Human Resource Management

FOM, SS02

"HRM aspects in the context of mergers and acquisitions (M&A)"

by

Sven Brüninghaus
Kai Karsten
Bodo Schaefer

1 INTRODUCTION 4

2 ELEMENTS OF HRM 6
2.1 ORGANISATIONAL STRUCTURE 6
2.2 STRATEGIC HRM 9
2.3 INTERCULTURAL MANAGEMENT 12
2.4 MOTIVATION SYSTEMS 15
2.5 CHANGE PROCESS AND CONFLICT MANAGEMENT 17
2.6 HUMAN RESOURCE ACCOUNTING 20

3 CONCLUSION 23

BIBLIOGRAPHY 24

1 Introduction

The purpose of this assignment is a critical review of company mergers and acquisitions regarding different human resource management related aspects. It will be analysed what impacts a merger might have on the organisational structure, on the human resource management strategy and on the required approach regarding intercultural management of the newly created company in relation to the current situation of the merging companies. In addition to that it will be analysed which impact a merger has on the motivation system, the change- and conflict-management and on the human resource management accounting system.

Based on practical merger examples the problems of these areas will be described and analysed and a recommendation for solutions will be given when possible. This assignment will give an overview about the human resource related problems and aspects, which companies will face and should consider when a merger is planned.

The definition of mergers and acquisitions (M&A) is not absolutely clear in the literature. On one hand side a merger is described as the legal and economical connection of two equal companies of the same size, which can be defined as a classic amalgamation, and an acquisition is described as an economical take over of a small company by a big one.¹

On the other hand side the subject M&A also includes the sale of companies, splitting of companies (Asset Stripping), restructurings, spin-offs, joint ventures and alliances.² Based on this it is not clear if a merger is the same as an amalgamation. Although the Daimler-Chrysler deal and the Renault-Nissan deal are defined and described as mergers it is not obvious if these were classical amalgamations or more acquisitions communicated and presented as mergers.³

According to the purpose of this assignment mergers are defined as classic amalgamation and a share or asset based acquisition.
The important item here is that companies with different cultures and backgrounds merge together and have to find a common identity including the consideration of the identities of the merging partners.

In the last years a lot of big and small mergers took place between companies from very different countries and cultures.

Illustration 1: Deal flow within and among regions 2001 in the full automotive sector⁴

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The reason for the trend of mergers is the still ongoing globalisation and the competition pressure based on shorter product cycles, which cooperates face. A lot of these mergers are described as not successful and a dominant reason for this is that soft aspects like company culture, human resource management and organisational aspects are not considered carefully enough. The main focus is usually on financial and legal aspects because these are easier to quantify than the soft items.⁵ This fact is reason enough to find out in the following what the human resource related aspects before, during and after a merger are to avoid the negative impact of too less consideration of these items.

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1 Compare: http://www.flexible-unternehmen.de/kl0908.htm, Jörg Wirtgen

2 Compare course material: Financial Management Module M&A, Dr. Frere

3 Compare: http://www.businessweek.com/2000/00_23/b3684147.htm

4 Source: http://www.pwcglobal.com/fr/pwc_pdf/pwc_automotive_sector_full_2001.pdf

5 Compare: http://www.flexible-unternehmen.de/kl0908.htm, Jörg Wirtgen