, Organisation development and change, Cengage Learning, New York.
DiChristopher, T. 2015, Buffett’s HJ Heinz to merge with Kraft Foods. Web.
Gill, C. 2012, ‘The role of leadership in successful international mergers and acquisition; why Renault-Nissan succeeded and Daimlerchrysler- Mitsubishi failed’, Human Resource Management, vol. 51, no. 3, pp. 433-456.a
Griffin, R. & Moorhead, G. 2014, Organisational behaviour; managing people and organisations, South-Western Cengage Learning, Mason.
Heinz: Welcome to our home 2015. Web.
Holbeche, L. 2007, Understanding change, Routledge, New York.
Kiessling, T. & Harvey, M. 2006, ‘The human resource management issues during an acquisition; the target firm’s top management team and key managers’, International Journal of Human Resource Management, vol. 17, no. 7, pp. 1307-1320.
KPMG: Unlocking shareholder value; the keys to success, 2000. Web.
Lakhman, C. 2011, ‘Post acquisition cultural integration in mergers and acquisitions; a knowledge based approach’, Human Resource Management, vol. 50, no. 5, pp. 605-623.
Market Watch: H. J. Heinz Company and Kraft Foods Group sign definitive merger agreement to form the Kraft Heinz Company, 2015. Web.
Schmitz, J. 2009, Understanding the cultural orientation approach; an overview of the development and updates to the COA. Web.
Sparrow, P. 2009, Handbook of international human resource management; integrating people, process and context, John Wiley, Chichester.
Vazirani, N. 2012, ‘Mergers and acquisitions performance evaluation; a literature review’, Journal of Management, vol. 8, no. 2, pp. 37-42.