Introduction
The literature review represents an analysis that has been collected to ascertain the importance of involving human resource managers in the process of mergers and acquisition. The paper will also critically analyse and discuss the importance of involving the practices of human resource in such procedures. As days go by, the human resource department is become a vi9tal partner that can facilitate the process of merger and acquisition. Human resource managers are endowed with skills and knowledge that will be helpful when an organisation is considering such a move. To illustrate how helpful the HRM is in facilitating mergers and acquisitions, the Ulrich model will be used.
Using the model, we will discuss the specific areas of merger and acquisition that the HRM will come in handy. This research presents today’s critical business challenges and the forthcoming new responsibilities for HR managers. It is also a demonstration of critics and the problematic of changing HR to become a strategic business partner. This will be followed by several cases to provide clear idea about the urgency and vitally role of HR mangers during major changes such as M&As.
The literature review section illustrates cases of different corporations that have gone through mergers and acquisitions process and on the need of changing expectations concerning HR manager’s role and responsibilities. The review also looks at the possible reengineering of HR functions to be officially strategic in the coming years.
Strategic Role of Human Resource Management
The strategic human resource management concept roots back to the early 20th century. The employee welfare presented important view points that have facilitated management and business literature. Before the term human resource management ever existed, there was a wider use of personnel management which was replaces as of 1981. This is the year that marks the beginning of the wider use of the term (Storey, J., 2001).
The new basis that was 8used to value people signified the importance of their management in boosting global economy (Best, M., 1990). It was the introduction of this concept that gave rise to the immergence of management gurus who brought in new ideas. One of such theories that were invented includes theory Z, (Ouchi, G., 1981) and In Search for Excellence (Peters & Waterman, 1982).
In search of excellence and theory z both emphasized on the need and importance managing people effectively to realise growth in the organisation. Through the concepts, it was necessary for an organisation to adapt unique management skills that are free from any kind of imitation. With increased number of business establishments, it is necessary to adapt an effective management plan that will give the organisation a competitive advantage over the others.
The adaptation of extra ordinary management procedures has made most organisations to adapt a number of departments. This was deemed necessary to facilitate different sets of responsibilities and also utilize the unique know how that had been acquired by the employees. The concept of human resource was therefore considered to be the best that will have the ability of taking care of these different categories of people that were working in different departments. The revolution that has been experienced in the field of human resource management has led to the birth of a new discipline that is referred to us Strategic Human Resource Management (SHRM).
The introduction of the discipline once again motivated management scholars to come up with its distinct functions and responsibilities. According to theorists like (Beer, M., et al., 1985), the function of human resource Management is to take the perspective of line management and not just HR specialists. Furthermore (Fombrun, J., et al., 1984) supports the broadness of HRM. In their literature on HRM they allied the organisation performance to a wide range of actions such as motivation, organisational culture, strategic human resource management, stakeholder analysis, and structure. This guides us to attachment of the prefix ‘strategic’ to the term ‘human resource management’.
The due diligence among academics, practitioners, and scholars in linking strategy concept to human resource management notion can be justified and illustrated from both the rational choice and the constituency based perspective. There is a managerial logic and common sense to focus attention on human’s skills, knowledge, and abilities as intellectual assets which provide a sustainable competitive advantage when technological advances, even once achieved, will quickly erode (Barney, 1991; Pfeffer, 1994, 1998).
From a constituency based perspective, it is argued that HR academics and practitioners have embraced strategic human resource management as a means of securing greater awareness and respect for HRM as a field of study. On the other hand HR managers are empowered in their efforts of employing strategies that will enhance their role in the organisation (Bamberger & Meshoulam, 2000; Powell & DiMaggio, 1991). According to Purcell & Ahlstrand (1994) “strategic HRM therefore emphasizes on the need for Human Resource strategies and plans to be formulated within the framework and context of overall strategies and objectives of the organization and to respond to the changing nature of the organisation’s internal and external environment.”
Human resource management is a framework just like any other frameworks that requires the interpretation and adaptation of entrepreneurs. It is only through proper interpretation of this concept that the HRM will display proper management of business strategies and plans. The overall features and characters of Strategic Human Resource Management (SHRM) therefore are to integrate and accumulate all HRM functions. These functions are to adherently support extensive and wide-range organisational objectives and also to be responsive to the internal and external environment.
Two recent Australian and international studies suggest that the linkage of SHRM theory and practice is still somewhat unsubstantiated. (Tebbel, 2000; Kramar, 1999) argue that while extensive improvements have been made towards that alignment of all HRM processes and the integration of HRM within organisations, HR managers still have to demonstrate their credibility, reliability, and the beneficial contribution they can afford to business development.
Whatever the direction; Human Resource Management remains a contemporary yet evolving science that deals with complex beings in complex organisations and environments (Cusworth $ Franks, 2003). Its coherence to business strategy and performance has given credibility and reliability to the description of being a Strategic Human Resource Manager (Analoui, 1999).
Human Resource Management and the Strategic Fit with Mergers & Acquisitions
In studies that relate to Strategic Human Resource Management, (Miles & Snow, 1984; Baird & Meshoulam, 1988; Wright & McMahan, 1992) have emphasized on the equivalence that exists between human resource managers and business strategic management. According to them, it is like linking HR functions to the overall strategy of the organisation. Lengnick-Hall (1988) asserts that, “a great deal of theoretical illustration states that the implementation of effective HR practices and the design of human resource system, which are adaptable and compatible with the organization strategy, are crucial and essential for the successful execution of business strategies.”
“There is an increase in the number of empirical studies that are conducted in various contexts on the relationship between strategic HRM, organisational performance, change management, and competitive advantage” (Huselid, 1995; Bjorkman & Fan, 2002; Shaffer, 2004). There is more emphasis which is laid on development of an organization’s human resources capacity in order to enable a better coordination of internal and external organizational environment to be enhanced. The more efficient the practices are the better the working atmosphere which will result in high productivity.
The management strategy that is employed by a firm is displayed through its ability to counter internal and external strategies to gain a competitive advantage over the others. Human pool, which is the basis of an organisation’s capital, will act as a catalyst to the results that a company may display through the integration of their skills, knowledge and abilities which need to be compatible with the objectives of the organisation. The work of the HR is to impact an efficient behaviour and utility among its employees. Sustainable competitiveness resulting from advantages displayed by HR are the most valuable and precious strategic assets.
A merger or acquisition is a long term decision that can ever be taken by an organisation. It is through the considerations that have been made and the real results that will affect the long-term operation of the organisation. Monitoring and evaluation are usually alternative measures that gare sough by organisations that desire to experience growth. Before a final decision is made to enter into a merger or acquisition, the organisation should be able to consider the long-term effects it will have on the organisation rather than the short-term profits (Berger, et al., 1999).
Mergers and Acquisitions M&As have been stated as a key strategic tool for business growth and repositioning during the last decades (Anand, et al., 2005; Hitt, et al., 2001; Schweiger, 2002). During the initial stages of merger and acquisition, the process may experience some challenges that need to be tackled in an intelligent manner (Capron & Pistre 2002; Daniel, 1999; Hitt, et al., 2001; Larson & Finkelstein, 1999).
It has been ascertained that most of such challenges results from not integrating the HR tactics of merging organizations (Buono & Bowditch 1989; Haspeslagh & Jemison, 1991). This may be displayed in the examples of clashes experienced between organisations during mergers and acquisitions (DeVoge & Spreier, 1999; Morosini, 2004; Overman, 1999; Weber & Schweiger, 1992), as well as national cultures in cross-border mergers and acquisitions (Belcher & Nail, 2001; Marks, 1991) particularly during the post-merger period. Even though these studies have generated abundant valuable findings, a challenging mission is to extend this research to indicate how values, organizational systems and workflow become standardized and stabilized in newly merged organizations.
The negativities that have been experienced in M&A in history are attributed to the ignorance in the integration of the roles of HR. some of such important roles include leaving of personnel, survival syndrome, poor motivation, “dump-sizing”, culture, managing differences, vogue long term objectives and unplanned change (Cartwright & Cooper, 2000). Scholars like Bryson (2003, p. 14) found out that “poor merger results are often attributed to Human Resource Management and organisational problems. Other numerous factors linked to maintaining personnel stability are acknowledged as important in managing HRM risk.”
Schuler and Jackson (2001, p. 239) also argue that “Mergers and acquisitions fail frequently as a result of the disregard of human resource issues and activities”. Thus, M&A can be seen as a process of managing people to create energy for the merged organizations especially during the post acquisition integration stage (Habeck, M., et al., 2000).
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