People Power: The Crucial Yet Neglected Factor in Successful Corporate Mergers

Executive Summary

It has been a demonstrated fact that chief executives/leaders of companies which are slated to be merged into a larger corporate entity, become preoccupied with the peripheral functionalities of corporate mergers such as regulations management, obtaining of approvals, technicalities of financial and administrative nature, determination of the power structures and so on. However, the corresponding case evaluation report has been oriented towards concentration of emphasis on the dearth of proper attention which is required to be provided to the process of human resource integration management in terms of asset management at the post merger scenario. The human resource elements could be acknowledged to be the most vital assets for staffing operations pertaining to the formulation of the top tier of management structures of the merged companies. Shortcomings in properly staffing of the management posts could lead to misuse/wastage of human resource capitals of different companies. Such problems could have the farthest reaching impacts on the proper functioning of different business organisations since improper utilisation of the human assets could lead to the under utilisation of the associated material resources since the paucity of skill and competency related assets could hamper the procedural and market functionality as well as production/ service provisioning related decisions of any business organisation. The study has highlighted that the most dominant issues is the context of human resource management have been perception management, cultural divergence and communication shortcomings of the associated executive operatives of the companies which could be undergoing the process of merger. For businesses facing challenges in managing human resources during mergers and acquisitions, seeking business dissertation help can provide the most valuable insights and strategies for effective integration and asset management post-merger.

In this context, the related HBR case study has been utilised to determine the various problems related to integration of the human capital of the companies under consideration, namely BioHealth Labs and Dewaal Pharmaceuticals. The highlighted issues in this context have been the complete absence of proper planning, effective engagement with the employees, issues concerning the visualisation of the impacts of apprehension of employees regarding their future career continuation in the merged company and conflict of cultural perspectives between the existing chief executives. The report has also delved into the development of certain recommendations for both of the chief executives of the respective companies to progress towards an efficacious transition to a post merger phase in terms of human capital management and integration.

Introduction

The prevalent business manners as well as the corporate cultures of majority of the populace has been undergoing transformation which signifies cultural metamorphosis from the domestic to globalised perspectives of business operations. The associated purposes are sustaining of organisational growth, achievement of competitiveness and maintaining the status quo. Regarding the VUCA world situational contexts, the Mergers and Acquisitions have become one of the most preferred strategies for corporations to obtain market benefits such as maximisation of competitive leverage and gross profit, sustained growth, stakeholder interest management, innovation management, expansion of financial resources and international brand image formulation. The hazards and challenges associated with such a strategic approach have been imperfect selection of issues to be resolved, inappropriate management processes, dearth of proper diligence and problems of proper integration of the combined human resources at a post merger scenario. Such issues are perpetuated by diverging organisational cultural differences, improper perspectives relating to employee engagement, conflicting frames of mind relating to power concentrations and delay in identification of proper issues pertaining to M&As.

In this context, the issues pertaining to the merger of BioHealth Labs and Dewaal Pharmaceuticals have been explored in the corresponding case analysis report. The highlighted problems have been inappropriate diligence and conflicting leadership styles concerning ensuring employee engagement at the highest levels. These problems have culminated in the absence of proper plan of organisational human resource integration at the post merger scenario. Furthermore, the report would be highlighting the conflicting values and illustration of theories and concepts of management which could be utilised to address the integration issues. Recommendation formulation would be undertaken to resolve the issues pertaining to staffing and structuring of the managerial hierarchy at the merged megacompany of DeWaal BioHealth.

Potential conflict of values and utilisation of relevant theoretical constructs

Eschen & Bresser (2005) have delineated that effective management involves achievement of organisational objective through proper planning, implementation, supervision and control of the different work processes and resources. Vaara, Sarala, Stahl & Björkman (2012) have observed that decision formulation styles of the organisational leadership become crucial in finalisation of HR integration at the post merger scenario. Thus, it is of vital necessity to formulate a consensus regarding the decision making process and leading of the merged organisation by both of the leaders of BioHealth Labs and Dewaal Pharmaceuticals, so that turnover of valuable and apprehensive employees of both of the companies could be precluded. The purpose is to restrict loss of human capital through broadening the horizon of executive capabilities to take cognisance of the post merger situation as a deterministic unit of business environment where personal preferences and emotive factors could be excluded from decision formulation, change mobilisation and supervision prospects. The conflicting values between the leadership elements of Steve and Kasper are indicative of the necessity for the leaders to be enablers rather than controllers. The purpose would be to foster inclusivity and integrity of the new business environment where lateral expansion of employee capabilities could become a definite possibility.

Furthermore, the directional change regarding the organisational mission, vision and goals is another point of conflicting values which could prevent the companies to remain on a path of convergence. The issue is that problems of integration spawned by the diverging corporate cultural perspectives at post merger scenario involving the organisational human capital could culminate in the shifting of the focus of the employees towards the possible dissolution of their positions in the emerging hierarchical order with the added concerns of interpersonal conflicts. Development of synergy is jeopardised amongst the employees when application of strategic management efforts could be improper and the final outcome is serious hindrance of exploration of differential capabilities of involved organisational human capital since the employees become demotivated in an apparently hostile condition. The HBR case study under consideration has highlighted the manner in which CEO Steve and Chairman Kaspar had been utilising the lens of their personal organisational cultures to the issues of future human resource capital management within the merged company of DeWaal BioHealth. They had been ignoring or had been oblivious to the vertical and horizontal differences between the companies and this had culminated in the absence of any proper human resource management and retention plan for the post merger conditions.

In this context, the current conditions are reflective of the necessities of both Steve and Kaspar to avoid succumbing to their emotive factors and personal preferences so as to properly scrutinize the expected performance scenario and necessity of HR expertise for the positions of the future merged company. Further emphasis would be required on the culture of consistency, adoptability, achievement orientation and transformation of HR management strategies while having to arrive at a particular decision regarding which format of organisational values and cultures would be preferred in the future merged company.

Theories of mergers and integration studies to evaluate the process currently utilised in the process of integration.

As per the observations of Green (2016), the case study has utilised multiplicity of organisational theoretical constructs. These have been elaborated as the following:

Leadership theory

The most effective leadership elements could be effectively identified through utilisation of this theoretical construct. The essence of this theory is that reaching the apex of business process performance is only possible through development of the most competent leadership elements within any business organisation. Proper leadership elements could further emphasise on the usefulness of effective management in the form of achievement of group based goals. The underlying processes could be arrangement of various factors of production/service generation, organising the resource management processes and integration of existing resources within the goal achievement framework.

Human Resource Theory

This theoretical construct is effective in provisioning a strategic framework which could be pursued for the objective of effective deployment of human capital within the organisational responsibility structure. This process gains greater vitality in terms of management of experienced and valuable human assets. The effective employment of such a theory based operational approach could further the human resource integration plan which could resolve the most fundamental issue pertaining to the process of merger of two large corporate organisations.

Communication theory

Communication is considered to be the dominant factor which contributes to the measure of success and growth which could be achieved by any business organisation. Gaps in proper communication between the company hierarchies and the employees, including the senior executives, could lead to abject failure in the process of merger between large organisations such as the two mentioned in the HBR case study. The case study has been reflective of the evidence that communication gap between Steve and his employees has been responsible for the emergence of survival syndrome within the top tier employees of BioHealth Labs.

Envisaged recommendations for the development of issue resolution perspectives

According to Jang, Elfenbein & Bottom (2018) , the initial recommendation would have to be defining the objectives of the merged company through forming a consensus between both of the Chief executives (Kaspar and Steve) regarding the core functions of the future organisation. This would involve a joint work session through which finalisation of financial and human resource integration planning could be performed and this process would have to be inclusive of the respective HR managers of both the companies. The factors of the mission, objectives and cultures of the future merged company would have to be taken into consideration prior to finalisation of the human capital integration plan (Bauer, King & Matzler, 2016). This plan would have to be cognizant about the structure of power distribution which would come into effect in the merged DeWaal BioHealth as well.

The next recommendation would be formulation of customised organisational culture for the DeWaal BioHealth. This would be incumbent upon the resolving of the existing cultural dissonance between Steve and Kaspar and forging of a collaborative professional relationship between the two chief executives.

The third recommendation would be the reformation of the organisational structure so as to define properly the interactive and coordination based functionalities within the merged organisation. This process would have to take into consideration various prospects such as new objectives and goals for the merged company as there could be significant divergence of business functionalities and purposes of the DeWaal BioHealth from that of the two parent organisations. According to Ramanadham (2019), there are two different options which could be explored in this context by both Steve and Kaspar. The first one would be the Flat Structure on which DeWaal BioHealth could be configured. This would entail an overall extended management structural span and limited numbers of hierarchical strata. The second would be the Tall Structure of organisational configuration which would entail narrow span of the managerial structure and extensive numbers of hierarchical levels.

The fourth recommendation would be the utilisation of Transformation Leadership elements so as to effectively implement change prospects within the organisational structure. For the future DeWaal BioHealth, Kaspar and Steve are required to act as transformation leaders for the purpose of enhancement of morale, motivation and competencies of the integrated employees. Substitution of Preferentialism and Nepotism with Meritocracy would be paramount.

Human capital integration based processes specified for the chief executives of the companies

According to Weber & Camerer (2003), it is the responsibility of the organisational leaders to design a mechanism through which the performance of existing employees could be evaluated and managed in the context of future task responsibilities. The necessity is off involvement of traits such as flexibility of control, motivational aspects improvement, space for acceptance of criticism and cross-cultural propensity development in terms of the personalities of the leadership details. Development of interpersonal skills of communication to manage uncertain situations is also required for both Steve and Kaspar. Individually, Steve is required to reframe his personality so that the associated professional attitude could be transformed effectively in terms of managing effective communication. The benefits would be informing the colleagues about the selection processes, promotion of multi-cultural tendencies which could negate the preferences provided to previously affiliated personnel, defining of the core competencies for human capital for the merged company and finally, assurance provisioning to the employees of BioHealth Labs that selection for the top management hierarchy of the Dewaal BioHealth would be based on merit and professional competence only.

According to Pellinen, Teittinen & Järvenpää (2016), it would be further required for both Steve and Kaspar to form an accord regarding the direction, mission and culture of the Dewaal BioHealth so that they could jointly consider the combined employee strength of both the companies to determine the appropriate personnel for the merged company as well as formulation of a human capital reserve through which substitutes of inappropriate personnel could be accessed. This would be vital to be achieved since retention of the most valuable human capital would be paramount in terms of significance and could only be ensured through development of alternative responsibility profiles for such personnel who could be kept as a strategic reserve for the future combined company.

Critiquing the usefulness of management theories

The benefits of implementation of the previously stated management theories and the drawbacks of not implementing the approaches specified in the theories are multifarious, concerning the situations detailed under the HBR case study. The most prominent benefit of application of such theories in the analysis of the case study could be understood as the development of a fundamental framework through which strategic solutions for the existing issues could be developed. The identified issues are related to culture, integration, communication, employee turnover and communication shortcomings.

Thus, according to Edwards, Lipponen, Edwards & Hakonen (2017), the crux of the requirement at post merger phases for any M&A project involves addressing of several aspects for avoidance of uncertainty. The emphasis has to be concentrated on planning of human capital integration to prevent the adverse impact of rapid shift in the business environment. Three particular elements are required to be taken into consideration in the format of development of an effective integration plan, identification of strategic and improvement of organisational abilities to achieve predetermined objectives. These approaches could define the process to design the future culture of the newly merged organisation. The options could be dual fold in the format of either following the culture of any particular organisation or to harmonize the existing cultural values so that synthesis of a new organisational culture could be formulated.

In this context, the visions and policies of the existing organisations should be utilised as standards so that the required structure of the management hierarchy could be configured. These could be assistive in performing an in-depth analysis to determine the organisational objectives as well as the required competencies and skills which could effectively outline the procedures through which proper placement of employees in the merged company could be managed. This practice has been termed by Pickering (2017) as benchmarking through which structuring staff requirement could be effectively performed.

The process of merger currently under utilisation at the organisational levels has been indicative of the improper attention provided by both the chief executives in terms of post merger HRM process and this has transmitted the message of devalued position of the employees. Thus, the development of a proper communication plan would be imperative so as to assuage the apprehension of employees regarding their career growth in the merged DeWaal BioHealth. This could foster the element of collectivism which could effective reinforce cohesive social relations amongst the employees within the working architecture of the future DeWaal BioHealth so that a well defined and combined culture of operational excellence could be established.

In this context, Canterino, Shani, Coghlan & Brunelli (2016) have observed that the leadership could utilise the Hfstede-Insights analytical methods to represent the norms, customs, values, characteristics and demographic elements of both of the companies slated to be merged into DeWaal BioHealth. The benefit which, Kaspar and Steve could derive would be the understanding of the cultural differences of the existing human resource personnel and this could enable the DeWaal BioHealth management hierarchy to avoid cultural conflicts.

Summary and Conclusion

At the conclusive phase, it could be observed that the VUCA world based situational analysis of M&A conditions has been applied to the undertaken case study concerning the strategies which could be applied by different business organisations to fulfil market oriented objectives such as growth and profit maximisation, stakeholder worth enhancement and sustainability of business operations.

The HBR case study has been put under scrutiny for the purpose of identification of conflicting values amongst the chief executives of the previously mentioned companies so as to evaluate the problems of HR integration in the merged company of DeWaal BioHealth. The factors underscoring these problems and issues have been identified as ambiguity of objective, power segregation related internal conflicts, strife between leadership elements of individual companies, cultural points of inflection, absence of proper planning, gaps in communication and dearth of staffing initiatives. As developed recommendations, clearly defining of organisational objectives, customisation of organisational culture, restructuring of organisational architecture of DeWaal BioHealth and the utilisation of transformation leadership principles have been contextualised concerning the future direction of progress for both Steve and Kaspar.

Reference List

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