Strategic HRM issue in an Industry project

The concept of Human Resource Development (HRD) has been increasingly creating attention from individual, organizational and community societal levels. The growth of human resource development has been witnessed over the past decade. Management of sustainable performance results is quite challenging task and should be based on a comprehensive, holistic approach to performance improvement and management. For successful growth of a company, the Human resource manager has to play a bigger role. This is because the role of human resource managers is constantly changing as the management of business systems also changes. The introduction of the new technology has changed the way new businesses are carried and most companies are facing a lot challenges in the current business environment. For good results to be obtained by a company there are some tasks that the human resources managers have to do. For example all the organization functions should be integrated by putting emphasis on meeting customer needs and organization objectives.

New information and communication technology has made most of the current HR to fail in their work. Most managers are nowadays doing business reengineering and redesign by applying new methods of production. Due to increasing rate of competition in the global business, environment, most human managers have also shifted their operations.

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The new system has brought new productions methods such as formation of mergers and acquisitions and outsourcing in order to improve production. The pharmaceutical industry is one of the industries that has been affected by the new technology and is doing business re-engineering. This has been seen in the merger of Well Burrough and Glaxo pharmaceutical industry in the year 1996. Mergers and acquisition of late have become the order of the day in contemporary business era. The concept of merger and acquisition provides strategic, operating and financial benefits to both he parent company and acquired or merged company. Most Human Resource managers of different companies have realized huge financial benefits after having successfully employed the concept of mergers and acquisition in their organizations.

Introduction.

Through mergers large companies have formed new products and technologies necessary to maintain their competitive advantages growth and profitability. However badly done mergers and acquisitions will automatically result in poor performance of these organization yield bad results. First it may lead to disruption of business activities, disadvantages pf employees and defection and above all decrease in production plus production of poor quality products for the combined company or the one formed through acquisition. (Taylor, 2000). This paper presents the challenges facing the Glaxo and welcome Burrough joint company that was formed through merger since 1996 and how the Human Resource manager has tried to tackle the issues. The paper starts by reviewing the Hr issues that might have led to poor performance of merger by Glaxo and Welcome Burrough companies and how they have tried to address the issue.

Literature review on merger and acquisition.

Most of the companies are experiencing successful growth because of the idea of merger and acquisitions the HR managers have put into place.  Mergers and acquisitions have yielded a lot of profits to these companies as a source of new funds in business. The whole process of merger and acquisition is very complex and therefore brings a lot of challenges to the HR who should ensure that the transaction process is properly monitored (Taylor, 2000). The HR therefore must have the responsibility to influence the various activities so that each company comes out a head and satisfied (Sparks, 1998)

In merger and acquisition the HR department will play a number of activities to ensure that there is smooth amalgamation of the two companies. Among the roles include redesigning the company’s model and structure, evaluating essential individuals and setting up the distribution of new and redistribution of present assets and funds (Numerof and Abrams, 1998). The HR should also play the role of evaluation of staffing needs and where possible downsizing can be done. Restructuring of incentives to ensure integration of crucial staff, salaries harmonization and streamlining of payments are also among some issues the HR should put into consideration. According to Taylor (2002) the HR should   pay close attention to the issues that affects the employees and bringing the staff departments together.

Generally coming up with a successful merger and acquisition is very difficult because it means losing one of the departments or one side might feel sabotaged. The HR is to be the central person in managing the transition and smoothing out any performance hitches that may compromise productivity during this period. He has the responsibility of making certain strategies and policies in any merger and acquisition process.

After having looked at the literature review, this paper will critically analyze the HR issues faced during mergers and acquisition. Glaxo and Well Burrough companies have been used as the reference company that was formed in 1996 through merger and to date still facing some problems brought by poor formation of merger and acquisition.

Role of HR at various stages of merger and acquisition.

Just from the beginning the HR plays a complex role in the process of merger and acquisition. He should understand that he is dealing with different assets and different people from different cultural background. He therefore needs to recognize whether the cultural values of the two parties are compatible whether one culture will be dominant and the other less dominant. These issues should be addressed. This is one area where the HR for Glaxo and Welcome Burrough went wrong.

Staffing.

Most of the businesses formed by merger and acquisition always lose their key people after acquisition. It means that retention of key employees is crucial to achieving performance goals through the transition. The HR should therefore ensure that key employees and competent ones are retained in the company. Carrying assessment in the type of employees to be retained should be done whereby those who have worked for long are supposed to be retained.  Solidification of the new staff is very necessary to strengthen the organization. Since mergers and acquisition involves two parties, proper balancing when choosing the new staff members needs to be considered. The various interests of the new staff members picked should be articulated with those retained by the HR to ensure smooth transition (Creswell, 2001).

Picking on new members of the organization may require a team leader representing the tow parties. The leader should help the HR in making positive judgment on who is to stay and who is to leave (Spark, 1998). The moment a new team is picked, the HR should ensure that a specific task is assigned to a particular individual on his area of specialization. On dong this he will be able to make good decision on how to come up and coordinate new culture, structure, HR policies and practices that should be incorporated in the newly formed organization. This means that staffing is a key issue that should not be ignored by the HR.

Job redesign.

The HR should redesign the organization strategies for smooth take over to be achieved. The type of merger should also be addressed effectively for example whether the company is to be formed through acquisition or merger. He should perform some readjustments and reengineering to the new system to ensure solidification of the new staff is achieved. The two companies discussed formally failed because of the inability of the HR to carry an effective job redesign. The new team picked starting with senior officials should be selected with an objective of cutting down the cost of operation to ensure huge financial benefits are achieved.

Training programs.

Training is one of the best business practices that the current Human Resources managers and supervisors need to know. Effective training should be given to the new staff members to ensure the new knowledge and skills are passed into them. The HR needs to recognize that his is in a new environment and dealing with new employees. Each worker should be trained thoroughly in his/her area of specialization to ensure smooth transition. Training should also be provided in areas dealing with discrimination and harassment. Discrimination is a common vice that do exist in any organization. Chances of bullying and harassment may exist in the organization since the company will consist of new employees. Training should be reevaluated whenever new equipment, tools are introduced into the work place and any time a new employee is recruited.

Dealing with cultural issues.

In any organization, employees tend to come from different cultural backgrounds. In merger and acquisition the HR is faced with a difficult task of handling the cultural issues of the two parties (Brett, Behfar and Kern, 2006). The HR should check whether the two cultural values are compatible or not. For example one culture may be dominant over the other. Cultural identification will help him in coming up with procedures on how people falling under different cultures will operate when merged together. The way employees react to the change introduced will normally determines whether the combined company will be productive or not. Human Resource manager is believed to be an officer who has powers to address the cultural differences among the employees. If the cultural differences are not addressed, the whole process of take over may fail whereby the company may end up not getting the huge financial benefits it wants to achieve.

Intermixing of staff members never succeeded properly in the merger between Glaxo and Welcome Burroughs in 1996. There was a problem between employees and the administration over the salary increment. The pharmaceutical company is situated in India.  The difference that occurred over the salaries between the two companies employees was such that even after a one-month compensation offer was made, it was refused and both subsidiaries have continued to operate as independent subsidiaries. A pointing an integration team headed by integration manager could have solved this problem. The manager is charged with the responsibility of carrying out negotiation between the two parties. The integration manager appointed should act as project manager, advisors, negotiator, facilitator and relationship builder. This duty was ignored by the HR heading the new company that was formed through the merger of Glaxo and WelcomeBurrough.

Power and conflict is another problem that is experienced during mergers and acquisition process. The HR is supposed to be vigilant when handling power and conflict issues. He needs to bring conflict out to the surface and deal with power issues very closely. He should figure out the role of each organization to prevent unnecessary conflicts between the two parties involved. The two organizations should not be left to work in guesswork on who is to control the other. Communication should be made open whereby all the necessary information pertaining the merger should be passed to the members.

 

Reward and motivation.

Employees in any organization will tend to work effectively when rewarded appropriately motivating employees has always been a high level concern for human resource managers. As such, recognition and rewards often take on mythical status in value for managers to increase productivity and increase retention. Any good work done should be rewarded to ensure that employees’ self-esteem are maintained and increased.  Positive reinforcement and rewards always keep the company to move towards the required direction. Employees should not be fooled by feeding them with nice words without any action being taken. He should keep to his promise. Rewards and motivation can be brought by building team work (Viasic and Stertz, 2000).

Compliance to legislation.

The process of merger and acquisition is very complicated. The HR should therefore take the responsibility of influencing the various activities so that each company comes out a head and satisfied. The legal framework governing the process of merger and acquisition should be observed. These may include intellectual property issues and financial issues. Retention issues, recruitment, management, payment scheme, medical cover and rewards should be discussed before take over is done. The legal issues raised during M &A may affect strategy development structure and responsibilities of different members. Other legal issues include compliance of the transaction with local, state and federal laws. It may also include conducting a   proper consultation to unearth any potential lawsuits or potential claims. Different stakeholders should be consulted to ensure that proper understanding is achieved between the two parties.

 

Evaluation
The HR should perform evaluation on the operations of the new company formed through mergers and acquisitions. Evaluation will help him make some adjustments on improving products and services offered by the company. After selecting the key people to be retained and new employees to join the company, evaluation of the core operations of the company should then be done. The corporate culture, employee demographics, current remuneration and unsettled labor and employees issues should be evaluated. An understanding of these issues will ensure that the HR stays a head of the curve during the merger (O’Reilly and Pfeffer, 2000). The joint company never carried out evaluation of the various elements in the new company. Employee salaries were not assessed when the negotiation was made.

The structure of the company and those in charge should also be evaluated. He should find out what the employees feel about the new merger to be formed, as this will determine whether the whole process of merger will be successful. It can be said that evaluation was not carried on merger between Glaxo and Welcome Burroughs in the year 2001.The differences that arose could have been solved if the HR would have done proper evaluation.

Summary.

Many changes have been identified as a result of merger and acquisition. It is the responsibility of the HR of the company to ensure that these challenges are properly addressed. This will ensure smooth integration process. The HR should be responsible for the cultural integration, leadership and communication of merging firms. power, cultural differences and communications are some of the key issues that the HR should address to ensure smooth takeover.  Any change introduced within the organization should be communicated in time to the relevant people. Thorough assessment on the two companies to be merged should be done to confirm whether they are compatible or not. A company can be better placed in the production line if the HR lays effective strategy before the merger and acquisition process effected. Another reason for poor performance of companies formed through merger and acquisition is due to failure to develop specialized skills and resources. Those who are involved in the deal at times are not aware of the productivity tools required of them in the merger process. These people should have relevant skills and knowledge before they venture in to the deal. Skills most of these dealers lack is about profit making, effective communication and the strengths of the organization plus its limitations. Various professional should be contacted, funding sources and sources of business information. All these should be stored in his database. These skills will help one when entering into a deal on merger and acquisition.

I can also say that those companies involved in merger and acquisition do fail to achieve for financial benefits because they do not use professional counsel to add value to their organization and decisions they are making. They do not realize that merger and acquisition is a complex and complicated process, which is detailed, and time consuming if both parties are not careful. It might take years and years before the smooth take over is finally realized. This implies that a lot of risks are associated with the acquisition process therefore one need to seek help on how to go about the process. The only source of help is by seeking for advice from professionals who have been dealing with process and have brought successful results. Companies that fail do not consult widely on how to approach the merger and acquisition profess.

Conclusion
The pharmaceutical industry is one of the industries that has been affected by the new technology and is doing business re-engineering. This has been seen in the merger of well Borough and Glaxo pharmaceutical industry in the year 1996. What can be said is that companies formed through merger and acquisition under a competent HR have been placed in a better position as far as healthy competition in the business environment is concerned. The whole process may be effective if proper planning is done. The HR should take the responsibility of bringing the two parties together to ensure smooth take over. However many companies formed through merger and acquisitions have failed to realize financial benefits because the HR issues discussed above are not addressed. Compliance to legislation, cultural issues, staffing, businesses redesign and evaluation should be properly addressed to ensure smooth take over.  If all these are checked, the HR will therefore realize the huge financial benefits it wants to achieve.

 

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