Strategic Partner Role
The HR managers of the two banking institutions were heavily involved in the process of merging the two companies. They provided the strategy used in the merger. We were involved both at the organizational culture level and at the industry level.
This is a key role of a human resource professional. In performing this role, the human resource professionals advised the company on how to be successful in their operations. We were helpful in making the decision to merge so as to increase profitability. These professionals analyzed the financial position of the two banking institutions. It is this form of evaluation that enabled the HR professionals to advise the Banks on the right decision to take so as to enhance profits. In performing the role of strategic partner the HR assist in making important decisions that contribute to the success of the company.
We used our expansive knowledge in business matters to steer the bank to success. The strategic decision to merge the EBI and NBD contributed heavily to the growth of the two large banks. The net profits in 2007, one year after the merger stood at AED 4 billion. This represented a 35% growth above the year 2006. The total assets of Emirates NBD stood at 253.8 billion. This represented 53 percent growth in asset base above what the two companies had before the merger. This high growth both in capital and assets made Emirates the largest banking facility in the United Arab Emirates (UAE). It also went above other banks’ asset market share. Its asset market share in UAE hit 20.5 percent in 2007, just one year after the merger. Emirates NBD bank upon its merger adopted a new HR that was centered on among other things, an HR department that was a business partner.
|Combined Net profits(AED)||2.9 billion||4 billion|
|Combined Asset base||165.8 billion||253.8 billion|
|Average shareholder equity (%)||23.53||25.12|
There was no uniform trend in returns after the announcement of the results. On some days the returns dropped to the negative while on some days the returns were on the rise. On the first day after announcing the returns stood at 3.89 percent. However, the return was -9.02 on the eighth day after the announcement of the merger. Generally, there was an increase in returns after the merger.
This was a good decision made by the managers of the company. Most companies face problems after mergers or acquisitions because they fail to incorporate Human Resource professionals in decision-making.
The ability of HR professionals to effect change in the organizational culture of the two banking corporations required the services of a strategic partner. The two companies had to harmonize their culture to ensure success banking business. Each of the companies had to incorporate new cultures and leave out some of their cultures.
The HR professionals generated ideas and ensured the successful implementation of those ideas. HR was an important constituent in the decision-making process during the Emirates NBD merger.
Employee Champion Role
HR managers are responsible for the recruitment, training and development of staff. They also reward employees to improve on their performance. As a result of the merger of the two banking institutions more opportunities were created. The diversification of the services offered and necessitated the recruitment of more staff to perform the various duties that were available. Training of employees was also necessitated by the fact that the merger was introducing new products into the market.
The opportunities for career development also increased due to the merger of the two banks. As employee champions, HR did several things to promote the interest of employees.
Training of employees
The merger of the banks made it necessary for the HR executives in the two banks to equip employees with appropriate skills. This was necessary for achieving the goals of the newly set bank. The increased growths, after the merger of the two banks, also led to improved salaries for staff.
A lot of money was used after the merger to train more employees. This training was conducted by the HR Department. About AED 30 million was used in the training of both existing employees. Employees attended several seminars in the United Kingdom, Australia, France, Switzerland and the United States. Several other consultants were brought in to train staff. Other in-house courses were designed by the HR department to provide employees with the necessary skills.
The dedication of over AED 30 million by the HR department to train employees of the two companies was an indication that the department was concerned about the welfare of employees. A cheaper option would have been to out-source talent and render the employees who could not cope with the new system redundant. However, the HR department decided to fly most of its employees abroad for training. This provided them with the knowledge to work under the integrated system.
We had to ensure that the staff had the right knowledge to enable the bank to realize its set goals. This explains the use of such a huge amount of money used to facilitate training.
Increasing the number of employees
In the year 2007, the HR department increased the number of employees. Emirates NBD employed an additional 2135 employees putting the total number to 7500 people. This was carried out by the HR department within the companies. The need for more employees had increased after the merger of the two banks.
The bank had employed 1682 citizens of the United Arab Emirates by the year 2007. This made it the first bank to have reached such a level of employment for UAE nationals. Emirates NBD became the ‘employer choice’ in the United Arab Emirates.
Once companies go through mergers, they have a serious task of reducing the costs and eliminating redundancy in the company. The fate of employees is therefore decided at this stage. At times, many employees are often laid off. However, in the case of the Emirates NBD, the HR department employed more people and conducted training to reduce the possibilities of employee redundancy. The number of employees before and after the merger is illustrated in the table below.
|The combined number of staff||5, 365||7, 500|
The merger increased the ability of the two banking companies to attract highly talented individuals in the field of finance. The HR department found it easier to retain top employees due to existing opportunities for career advancement. Employs always prefer working with an organization that has a high potential for growth.
It is through recruiting competent staff and training existing staff that the company achieved its goal of being the champion of the UAE. They also achieved their ambition of increasing in financial strength and scale of operation. It is for this reason that management thanked employees for the work done as they declared profits in 2007.
The importance of HR professions cannot, therefore, be ignored. They can mean the success or failure of a company. The involvement of HR professionals in the merger process was therefore a wise decision for Emirates NBD bank.
Change Agent Role
Supporting and implementing company decision
We have a responsibility of supporting change that occurs within the company. In the case of the Emirates NBD bank merger, the Human resource department played a great role in ensuring that the merger was successful. Human resource professionals of the two merging banks played a vital role in the merger process.
The two banks needed to increase their profits. This could only be done through the merger of the two companies. This was a change that had to occur to spur the growth of the two companies both in capital and assets. The change was to make Emirates NBD the leading bank in the United Arab Emirates with the largest market share.
The HR professionals had to support this approach to ensure its success. If the two giant banks remained static in the way they did business, the great profits that the bank made after the merger would not have been achieved.
The merger also necessitated an increase in the number of employees working for Emirates NBD. The Human Resource department of both banks played a very important role in hiring more staff. This was a change and they had to support it to ensure the success of the company. The merger of 7500 employees through the support of Human Resource indicates that the HR professionals in the two companies played their role as change agents properly. They ensured that the merger resulted in success for the two banks.
Structural and cultural reorganization
The merger of the two banks also created the need to change the management of Emirates NBD. This change in management had to be effected by the HR professionals in the Human resource department of the two banks.
The ability of HR executives to adopt the structures, as well as the employees, illustrates the support that they accorded to the merger of the two banking companies. Mergers have a tendency of causing shocks in companies. They can sometimes lead to failure and not the intended success. The involvement of HR in the harmonization of the culture of the two corporations was an indication that the HR department carried out its role as a change agent. The department ensured that there was enough manpower to perform the new roles created through the merger. This role was exercised through the investment of AED 33 million in training employees. If they had resisted the merger from the beginning, then the overall success of the Emirates NBD would have been jeopardized.
Whenever a company is going through a change in structure or mode of doing business, the HR executives must be at the front in supporting such a move. They have to lead the entire group in the company in supporting a new idea.
The HR of the two banks demonstrated great expertise in dealing with the merger. The merger of the two companies with different organizational cultures was not an easy exercise. The two banks had different ways of handling very issues. The merge, therefore, presented a great challenge for the banking companies. They had to integrate faster, effectively and efficiently. This integration also involved the employees of the two companies. This integration needed a great level of administrative expertise.
Management of staff
The decision to bring more talent into the bank’s workforce and lay off others required a high level of expertise. Being able to integrate over 7000 employees and still achieving a high growth rate indicates administrative expertise on the part of HR Professionals. It is never easy to bring together employees from different backgrounds and use them to spur growth. The HR professionals ensuring that all employees worked towards a common goal was very vital. The two banks achieved great success just within a year of the merger. Without proper administrative expertise, this could have been a mirage.
Efficiency in company operations
The HR ensured efficiency in the operations of Emirates NBD. The operation cost increased after the merger of the two companies. However, this is understandable because the companies engaged in expansion and that led to high costs. The net profits rose by 35 percent. This, therefore, shows that regardless of the increase in operation costs, the company still made substantial profits. The operation cost of The Emirates Bank International (EBI) increased by 46% after the merger. This represented an increase of about AED 2.6 billion. The NBD bank also had an increase of 55% in operational costs in the year 2007. This represented AED 1 billion increase in operational cost. The combined cost of operation of the two banks after the merger stood at 51%. This represented an increase of AED 2.7 billion.
It is the duty of HR professionals in carrying out their roles as administrative experts to check on the efficiency and cost-effectiveness of company operations. In case the profits were lower than the operational costs, then the HR professionals could be deemed to have failed in their role as administrative experts.
The relationship between operational cost and net profits is illustrated below.
|Year||Operational costs||Net profits|
|2006||1.79 billion||2.9 billion|
|2007||2.7 billion||4 billion|
The fostering of employee relationships was enhanced by the HR department. Training employees jointly led to the improved working relationship between employees. The employees of the two different banks could now work as a team. The ability of employees to work together leads to success. This was perfectly done by the HR departments of both companies.
The efficient running of the merged companies was insured by the HR departments. Success would have not been possible if their expertise in administration was not been properly utilized.
It can be stated authoritatively that the HR team performed their roles properly to ensure the success of the merger. If they flopped in any of their roles, then the companies would have failed in their joint endeavors. It would not be possible for our company to increase its profits by up to 35% if we did not perform our roles properly. The growth of over 20% in market share was a result of the work of the HR team.