Mer

ger
sandAcqui
sit
ion

Mer
gerandacqui
si
ti
onar
etool
sbusi
nessesuset
oachi
eveor
gani
zat
ional
obj
ect
ives.

Merger– isgener
all
ydef
inedasthejoi
ningoftwoormor
edi
ff
erentor
gani
zat
ions
underonecommonownerandmanagementstr
uct
ure.

Acqui
sit
ion–alsoknownasat akeov
erorbuyout
,isthebuy
ingofonecompany(
the
t
arget
)byanot
her.Anacqui
sit
ionmaybef r
iendl
yorhosti
l
e.

Theunder l
yingr easonbehi ndt hesemer gersandacqui sit
ionsi sf inancial
.Mer ged
compani escomet ogetherhopingt ogaingreatermar ketshar eort oachievegr eat
er
eff
ici
ency .Whent wo companiesar ecombi ned i
nto one,ei t
hert hroughmer geror
acqui
sit
ionpr ocess,onewoul dalway ssayt hereissy nergy.Sy nergyi sachiev edby
combiningt hefor cesoft wocompani eswithcompl ement ar
yst r
engt hs.Itresul
tsin:
 Rev enueenhancement
 Costsav ings
 Pay rollcostr eduction
 Acqui r
ingnewt echnology
 Impr ov edmar ketreach
 Indust ryvisibil
it
y
 Enabl ingt henewcompanyt osellproductsorprovideservicesatl owerpr i
ces

I
MPACTOFMERGERSANDACQUI SITIONSONEMPLOYEES
There are compani es t hatf ai
lto achievethei
rantici
pated st
rat
egi
c and f
inanci
al
obj
ecti
v es.Itisoftenat tribut edtovariousHR-
rel
atedf
actorssuchas:
 Incompat i
blecul tur es
 Managementst yles
 Poormot i
vation
 Lossofkeyt alent
 Lackofcommuni cat ion
 Di minishedt r
ust
 Uncer t
aint
yofl ong- term goals

A HumanResour cepract
it
ionerhasaf ew thi
ngstof ocusondur
ingamer
geror
acqui
sit
ion,suchas:
 Creationofnewpoli
ciestoguidetheneworgani
zati
on
 Retentionofkeyemployees
 Empl oyeesel
ecti
onanddownsi zi
ng
 Dev el
opmentofcompensat i
onstrat
egies
 Creationofacomprehensiv
eempl oyeebenef
it
sprogram
CONDUCTI NGANAUDI T
Acompanypl anningt oacqui r
eormer gewi thanot hershouldconductacompr ehensive
l
aborandempl oy mentaudi tofthecompanyt heyar eplanningt omer gewi t
horacqui re.
Whenconduct inganaudi t,allrelev antpaper sanddocument sshoul dbeexami ned.
I
nterv
iewing t op and seni ormanagementi ndivi
duals and some chosen mi ddle
managersshoul dalsobedone.Theaudi tshoul dincludethef ol
lowingitemsandi ssues:
 Empl oyeehandbookandPol icymanual s
 Or ganizat i
onst ructur eandst af f
ingpat tern
 Compensat i
onpol icyst r
uctur eandf ringebenef it
s
 Humanr esourcemanagementpr actices
 Itsv ari
ancei ncul t
ur eandv alues
 Out sour cingar r
angement sandot herser vi
cecont racts;r
ev i
ewt hosecontractsto
ensur ewhet hert heyper mitr enegot i
ationort erminati
on
 Ifuni onized, i
tsCol lecti
veBar gainingAgr eement s
 Ifnon- uni onized,t hest ateofi tsempl oyer-
empl oyeer elat
ionsandanychar ge
pastorpr esentrelat i
ngtounf airlaborpr acti
ceorsaf etyandot herlaborstandard
issues.

COMMUNI CATIONI SSUESINMERGERORACQUI SITI

ON
Havingawel l
-plannedcommuni cati
onst rategyinplaceiscr i
ti
cali
nt hemergerand
acquisi
ti
onprocess.Eff
ecti
v ecommuni cati
oninvolv
esprovidi
nginfor
mat i
onon
a.Theshar edvisi
onforthenewcompany
b.Thenat ureandprogressoftheintegrati
onandanti
cipatedbenefi
ts
c.Theout comesandr oughtimeli
nesf orthefut
uredecisi
ons

Thef
ollowingstepshi ghl
i
ghtt hecomponent sofasuccessf ulcommuni cati
onprogr
am:
 Est abli
shmul ti
pleroutesofcommuni cat i
on
 Focusont het hemesofchangeandpr ogressbyhi ghl
ighti
ngpr oj
ect
shatar e
goingwel landacti
onit emsthatarebei ngdeli
veredont ime
 Repeatcommont hemesoft hemer gerandacqui siti
ont oincreaseemployee
understandingoftherat i
onal
ebehindt het r
ansacti
on
 Pr ovideopportunit
iesforempl oy
eeinv olvementandf eedback
 Ensur et hat employees under st
and t here wi l
lbe pr oblems,but gi v
ea
commi tmentt hatt hepr obl
emswi llbei dent
if
iedandaddr essedasear l
yas
possible

HRSTRATEGI ESI
NMERGERORACQUI SI
TION
HRstrategiesmaybelookedatintermsofthree(
3)st
ages–t
hepr
e-ent
ryst
age,t
he
assi
milati
onstageandt
hemaintenancest
age.
Pre-Entr
yStage
Thisstageshoul
dal
readydeci
det
heshapeandst
ruct
ureoft
henewor
gani
zat
ion.

Assimilat
ionSt
age
Thisstageincl
udesmanningthenew t
abl
eofor
gani
zat
ion,whoget
swhi
chj
oband
redundantempl
oyeesar
elaidof
f.

MaintenanceSt age
Theov er
lappi
ngoff uncti
onsasar esul
tofthemer geroracqui si
ti
on,andthenew
corporate struct
ure resul
tsin downsizi
ng. Lay
offsi nt
roduced an element of
unpredictabi
li
tyinthesurvi
vi
ngempl
oyee’
spsyche,creat
ingfeel
ingsoflossofcont
rol
,
betray
al andunfair
ness.

DOWNSI
ZINGANDRESTRUCTURI
NG

DOWNSIZI
NG
- Astrat
egythatreducest
hescal
esizeandscopeofabusi
nesst
oimpr
ovei
ts
fi
nanci
alper
for
mance.(Robbi
ns&Pear
ce,1992)

WHYDODOWNSI ZINGHAPPENS?
- Decli
ningprofi
ts
- Businessdownt ur
n
- I
ncreasedpressuref r
om compet i
tor
s
- Mergingwithanotheror ganizat
ion
- I
ntroducti
onofnewt echnology
- Theneedt oreduceoper ati
ngcost s
- Desiretodecreaselevelsofmanagement

THREETYPESOFDOWNSI ZINGSTRATEGI ES
Workfor cereduction
- A shor t-t
erm st rat
egyt ocutt henumberofempl oy eesthroughat t
ri
t i
on,earl
y
reti
rementorv ol
untarysev er
ancepackages, andlay offsorterminat
ion.
Workredesi gn
- Amedi um- t
erm strategyi nwhichor gani
zationsf ocusonwor kpr ocessesand
assesswhet herspecificfuncti
ons,product
s,and/ orser vi
cesshouldbechanged
oreliminated.
Syst
emat i
cchange
- Al ong-term st r
ategyt hatchanges t he organization’s cul
ture,att
itudes and
empl oyees’valueswi t
ht hegalofreducingcostsandenhanci ngqualit
y.

DOWNSI
ZINGANDOTHERHRSYSTEMS
Lossoft
rai
ning
i
nvest
mentfrom Empl
oyee Mor
aleof
Rel
ati
ons

Tr
aini
ng DOW
NSI
ZI Per
formance
Management
DOWNSI
ZINGEFFEECT
mpl
o:O
yVE
menRALL
- Fi
rmsreputati
onta Rew
sagoodemp la
or
ydrs
e uf
fers Per
for
manceev al
uat
ion
- Downsi
zingforcestoret
hi S
nkiyst
em
ngofEmpl oymentSt
ratasl
egyayoffcr
it
eri
a
Reputati
oneff
ect
s
onrecrui
tment
DOWNSIZINGEFFE SCT
ev:
eWO
r
ancR
eKF
pO
ayR CEQ
&b enUA
ef
iL
tI
sTY
- Manyseni orempl oyeesl eaveduet oapplicat
ionofearl
yr et
ir
ementi ncent
ives;
resultoflossofi nsti
tut
ional memor y
- The use ofv ol
untaryr eductions (
buyouts)resul
tsint he mostmar ket
able
empl oyees( st
ars)leavi
ng
- Earlyr et
irementsand v oluntaryreduct
ionsof t
en r
esul
ti nt oo manypeopl e
quitt
ingandsomear ehiredbackasconsul tant
satahighercostforthefir
m

DOWNSIZI
NGEFFECT:EMPLOYEEMORALE
- Employ eemot iv
ationdisrupt
ed:incr
easesinpol i
ti
calbehavi
ors,anger,f
ear–
whichislikel
ytonegat i
vel
yimpactquali
tyofcustomerserv
ice
- ‘
Survivors’exper
iencemor estr
essduetolongerworkhourswithredesi
gnedjobs
andincreaseduncer t
aint
yaboutfutur
edownsizing

FI
NANCIALPERFORMANCEANDDOWNSI ZI
NG
- Adownsi zi
ngstrat
egyistypi
call
yimplementedtoimprovebott
om li
ne
- Investor
susuall
yrespondnegativ
elytodownsizi
ngifi
tisfi
nanci
all
ymot i
vat
ed
- Compani esthatofferincent
ivesf orvol
untaryresi
gnati
onsarev iewed mor
e
favorabl
y

EFFECTIVEDOWNSI ZINGSTRATEGY
- Incr
easedcommuni cati
on
- Incr
easedempl oy eecommuni cat
ion
- Systematicanalysisoftasksandpersonnelrequi
rements
- Visi
bili
tyofseni
ormanagement
- Focusonr ight
sizing
- Establi
shasenseofowner shi
p
- Activerol
eofHRdepar t
ment
- Moni t
ordownsizingandl inktoor
ganizat
ionalstr
ategy
- Trainmanagementwi t
hdownsizi
ngtechniques

BESTPRACTI
CESOFDOWNSI
ZING
 - Downsi zingshouldbei ni
tiat
edf r
om thetop
- Workfor cereductionmustbesel ecti
veinappli
cati
onandlong-t
erminemphasi
s
- Specialat t
entionshoul dbepai dbot htothosewhol oset hei
rjobandtothe
sur
vivors
- Decisionmaker sshouldident
ifywhereinef
fi
cienci
esandcostsexist
- Mustbeapr oacti
v est
rategyfocusedonincreasi
ngperf
ormance

PLANNINGANDHANDLI NGTHELAYOFF
- Objecti
veandr ationaleoft hedownsizing
- Targetpay rollcostsav ingstobeachiev ed
- Targetempl oyeef orcetobel ai
dof ft
oachi ev
ethepay
rollcostsavi
ngs
- Targetdat eofi mpl ement at
ion
- Restructuri
ng,r edepl oymentofr emainingmanpower,reall
ocati
onandredesi
gn
oft
hewor kpr ocess
- Outplacementpl anf orthelaidoffemployees
- Communi cat i
onst rategy

ECONOMICSOFDOWNSI ZI
NG
- CostofSeparat
ionpay
=No.ofper sontobesepar at
edxAv eragemonthl
ypayxaveragelengt
hof
servi
ce
- Monthlycar
ryi
ngcost
=No.ofpersontobesepar
atedxAv er
agemont hl
ypayxest
imat
edfri
ngebenef
it
cost
Costofseparationpay
- PaybackPeri
od=
Monthlycarr
y i
ngcost

RESTRUCTURI NG
- I st he cor por
ate managementt erm f ort he actofr eorganizing the legal,
owner ship,operati
onal ,orot herst r
uctur esofacompanyf ort hepur poseof
maki ngitmor eprofit
able,orbet t
eror ganizedforitspr
esentneed.
- Asuccessf ulreorganizati
onr equirespr eparationandpl anningt hataddr esses
programmat i
cneeds,suppor tservicesrequi r
edt oadvanceor ganizati
onalgoal s,
andef fecti
vewor kfor
cepl anningandcommuni cat
ion.

FACTORSTHATHRSHOULDCONSI DERWHENRESTRUCTURI
NG
• Workfor
ceCharacter
ist
ics
• Organi
zati
onal
Struct
ure
• JobDesign
• Redepl
oymentsandCut
s
• Reengagement

REPORT

On

MERGERSandACQUISITI
ONS, DOWNSIZI
NG
andRESTRUCTURING
(MBA104-HumanResour ceManagement)
 Submi
tt
edby
:

DonPat
ri
ckM.Galisanao,CPA
Amyl
inE.I
nfortuno