SYMBIOSIS LAW SCHOOL NOIDA

RESEARCH PROJECT ON Human resource management in Mergers & acquisition SUBMITTED TO SYMBIOSIS LAW SCHOOL NOIDA

FACULTY GUIDEDr. Pushpa Negi

SUBMITTED BYAbhishek kumar

.. Symbiosis Law School

DECLARATION
I Abhishek kumar, student of BBA I Semester of Symbiosis Law School, Noida hereby declare that the MRP report titled Human resource management in Mergers & Acquisitions is submitted by me in the line of partial fulfillment of course objectives for the bba.llb I assure that this synopsis is the result of my own efforts and that any other institute for the award of any degree or diploma has not submitted it.

DatePlace-

Abhishek kumar (B.B.A.LLB, First Sem)

CERTIFICATE
This is to certify that Abhishek kumar student of B.B.A.LL.B, First Semester of Symbiosis law School, Noida has successfully completed his Project report. He has prepared this report Human Resource Management in Mergers & acquisitions under my direct supervision and guidance.

DatePlace-

Dr. Pushpa Negi (Faculty Guide)

ACKNOWLEDGEMENT
It is a great pleasure for me to put on records my appreciation and gratitude towards Dr. C.J. Rawandale, Director for his immense support and encouragement all through the preparation of this report. I would like to thank my faculty Dr. Pushpa Negi (Project Guide) for her valuable support and suggestions for the improvement and editing of this project report. Last but not the least, I would like to thank all the friends and others who directly or indirectly helped me in completing our project report.

DatePlace-

Abhishek kumar (B.B.A.LL.B, First semester)

LIST OF CONTENT

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Topic

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Introduction Review of Literature Conclusion References

Introduction
The growth in mergers and acquisitions (M&A) activity around the world, the volume of capital involved, and the pervasiveness of M&A stand in sharp contrast to their high rate of failure. Human resources have been frequently mentioned as a potential factor in M&A failure (e.g., Denisi and Shin, 2004; Weber, Shenkar and Raveh, 1996). However, conceptual and empirical studies of the role of HR Practices in M&A and its relationship to M&A performance remain scarce.Many studies have been conducted under the assumption that M&A are homogeneous, but not all M&A are alike--and that matters (Bower, 2001). For example, acquisitions may differ in their objectives. Some acquisitions aim to reduce costs, while others aim to retain key talent, including scientists and engineers. These differing objectives require the use of different HR practices. Furthermore, acquiring an international firm with the objective of improving both effectiveness and efficiency in the global marketplace will require a focus on the developmental practices of HR, including mentoring, training and creative compensation incentives, as well as intensive consideration of cultural differences. While globalization increases the number of cross-border mergers between companies from different countries, research on the role of HR practices in these mergers is rare. Clearly, the complex global operation of M&A requires a sophisticated adaptation of human resources, which gives rise to new questions, relevant to
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theory, research, and practice, about the nature and effects of HR management in M&A. The complexity of M&A in the global environment is summarized well by Very, Lubatkin and Calori (1993) who stated, cross-national mergers are a complex phenomenon, sometimes influenced by national cultural differences, sometimes by organizational influences, sometimes by both and sometimes by neither." The role of human resource management (HRM) in affecting the success of M&A both nationally and internationally is timely and challenging. We clearly need more research on the role of HRM during the different stages of the M&A, taking into account pre and post stage factors, such as strategic goals, synergy, integration approaches, corporate culture, national culture, leadership, and communication. Several independent streams of management research have studied either pre-acquisition stage or postmerger integration stages. For example, one stream that focuses on pre-acquisition stage examined the relationship between firm level measures of financial performance and the strategic fit between buying and selling firms. Interestingly, a recently published meta-analysis study (King et al., 2004) failed to find a consistent relationship between performance gains and the degree to which the merging firms share similar functions. Another stream of research that focuses on post-merger stage examined the cultural fit of the buying and selling firms and its impact on the success of the merged company, but findings are
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contradictory and confusing. In addition, studies have focused on the psychological effects of M&A on managers and employees. However, these streams have given little attention to the role of HR practices in affecting the success or failure of M&A in the national and international arenas. We note that the bodies of literature on M&A seem to exist in a state of splendid isolation. This issue was raised by a number of scholars years ago (e.g., Weber et al., 1996), but the situation has not changed much recently. While sharing some definitions and terms, authors writing about macro and micro issues associated with M&A, by and large, refrain from stepping into each others turf, thereby missing out on opportunities for cross-fertilization. Furthermore, the research about human resource management in M&A is still fragmented, leaving gaps that need to be addressed. For example, Schweiger and Goulet (2000) conclude, after their literature review about studies on post-merger integration that most of this research, with the exception of culture and acquired top management turnover team, has not been systematic and linked to any comprehensive theory (2000:84).The failure to account for personnel issues is surprising since HRM has the potential to play an important role during all stages of M&A. The goal of this special issue is to stimulate scholars to focus on HR practices as a major area in M&A. This complex, widespread and growing phenomenon of M&A will require the incorporation of multidisciplinary, multi-level and cross-cultural models and
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analyses. Therefore, this special issue also aims to explore how underlying concepts and methodologies can make an important contribution towards understanding M&A and its performance.We invite papers that focus on the role of HR in M&A in both the national and international arenas. We encourage both conceptual and empirical contributions that may address, but are not limited to, the following topics: 1. General Role of HR Practices in M&A: What are the roles of communication, training, staffing, recruiting, rewarding and other practices during the pre and postmerger period? Under what circumstances (e.g., industries, firm size) are these practices the most effective? What are the roles of leadership and trust during different stages of M&A? What are the best practices for knowledge transfer in M&A? What HR practices are effective during the planning, duediligence, and screening stages of M&A? What are the best HR practices to deal with human behavior challenges (e.g., stress, negative attitudes, reduced cooperation and commitment, and turnover) during and following M&A?

2. Multidisciplinary approach: What insights can perspectives from strategy, organizational behavior, international management, psychology, sociology, anthropology and other disciplines provide to our understanding of the nature, antecedents, processes and effects of HR practices? Given that some studies show that experience does not necessarily lead to better performance, how can Learning theory, Knowledge-based-view and Resource-based-view contribution of HR practices to M&A performance? Do strategic goals, strategic choices and screening processes during the pre-merger stage lead to different psychological experiences and outcomes that require different HR practices? What is the link between HR practices, synergy expectations and synergy exploitation? 3. Cross-Cultural approach: How do the characteristics of HR practices in M&A vary across national, environmental and social contexts? Do the effects of HR practices vary across national, environmental and social contexts? How do national, environmental and social contexts influence whether, when and how HR managerial competences are more or less effective? explain the

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Deals Can Fail for People-Related Reasons. The financial services industry has had its share of underperforming deals. These deals failed not only for strategic fit or financial reasons,but also for people-related ones. For example: Management couldnt agree on the future direction of the company. Uncertainty paralyzed the organization. Key employees departed or customers defected. Cultures clashed. Employees did not understand what was expected of them in the new company and morale plummeted.For insurers, the problems are compounded when two companies: combine mature, low-growth businesses fail to cut duplicate cost structures as expected are unable to rationalize or coordinate distribution networks face expensive systems reconciliation experience conflicts in combined management.Nonetheless, the life insurance industry, in particular,plans to continue merger activity as its primary growth strategy because most believe

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Conclusions There are numerous conclusions that can be made about M&A activity, both at the company level and at the HR level. At the Company Level It is important that business and integration strategies be clear When the deal is concluded, there must be a clear vision of what the new combination will look like: _ How will it be structured and run? _ Will it be stand-alone or connected? It is important that such decisions be made as early as possible and avoid ambiguity in decision making guidance It is critical to have a clear plan on whether to merge acquired companies or leave them alone. It is important that performance expectations be reasonable and take into account market conditions, capital investment requirement, etc. The sellers picture is too often the starting point for ongoing operations (e.g., artificially inflated sales, lagging capital investment) but is not realistic as a performance goal Inflated performance expectations can lead executives to adopt short-term focus and delay making investments in the business Financial expectations must be made clear, along with expectations with respect to other things

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Discovery

is

broader

concept

than

legal

due

diligence,covering internal and external analysis, of all key functions and culture (soft and hard due diligence). Thinking through the membership of due diligence teams and the responsibilities of key participants is critical It is important to also make sure that areas such as HR, IT, Operations and R&D are represented on the teams participation will depend upon key value drivers of the deal This has implications for capital expenditures, new product development, management retention, etc. For acquisitions or mergers in new markets, it is essential to understand market dynamics and customers At the HR Level Companies should put their best people in charge implementing M&A deals More emphasis needs to be placed on early planning of the integration process of

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References Bower, J. (2001). Not all M&As are alike And that matters.Harvard Business Review 79(3):92-101. DeNisi, A. and Shin, S.J. (2004). Psychological Communication Interventions in Mergers and Acquisitions. In: Sthal, G. K and M. E. Mendenhall (eds.). Mergers and Acquisitions: Managing Culture and Human Resources. Stanford: Stanford University Press. Schweiger, M.D. and Goulet, P.K. (2000). Integrating mergers and acquisitions: An international research review. In : Cooper, C. and Gregory, A. (Eds.) Advances in Mergers and Acquisitions Volume I, JAI, (New York, NY). Very, P., Calori, R., and Lubatkin, M. (1993). An Investigation of National 346. and Organizational Cultural Influences in Recent European Mergers. Advances in Strategic Management, 9:323-

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