...CURRENT ISSUES SERIES Mergers & Acquisitions: Organizational Culture & HR Issues Deborah A. Pikula IRC Press Industrial Relations Centre Queen’s University Kingston, ON K7L 3N6 Tel: (613) 533-6709 Fax: (613) 533-6812 E-mail: ircpress@post.queensu.ca Visit our Website at: http://qsilver.queensu.ca/irl/qsirc/ Queen’s University ISBN: 0-88886-516-3 © 1999, Industrial Relations Centre Printed and bound in Canada Industrial Relations Centre Queen’s University Kingston, Ontario Canada K7L 3N6 Publications’ Orders: 613 533-6709 Canadian Cataloguing in Publication Data Pikula, Deborah A. Mergers & acquisitions : organizational culture & HR issues (Current issues series) Includes bibliographical references. ISBN 0-88886-516-3 1. Personnel management. 2. Corporate culture. 3. Organizational change. 4. Consolidation and merger of corporations. I. Title. II. Series: Current issues series (Kingston, Ont.). HF5549.P469 1999 658.3 C99-932294-X Executive Summary Mergers and acquisitions are increasing in North America as organizations try to expand their operations and increase their competitive advantage. But despite optimistic expectations, mergers and acquisitions frequently fail, in part because managers neglect human resource issues, which are rarely considered until serious problems arise. This study highlights the importance of proactive management of human resource issues, concurrently with financial issues, and offers detailed practical advice to help ensure...
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...CURRENT ISSUES SERIES Mergers & Acquisitions: Organizational Culture & HR Issues Deborah A. Pikula IRC Press Industrial Relations Centre Queen’s University Kingston, ON K7L 3N6 Tel: (613) 533-6709 Fax: (613) 533-6812 E-mail: ircpress@post.queensu.ca Visit our Website at: http://qsilver.queensu.ca/irl/qsirc/ Queen’s University ISBN: 0-88886-516-3 © 1999, Industrial Relations Centre Printed and bound in Canada Industrial Relations Centre Queen’s University Kingston, Ontario Canada K7L 3N6 Publications’ Orders: 613 533-6709 Canadian Cataloguing in Publication Data Pikula, Deborah A. Mergers & acquisitions : organizational culture & HR issues (Current issues series) Includes bibliographical references. ISBN 0-88886-516-3 1. Personnel management. 2. Corporate culture. 3. Organizational change. 4. Consolidation and merger of corporations. I. Title. II. Series: Current issues series (Kingston, Ont.). HF5549.P469 1999 658.3 C99-932294-X Executive Summary Mergers and acquisitions are increasing in North America as organizations try to expand their operations and increase their competitive advantage. But despite optimistic expectations, mergers and acquisitions frequently fail, in part because managers neglect human resource issues, which are rarely considered until serious problems arise. This study highlights the importance of proactive management of human resource issues, concurrently with financial issues, and offers detailed practical advice to help ensure...
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...MANAGING CULTURAL INTEGRATION IN CROSS-BORDER MERGERS AND ACQUISITIONS Daniel R. Denison, Bryan Adkins and Ashley M. Guidroz ABSTRACT Cross-border M&A has become one of the leading approaches for firms to gain access to global markets. Yet there has been little progress in the research literature exploring the role that culture may play in the success of these ventures. Poor culture-fit has often been cited as one reason why M&A has not produced the outcomes organizations hoped for (Cartwright & Schoenberg, 2006). Cross-border M&A has the added challenges of having to deal with both national and organizational culture differences. In this chapter we review the literature on cultural integration in cross-border M&A and provide a framework designed to help manage the integration process throughout the M&A lifecycle. This framework presents culture assessment and integration as a crucial component to reducing poor culture-fit as a barrier to M&A success. Mergers and acquisitions (M&A) have become a central part of most corporate growth strategies, and an increasing portion of that M&A activity now spans national borders. Indeed, beyond a certain scale, one might say that all M&A is now cross-border M&A. For example, even a merger Advances in Global Leadership, Volume 6, 95–115 Copyright r 2011 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1535-1203/doi:10.1108/S1535-1203(2011)0000006008 95 96 DANIEL R. DENISON ET AL. between two large...
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...MANAGING CULTURAL INTEGRATION IN CROSS-BORDER MERGERS AND ACQUISITIONS Daniel R. Denison, Bryan Adkins and Ashley M. Guidroz ABSTRACT Cross-border M&A has become one of the leading approaches for firms to gain access to global markets. Yet there has been little progress in the research literature exploring the role that culture may play in the success of these ventures. Poor culture-fit has often been cited as one reason why M&A has not produced the outcomes organizations hoped for (Cartwright & Schoenberg, 2006). Cross-border M&A has the added challenges of having to deal with both national and organizational culture differences. In this chapter we review the literature on cultural integration in cross-border M&A and provide a framework designed to help manage the integration process throughout the M&A lifecycle. This framework presents culture assessment and integration as a crucial component to reducing poor culture-fit as a barrier to M&A success. Mergers and acquisitions (M&A) have become a central part of most corporate growth strategies, and an increasing portion of that M&A activity now spans national borders. Indeed, beyond a certain scale, one might say that all M&A is now cross-border M&A. For example, even a merger Advances in Global Leadership, Volume 6, 95–115 Copyright r 2011 by Emerald Group Publishing Limited All rights of reproduction in any form reserved ISSN: 1535-1203/doi:10.1108/S1535-1203(2011)0000006008 95 96 DANIEL R. DENISON ET AL. between...
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...What are mergers and acquisitions? Mergers and acquisitions are the modes of establishing inter-organizational linkages whereby companies buy a part of or a controlling interest in another company (Harrison, 2002). A merger is the unification of two or more organizations into a single unit whilst an acquisition involves the purchase of one organization by another so that the buyer assumes control (Brouthers et al., 1998). Why do mergers and acquisitions happen? M&As are done to help an organization expand rapidly in its own sector or venture into a new field or new geography without creating a subsidiary, other child entity or joint venture. The key principal behind mergers and acquisitions is of synergies or value creation as the two companies...
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...Anatomy of a merger: behavior of organizational factors and processes throughout the pre- duringpost-stages (part 1) Steven H. Appelbaum Concordia University, Montreal, Quebec, Canada Joy Gandell Concordia University, Montreal, Quebec, Canada Harry Yortis Hydro-Quebec, Montreal, Quebec, Canada Shay Proper Montreal Stock Exchange, Montreal, Quebec, Canada Francois Jobin Kruger, Inc., Trois-Rivie Âres, Quebec, Canada Keywords Mergers and acquisitions, Organizational behaviour, Process efficiency, Managers Introduction Since the late 1980s, the total number of mergers and acquisitions (M&As) has far surpassed the number that occurred throughout the 1960s. Whereas the M&As throughout the 1960s were mainly due to unions between conglomerates, the 1980s and 1990s has witnessed an increase in M&As between firms of different sizes and different industry types (Tetenbaum, 1999). The trend to engage in this type of vertical integration or diversification does not seem to show signs of diminishing in the near future. Yet, at best, the firm that initiates the merger usually only achieves normal economic profits while the value created rests almost solely with the firm that was approached (Barney, 1997). The primary purpose of merging and acquiring new firms is usually to improve overall performance (Lubatkin, 1983) by achieving synergy, or the more commonly described as the ``2 + 2 = 5'' effect (Cartwright and Cooper, 1993a; Hovers, 1971) between two business units that will increase...
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...‘M&As: why don’t people ever learn from the mistakes of others? by William Richards Introduction Over the years, mergers and acquisitions research has identified the importance of leadership and workplace learning as critical determinants of M&A activities and outcomes. However, surprisingly little systematic attention has been paid to conceptualising or studying the impact and effect of either leadership styles or learning on the success of M&As – either in the academic or in the practitioner literature (Cartwright and Cooper, 2001) Although scholars and practitioners recognise that acquisitions frequently fail to live up to their potential (Larsson and Finkelstein, 1999), the impact of leadership on the outcomes of the acquisition process and the learning that takes place, has not been well developed or even widely recognised. A review of scholarly and practitioner focused writing on M&As suggest that while much has been written on the actual M&A process, others have only occasionally noted the critical importance of leadership and learning in the success or failure of M&As. Even in those cases where the leadership impact has been acknowledged, past work on M&As has neither examined nor proposed any details concerning what constitutes what learning that actually takes place during M&A or how it makes a difference. A review of academic and practitioner literature on M&A reveals that discussion of the primary determinants of M&A process and outcomes rarely ever...
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...Organizational Behavior Issue Nirali Patel GMGT / 530 September 09, 2013 Brian Frank Organizational Behavior Issue According to Brief & Weiss, (2002), “Organizational behavior is an area of inquiry concerned with both sorts of influence: work organizations on people and people on work organizations.” Organizational Behavior is one of the important features to preserve and improve communication between employees in the business. Qualities like leadership, openness to discuss problems, challenge-initiative are related to the notion of Organizational Behavior (OB) to aid the business accomplish its tactical business objectives. In this paper the OB issues and organizational cultural differences of the two companies will be discussed. These issues have risen because of the decision made by the stakeholders of Rubbermaid Commercial Products (RCP), located in the United States to acquire Technical Concepts located in the Netherlands. The other point of discussion will be the challenges faced by the manger of Technical concept to create a smooth merger and create an environment of cooperation within the organizations. The merger and acquisition is to expand and continue to create a strong stand in the market place. As the manager of Technical Concepts, I have challenged to implement the changes necessary to make the acquisition process successful and to have a smooth transition while still maintaining high quality of performance. As the manager I will give recommendations...
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...IV. Corporate Culture What is this powerful force called “organizational culture” that can determine success or failure in an acquisition and merger. It has been defined in various ways that to work with the culture of an organization is to work with all aspects of a company. “It is the traditions, shared beliefs, and expectations about how individuals behave and accomplish tasks in organizations (Cartwright & Cooper, 1993).” All organizations have a culture, and consistent set of beliefs, shared by most of the members of the organization about how people should behave at work and what tasks and goals are important. The culture also includes and is shaped by the pattern of successful internal responses to adapt to external threats and issues. Since, the culture is results of past successes it will resist change even though a change in the environment, specifically a merger or acquisition, might impose a change in the culture. Economic globalization is viewed by some as the best hope for world stability, by others as the greatest threat. But almost everyone accepts that businesses of all types must embrace it. Organizational culture is a big aspect to globalizations. For recent years more and more international companies has merged. There are very successful acquisitions and mergers, but on the other hand, there are also unsuccessful mergers due to the differences of corporate culture. Some factors of the difference of corporate culture that firms need...
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...Anatomy of a merger: behavior of organizational factors and processes throughout the pre- duringpost-stages (part 1) Steven H. Appelbaum Concordia University, Montreal, Quebec, Canada Joy Gandell Concordia University, Montreal, Quebec, Canada Harry Yortis Hydro-Quebec, Montreal, Quebec, Canada Shay Proper Montreal Stock Exchange, Montreal, Quebec, Canada Francois Jobin Kruger, Inc., Trois-Rivie Âres, Quebec, Canada Keywords Mergers and acquisitions, Organizational behaviour, Process efficiency, Managers Introduction Since the late 1980s, the total number of mergers and acquisitions (M&As) has far surpassed the number that occurred throughout the 1960s. Whereas the M&As throughout the 1960s were mainly due to unions between conglomerates, the 1980s and 1990s has witnessed an increase in M&As between firms of different sizes and different industry types (Tetenbaum, 1999). The trend to engage in this type of vertical integration or diversification does not seem to show signs of diminishing in the near future. Yet, at best, the firm that initiates the merger usually only achieves normal economic profits while the value created rests almost solely with the firm that was approached (Barney, 1997). The primary purpose of merging and acquiring new firms is usually to improve overall performance (Lubatkin, 1983) by achieving synergy, or the more commonly described as the ``2 + 2 = 5'' effect (Cartwright and Cooper, 1993a; Hovers, 1971) between two business units that will increase...
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...TABLE OF CONTENTS EXECUTIVE SUMMARY 3 MERGERS & ACQUISITIONS 4 DISTINCTION BETWEEN MERGERS AND ACQUISITIONS 5 TYPES OF MERGERS AND ACQUISITONS 7 Horizontal Merger 7 Vertical Merger 7 Co-Generic Merger 7 Conglomerate Merger 7 RECENT EXAMPLES 8 REASONS FOR MERGERS AND ACQUISITIONS 10 Growth of the company 10 Synergy 10 Diversification and expansion 11 Elimination of competition 11 × REASONS WHY MERGERS AND ACQUISITONS CAN FAIL 12 No common vision 12 Weak leadership and poor governance 12 Poor strategic fit 12 Cultural and Social Differences 13 Incomplete and Inadequate Due Diligence 13 Poorly Managed Integration 13 Overpaying the target company 13 Changing market condition 13 ARTICLE STATING REALITIES OF M&A for HR 14 SUCCESS MANTRA for M & As 15 Cultural integration 15 Change Management 16 Management resources 16 Role of HR in M&A’s 18 Three Stage Model of Mergers and Acquisitions 21 Stage 1-Pre-Combination (HR Issues): 21 Stage 2-Combination and Integration (HR Issues): 22 Stage 3: Solidification and Assessment (HR Issues): 22 Role of the HR Department in M&A Activity 23 INDUSTRY EXAMPLE – Schnieder 26 Challenges due to acquisitions 26 Industry Example – MTS 29 Conclusions 30 At the Company Level 30 At the HR Level 31 REFERENCES 33 EXECUTIVE SUMMARY Mergers and acquisitions, as a means of rejuvenating and restoring business, have become increasingly popular...
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...Acquisition of ANZ Grindlays by Standard Chartered Bank Banking sector is one of the fastest growing areas in the developing economies like India. M&A is discussed as one of the most useful tool for growth, which has evoked the interest of researchers and scholars. Indian economy has witnessed fast pace of growth post liberalization era and banking is one of them. M&A in banking sector has provided evidences that it is the useful tool for survival of weak banks by merging into larger bank. It is found in our study that small and local banks face difficulty in bearing the impact of global economy therefore, they need support and it is one of the reasons for merger. Some private banks used mergers as a strategic tool for expanding their horizons. This report talks about the acquisition of ANZ Grindlays bank by the Standard Chartered bank. Standard Chartered PLC is a British multinational banking and financial services company headquartered in London. It operates a network of over 1,700 branches and outlets (including subsidiaries, associates and joint ventures) across more than 70 countries and employs around 87,000 people. It is a universal bank with operations in consumer, corporate and institutional banking, and treasury services. Despite its UK base, it does not conduct retail banking in the UK, and around 90% of its profits come from Asia, Africa and the Middle East. In 2000, it completed the acquisition of ANZ Grindlays bank in a $1.34 Billion deal. The following...
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...Change and Culture Case Study I Nikiah C. Roberson HCS/514 Monday September 24, 2012 Dr. Kinaro Change and Culture Case Study I Case Study Robbins Hospital has been competing with Smith Hospital for over a decade. Robbins offers both in and outpatient services including day surgery, wound care, and physical and occupational therapy. Robbins is one of the oldest hospitals in Savannah and is currently being updated with state-of-the-art technology. Smith is more modern, with technology such as telemedicine, PET scans, and the use of the electronic medical records program. Robbins has constantly honored itself on the great quality of care provided to its patients. Smith on the other hand, is known for giving the kind of care to patients that is not always of good quality. Over the last decade a merger took place between Robbins Hospital and Smith Hospital, joining Robbins who has a high quality of patient care with Smith who has modern technology. The newly named hospital will be called Robbins/Smith Hospital. The administrator who has been an administrator at Robbins for more than a decade will have the task of creating an organizational culture that will not only meet the needs of staff, but also provide quality patient care. The administrator at Smith Hospital has a duty to direct the group of employees as one in a way that forms a positive and comfortable work environment. The purpose must focus on the mission and goals of the newly merged facility, with...
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...McShane−Von Glinow: Organizational Behavior, Second Edition Part Four Organizational Processes Organizational Culture © The McGraw−Hill Companies, 2002 C H A P T E R 15 Organizational Culture AFTER READING THIS CHAPTER , YOU SHOULD BE ABLE TO : Learning Objectives I Describe the elements of organizational culture. I Discuss the importance of organizational subcultures. I List four categories of artifacts through which corporate culture is communicated. I Identify three functions of organizational culture. I Discuss the conditions under which cultural strength improves corporate performance. I Discuss the effect of organizational culture on business ethics. I Compare and contrast four strategies for merging organizational cultures. I Identify five strategies to strengthen an organization’s culture. McShane−Von Glinow: Organizational Behavior, Second Edition Part Four Organizational Processes Organizational Culture © The McGraw−Hill Companies, 2002 C arly Fiorina is taking Hewlett-Packard back to the future by reformulating the California-based technology company’s legendary culture, known as the H-P Way. “The H-P Way is about innovation; trust and respect and integrity; contribution to community; and performance,” says Fiorina, H-P’s first CEO hired from outside the company. The problem, she argues, is that employees have distorted these values over the years. “The H-P Way has been misinterpreted and twisted as a gentle bureaucracy...
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...Chapter 7 Cultural Diversity in Cross-Border Alliances Susan E . Jackson Randall S . Schuler Introduction Increasingly, firms are using cross-border alliances to strengthen and maintain their position in the market place . Although often seen as a relatively fast and efficient way to expand into new markets and incorporate new technologies, the success of cross-border alliances is by no means assured . To the contrary, such alliances often fall short of their stated goals and objectives . While some failures can be explained by financial and market factors, the failure of others can be traced to neglected human resource issues and activities associated with managing the cultural diversity present in these organizations . This chapter describes the special challenges that cultural diversity creates for effectively managing human resources within cross-border alliances . Drawing upon the extensive literature regarding the management of domestic alliances and domestic diversity, we offer suggestions for how human resource management practices might be used to improve the success of cross-border alliances . Regardless of industry, it appears that it has become all but impossible in our global environment for firms to successfully compete without growing and expanding through deals that result in cross-border alliances (CBAs) (Lucenko, 2000) . In some industries, e .g., insurance, cross-border alliances provide a means for moving into new markets . In other...
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