The Effectiveness of Organizational Development in Mergers & Acquisitions

The Effectiveness of Organizational Development in Mergers & Acquisitions

Anas Bouargane 17/02/2020 2

To date, there has been an increase in global integration trends in the global economy.

Large national companies are increasingly thinking about entering international markets and obtaining a world name.

However, to be successful both nationally and globally, the company must have competitive advantages. One of the progressive forms of acquiring such advantages is mergers and acquisitions. The market of mergers and acquisitions is unstable; it is cyclical. Currently, in the context of globalization, there is an aggravation of competition, and many companies face significant challenges in their attempts to enter new markets, obtain strategically critical scarce resources, and increase the capitalization of their business. M & A deals allow the company to overcome the difficulties of growth.

With the right choice of the target company and the correct implementation of the integration process, the M & A transaction can help companies to increase the speed at which products enter the market, outrun competitors and reduce the pressure of destructive market forces. However, still, such transactions lead to a change in the organizational structure of the company. Basically, in this process, the organizational development of the company takes place, which does not always have a positive impact on the two companies.

Criteria for selecting companies are closely related to the tasks assigned. If it is a question of unrelated diversification and financial motives of the transaction, then, naturally, the organizational and cultural aspects of the partner's choice will be less critical. However, when a partner is needed to share knowledge and create synergies, or if a merger involves some degree of integration, an integrated assessment is needed. Therefore, the purpose of this work is to analyze the role of M & A for organizational development and what challenges the company faces during this process. 

Mergers and Acquisitions: Definition of the Term 

As the processes of globalization of the world economy deepen, the problem of competition arises all the acuter. When national companies are included in the world market, competition goes to an entirely different level. In the global market, such companies may face leveling their competitive advantages, even to the point of their total depreciation. This situation forces us to change the strategy of behavior radically. As the processes of economic globalization increase, enterprises are in fact compelled to compete no longer with national companies, but with a whole world industry that is hugely diverse regarding technical equipment, production level, market share. All this raises the bar of the barrier to entering the global market, without giving the enterprise time for gradual, systematic development and forcing it to be immediately included in the production process.

One of the most common ways to quickly enter the market is mergers and acquisitions (M & A - from the English Mergers and Acquisitions). According to the basic terminology proposed by SF Reed, fusion occurs when one corporation is connected to another and dissolves in it. Absorption is a general term used to describe the transfer of property. In recent years, growth through acquisitions has become an essential component of the success of many companies in the new economy. It can be said that mergers and acquisitions were the only factors in the growth of their market capitalization. It is much faster to absorb than to build. And in the new economy, for example, the speed of bringing to the market, the rate of positioning, the pace of transformation into a viable company solve everything.

Motivational Factors of Mergers and Acquisitions

Assessing the trends of the existence of the phenomenon of mergers and acquisitions as an option for the development of companies, we can conclude that the methods of their implementation were complicated with each subsequent stage of development of the world economy. On this occasion, the question becomes logical, what are the current motives for concluding merger or acquisition agreements between competitors?

By exploring the problem of mergers and acquisitions, different analysts in their way propose to group their motives and reasons. In our opinion, to force or encourage a company to enter into an agreement with a competitor, there are three groups of factors: the internal necessity of the company, due to the need to find a new direction or way of its development; external conditions caused by changes in the business environment, which threatens to lower the efficiency of the company and makes it looks for new ways of development; their own desires, plans and ambitions of management of the company.

The action of internal motivational factors manifests itself in the aspiration of the merging company or the acquirer to acquire new skills (for example, technological advancements, better ways to organize business processes or experience of staff of a competitor). Often the internal motives of a company to create an alliance with a rival by the merger is the desire to gain access to new products, markets, distribution channels and financial resources of another company. This motive, in particular, is dominant when foreign companies purchase domestic competitor companies in the food industry (for example, the beer industry). The company-initiator thus plans to gain additional advantage from the expansion of the market, saving on costs of entering the market. A less common, but no less critical motive is the desire of the merging company to obtain tax savings through the purchase of a loss-making competitor.

The influence of external motives of mergers or acquisitions is explained by the company's desire to maximize its production capacity in the context of a general reduction of the market. Such an opportunity arises in the event of a merger with a company that produces products differentiated by the company. Acquiring such a company will prevent the process of reducing or curtailing its production due to the use of excess capacities for the production of another company.

The motives caused by the managers' own desire are manifested mainly in their desire to obtain specific financial benefits from the purchase of competing companies (for example, the expansion of control over the company-competitor and its staff and the influence on them, obtaining additional remuneration from the owners at the expense of growth of turnover and course shares after absorption or merger). Note that in most cases, mergers or acquisitions caused by such a motive are hostile to competitive companies and are least guided by the achievement of economic or financial efficiency for the business as a whole.

In the practice of mergers and acquisitions, there are also examples where the motive for agreeing was the common desire of participating companies to obtain virtually the same benefit. For example, the merger of companies in one industry allows them to negotiate with suppliers to reduce purchasing prices and to benefit from lower costs through the implementation of large batches of purchases. One of the motivating motives for both companies may be their desire to reduce their own costs for research and development of new products or technologies.

External motives, which encourage companies to unite, are also the requirements of creditors to the size of the company, the volume of turnover and profit of the latter in the case of jumbo loans, as well as in case of its entry into the world capital market. The merger of two or more companies with common interests can increase the credit rating and take advantage of the company-initiator. If the goals, motives, and desires of the companies coincide, their mergers or acquisitions become a true status. A key factor for a friendly takeover is the proper assessment of the prospects of the merger and the procedure for the execution of the purchase agreement.

As with any other investment decision, the conclusion on the feasibility of a merger or acquisition procedure should be justified by specific calculations. The level of their detail depends, first of all, on the number of financial resources the company intends to spend on the conclusion of this transaction.

Unfortunately, the results of concluded transactions are not always indicative of the effectiveness and feasibility of a merger or takeover. Studies show that the number of unsuccessful operations is about 60% of the total. The main reason for this is that the revenues generated by the merger do not cover all costs of the merger process (for example, stock purchase, the redemption of obligations, etc.). The negative consequences of mergers or acquisitions are due not only to financial losses but also to the reduction of the efficiency of the management system of the merged company. However, the majority of adverse results of concluded agreements is connected with the poor quality of preparation and integration.

Stages of Mergers and Acquisitions of Companies and Their Impact on an OD

Within the framework of the chosen corporate strategy, the process of mergers and acquisitions must go through seven main stages.

  1. Determination of the objectives pursued by the company in the transaction. The goals of mergers and acquisitions are to achieve competitive advantages in the market and increase the shareholders' well-being (an increase of the company's capitalization). Moreover, these goals can be obtained by the company through the use of both internal methods (improving management efficiency, using more modern ways of doing business, new technologies, increasing labor productivity), i.e., by organic growth, and by external methods, which include mergers and acquisitions. 

  2. Analysis of options for achieving the goals. Since high risks characterize mergers and acquisitions, alternative options for making the set goals are first analyzed. We consider opportunities for building new capacities, restructuring, increasing internal efficiency, changing marketing policies, etc.

  3. Selection of the object of the transaction, the search for a corporation-candidate to purchase. First of all, it is necessary to comprehensively analyze the situation to determine how thoroughly the company will be able to realize its opportunities in the planned takeover or merger. The preparatory phase of the transaction, as a rule, includes several stages: analysis of the industry, self-evaluation, analysis of competitors, after the preliminary analysis of the external and internal environment.

  4. Evaluation of the selected target corporation. At this stage, the candidates for merger or acquisition are evaluated first. Comparison of their expectations from the merger and the parameters of candidates for operational characteristics, ownership structure, financial indicators allows you to identify the most attractive of them. The second step is to identify opportunities for creating synergies. The success of a transaction depends mainly on the ability to assess the creation of value as a result of the integration of marketing, production, research and other capacities, strengthening market positions, reducing staff, transferring technology. The third step is to identify opportunities for creating value through restructuring the company. Determining opportunities for restructuring, buyers often compare the company being absorbed to industry leaders. It is important to remember that mergers or acquisitions always mean changes in both companies in both digested and absorbed, and they can be profitably used for transformation. The next step is the financial evaluation of the candidate. In conclusion, the final verification of the reliability of the company. Based on the verified information, the cost of the company being absorbed is specified, while the agreements contained in the memorandum of intent may change. 

  5. Decision-making. Drawing up an integration plan.

  6. Implementation of the merger/acquisition plan planned by the corporation-buyer with some changes. Integration. Although the basic schemes for which this or that type of merger or acquisition are being conducted are already known for this stage, the literature describes in detail: protection schemes against hostile takeovers (both before and after the tender offer); types of payment for a merger. The negotiation process is specific to each case, and there are no explicit dependencies. Integration of companies is rightfully considered one of the most challenging management tasks. In this process, there are a lot of subtleties and complications. Therefore, companies very often make mistakes. Despite the significant experience of associations, the algorithm of integration "according to the textbook" does not exist too much importance is the specificity of the merging companies. The success of integration depends not only on how carefully the work is planned, and the responsibilities are assigned but also on whether it will be possible to realize the unique opportunities that emerge as a result of the transformation of companies. At the same time, world experience shows that companies often not only do not consolidate their position as a result of the merger but, on the contrary, lose their primary positions. The association creates a situation of uncertainty, which can lead to the loss of key customers and employees, to uncontrolled expenses and, as a result, to the destruction of value.

  7. Evaluation of effects. After some time, the effects of the transaction are evaluated, and conclusions are drawn about the degree to which the goals are achieved. Thus, to achieve and the companies set strategic goals, they must more efficiently use the transaction on mergers and acquisitions. To do this, they need to plan these operations carefully, to analyze their competitive positions, the market, technologies, and consequences of transactions more deeply.

The Problems and Negative Consequences of Mergers and Acquisitions for OD

The merger can improve the efficiency of companies that have merged but can worsen the results of current production activities, increasing the burden of bureaucracy.

Experts identify three reasons for the failure of mergers and acquisitions: Incorrect estimation of the absorbing company's attractiveness of the market or competitive position of the absorber; Underestimation of the amount of investment required to complete a transaction; Mistakes made in the course of the merger transaction.

An incorrect calculation of investments for a merger transaction is possible. For example, with the acquisition of BMW by Rover, the approximate cost of the latter was 800 million pounds, and the necessary investment in the next five years after the merger was 3.5 billion. Managers cope with the difficulties caused by the integration of the two companies, with the specifics of the production process, accounting, corporate culture. 

The value of companies depends on specific assets, like human resources, the professionalism of managers, the qualifications of workers, engineers, researchers. Change in the host leads to a revision of the established criteria for assessing the personnel and traditions of career planning, to changing priorities for spending funds, to changing the relative importance of individual management functions and, consequently, to breaking down the informal structure. If managers are absorbed, they have a specific share in the capital, their transformation from proprietors into hired workers negatively affects motivation. As a result, they begin to work worse.

Analytical studies of mergers show: it is more profitable to sell a company than to acquire someone else's. In most cases, shareholders of companies that acted as sellers in mergers or acquisitions made a profit, and the shareholders of the acquiring company won less. Two reasons can explain it. First, companies that absorb are more developed than those that are absorbed. If the net benefits of the merger are evenly distributed between the two companies, the shareholders of each company will receive the same income in absolute terms, but in relative, percentage terms, the earnings of the shareholders of the company being absorbed will be higher. Secondly, each applicant for the purchase of the company seeks to exceed the conditions advanced by the previous one. Most of the winnings from the pending merger transaction go to shareholders being absorbed. At the same time, the managers of the company that are going to absorb can take some measures of an anti-seizure nature, seeking that the sale of their company, if it occurs, occurred at the highest possible price in these conditions.

When large corporations are formed, a phenomenon of suboptimization arises - the desire to strengthen intra-group cooperation ties, to buy products in own companies. Own company seeks to set a price that brings maximum profit. Thus, the production becomes expensive and uncompetitive. Modern economics principles imply that business should focus mainly on the “average-priced” market, offering services someone might need right away. You cannot gain much profit when putting an “elite” price tag on something sold at a fair price by your competitors. For example, online research paper writing help for college and university students is always in high demand. Essay writing companies like Write My Paper Hub win the market, offering professional writing assistance from experts, hiring the best academic writers, and dealing with most of the topics students may be interested in. When you don’t have time to write a paper and pay for a sample, you want it to be an affordable experience. As studies show, the academic writing market is booming, only services which offer the best cost-quality balance win the customers.

The consequences of acquisitions lead to such phenomena as an increase in the number of unemployed, bankruptcy of enterprises, a break in economic ties with suppliers, an increase in monopoly, an increase in prices for consumer goods.

About 95% of acquisitions occur by mutual consent of both parties, often in practice there are hostile takeovers - situations in which an extraneous group buys shares of the corporation in an amount sufficient to gain control over it, against the will of the board of directors, this is a hostile takeover. If the controlling interest is acquired, then the previous managers are dismissed and the management of the company passes to others.

Mergers and Acquisitions as a Form of Competitive Advantage of the Company

Modern enterprises use several variants of development, among which two principal ones stand out: growth through organic development or growth through the acquisition of a structure from the outside. It should be mentioned that any company initially develops an individual corporate strategy that serves as a basis for making further decisions, so it is necessary for managers to determine a profitable direction: investing a certain amount of resources in buying a new business or redistributing resources among existing activities. Therefore, for the company, the merger and acquisition process is a way to achieve a strategic advantage by integrating a new business, which should be more potent for the effective operation of the company as a whole than the process of internal development.

At the moment, various approaches to the definition and classification of mergers and acquisitions are highlighted. More specifically, the merger is a reorganization, as a result of which all rights and obligations of participants in the composition of two or more companies are transferred to the newly created legal entity. And under the takeover is understood the process of moving all rights and obligations to an existing legal entity in connection with the termination of one or several market participants. In general, mergers and acquisitions are transactions of control over the activities of enterprises that are formal or informal.

At the moment, an increasing number of international companies are involved in mergers and acquisitions. Among them, there is also active on transactions among multinational corporations.

Despite the positive assessments of the experts, a large number of studies in this area indicate that the initial goals of M & A are unattainable or not at al. Therefore, many scholars raise the question of whether such economic operations should be carried out. In 1978, the consulting firm Arthur D. Little conducted one of the first severe M & A studies at the time. The result of the work was a list of the most significant reasons for mergers and acquisitions, which included the following items: obtaining synergies, diversifying the business by entering new markets and expanding the range of products, increasing the market share, using the acquired innovations and legislative advantages of another country, tax benefits, the purchase of the necessary undervalued assets, exit strategy and the desire of managers to significant and successful transactions.

A later audit firm, KPMG, also conducted studies that showed slightly different motives. Of the 100% of the companies surveyed, 22% could not explain the specific reasons for their implementation of such transactions, 31% cited the goal of increasing their market share, 26% relied on geographic expansion of the scope of activity, 15% emphasized the need for diversification and 6 % - said about economies of scale (KPMG, n.d.). Thus, it can be judged that in the second case a more restricted list of M & A motives is considered. Also, some real motives are not always realized or are hidden. Therefore, the analysis of the reasons for conducting mergers and acquisitions, taken directly from the assessments of the practical experience of various companies, has a selective nature and does not give an objective assessment.

All the reasons for mergers and acquisitions boil down to the growth and achievement of the most influential strategic position in the market, which means that the primary goal is the company's strategic advantage, which the company cannot achieve through internal growth of the business. Thus, the strategic approach requires two groups of motives for mergers and acquisitions: strategic and functional. The first group of motives includes the following items: strengthening the competitive position and increasing the market value of the business, obtaining financial stability and developing new business models. While the second includes a variable list of economic, subjective psychological motives, for example, obtaining tax benefits, increasing the market share, accelerating R & D, increasing cash flows and controlling them.

M&A and Human Capital

Analyzing the practice of M & A transactions, both domestic and foreign researchers as one of the most serious allocate precisely HR-risks associated with the growth of uncertainty due to the lack of a real strategy for further work and increased concern for employees and the confusion of managers. Negative phenomena are particularly typical for unfriendly takeovers because the acquiring side often underestimates the potential costs of integration, restructuring of the management system, the formation of a new image. Integration really requires a lot of effort, including, of course, the efforts of HR managers.

Critical Points

To fall into the maelstrom of the confluence, the HR must be accepted as a given, that people, as a rule, react negatively to the changes: dismissals, diminished productivity, rejection of new ideas, refusal to accept the rules of "alien" corporate culture. Therefore, one should not expect delights from the employees of the acquired company. Even if a "positive" advertising campaign accompanied the M & A transaction, the discontented would always be, people will still conclude that "the wrapper turned out to be better than candy".

What to do in this situation? People can hide, sit quietly and wait until everything goes by itself, or you can try to manage the changes. I believe that active change management is the only way to achieve results. What should you pay particular attention to when merging / acquiring?

  1. Selection and retention of talents and key players. Colleagues-HR know that they are different groups of people: talents have the abilities (skills, competencies) necessary for a communicator, leader, integrator; the professionalism of critical employees depends on the success and stability of business (for example, a highly qualified electrical mechanic, professional financier, experienced recruiter). In the process of integrating companies with each of these groups, people need to interact in different ways. When working with key players, it is necessary to pay attention to maintaining stability and predictability, while working with talents - motivation for changes and taking into account individual and collective goals.

  2. New organizational structure. There are quite a few companies that work without the "organizational structure" drawn on paper, and successfully. Perhaps for a while, such organizations will still be able to hold out, but they have little chance of winning from their competitors. What should HR pay particular attention to? It is necessary to have a plan of substitution of managers for at least three levels of management - the general director, his deputies and the heads of functional areas. For a new company, planning of the organizational structure is a matter of life and death; often on such formal grounds, it is possible to assess the manageability of the organization reasonably objectively.

  3. Cross-functional communication and subordination. It is a painful moment of "invasion," which must be discussed and accepted in advance. Managers and HR specialists should clearly explain to employees: the new structure of the company; new subordination relationships; approved changes in KPI's (or in another system for monitoring the work performed). Often, the new head takes the objectives of the unit but sees other ways to achieve them. And expects the previous successful results! In such a situation, employee turnover is often increased, motivation and productivity of people in the workplace are reduced. Such changes should be discussed as thoroughly and widely as possible - at general meetings of the team, in the corporate press, during meetings in departments. It is necessary to understand: a splash in fluidity for the first time after merger/acquisition is not always bad. It is entirely reasonable if employees leave the company that does not support the new owner or noticeably "do not fit" into the value framework of one of the organizations. However, there are always people who are especially hard to lose, whose care can lead to the curtailment of business.

  4. Unified compensation strategy. Remuneration of employees is essential! Objectivity in the perception of reward severely affects the success of the company and the climate in the team. And a unified approach to remuneration is not so much the general rules for calculating salaries in both companies (absorbing and acquired), but the same attitude to all the people we invited to the new organization. Reward changes are usually required for M & A. In our opinion, the best way to solve this dangerous problem is to entrust the search for a solution to the working group, including representatives of both the parent company and the acquired one. (Of course, if it is a merger, not an acquisition.) It is crucial that all of them work in the initiative group on a parity basis. It will help turn "likely opponents" into allies, and therefore, reduce the risk of rejection of new rules, facilitate the introduction of a new strategy. Members of the working group should analyze the motivation systems in both companies, and then choose the best methods that all parties will arrange.

  5. Competent use of information technology, providing operational control of all parts of the integrated company. It is a critical point, especially for those organizations that significantly expand the geography of their presence as a result of mergers/acquisitions. For example, in Russia, the company operates in nine time zones. Heads at headquarters need to make serious decisions promptly, for which it is necessary to understand what happens in the units. Therefore, the most critical task of the IT system is to establish feedback between the headquarters and the regions, so that top managers receive information not only from reports but also directly from the "front line" - from the employees themselves. We want to note that the potential of domestic IT-systems to provide data in the "real-time mode" is still underestimated (perhaps, these are our national characteristics - we tend to trust more than to check). When planning integration, you need to put in a budget for installing the appropriate program immediately. Combination of different IT solutions (including for reward systems) can be a costly project.

Evaluation of Cultural Due Diligence and Integration After the M & A 

So, when mergers/acquisitions of companies into the sphere of responsibility of the HR Director is: implementation of the previously developed plan and its adjustment (if necessary); Assessment of the impact of changes on the motivation and productivity of employees (both companies). It also means minimizing the loss of critical talents; mitigation of differences and the formation of unified corporate culture; assistance in the creation of effective new inter-functional relationships and systems of subordination. The list is far from exhaustive, it all depends on the specific situation.

To achieve maximum harmonization during the merger, we can use the tried and tested HR tools.

  • Training managers change. When people understand what exactly awaits them in a new company, they react more predictably.

  • Technical training, advanced training. For example, our high-tech company guarantees customers high security and constant technical support, so new employees need additional training. Naturally, with the purchase of other companies, we try to demonstrate to the newcomers that they are interested in improving their skills. It is a signal for people: our goal is not to fire everyone to get new ones but to work effectively. To stay in the company and beyond, the main thing is to understand and accept the rules, to "fit" into the new structure. It is essential to convey to everyone.

  • Family Support Program. Such a program helps to preserve the best employees because we try to make allies not only the employees themselves but also their family members. Often, the spouse/relatives exert more influence on the person than the colleagues, so involving families, organizing their acquaintance with our company, joint recreation programs is, in our opinion, a correct approach. It is especially important to use it in case of a shortage in the market of supply of working specialties.

  • Regular meetings of representatives of integrated companies. The main thing here is a regularity; this is a guarantee that the M & A processes will be predictable (which means that people will not be scared off). The opportunity to openly discuss once a week or two changes in the situation significantly removes tension in the relationship.

  • Orientation programs. Similar programs for beginners are accepted in many companies. Therefore, they can be easily extended to employees of the new organization. It will allow to correctly navigate and find a common language for people who have worked for a long time, but have different experiences.

  • Explaining new links & innovations. In mergers and acquisitions, it is better to give a little more information than "under-commit". The timely information allows employees to be aware of the changes.

  • Help those who lose their jobs. With some employees have to part. The principle approach, in this case, should be as follows: people are not "bad," not outcasts, they have just another perspective on life. A company that values ​​its reputation in the long term, it is necessary to provide a program of assistance in employment.

Change Management

As a rule, HR-specialist rarely comes to the company to be bought "first": the management team starts working when the owners have already agreed with each other. Of course, often selling business owner "appropriately" adjusts its employees, which can complicate the interaction at the first stage. But more often than not people understand that if they do not cooperate, then the deal cannot take place at all. Therefore, it's rare to put "sticks in the wheel".

The success of integration in the conduct of M & A transactions largely depends on their preparedness. Is the HR unit ready for change? Will it become a "communication hub" for the upcoming changes? Will HR limit the role of a technical expert in personnel administration and recruitment, or will he become a strategic partner? Here much depends not only on the company but also on the HR itself.

For example, the excellent work of HR administrators protects the business from losses. How a good accountant minimizes fines, and a good administrator can ensure the trouble-free lay-off or control procedure. However, the CFO works at a different level: his task is to ensure the company's work in the future. So HR-director (if he became a strategic partner) already in the early stages of the process M & A takes part in the development of criteria for the success of the purchase (within its responsibility), plans to retain critical talents, communications, cultural changes.

In any case, to evade responsibility (mainly, to avoid self-destruction) the HR does not work! Even if a person "quietly sits in office," people will still come, still have to engage in the work actively. If the absorbed company has a full-fledged HR department or at least an HR specialist, the integration process is simplified: there is already necessary information about employees and essential HR tools, and there are traditions in communication. However, if the HR function was reduced to personnel administration (for example, the bookkeeper filled out the accountant), then it is possible to find out what happens to people only from the experts themselves: financiers, buyers, lawyers ... The fuller the circle of colleagues with whom the HR communicates, the better he will understand the actual state of affairs.

When conducting mergers/acquisitions, regardless of the size of the companies, the integration procedure and the number of assets being absorbed, the tasks of the HR manager necessarily include the organization of maximum transparent communication; retention of critical talents; accompaniment of changes in corporate culture.

Minimizing the Risks

To minimize HR-risks, the HR-Director should pay attention to the following essential points.

  1. To be honest and fair to people (in the first place), respect them, even when performing unpopular decisions. It is essential! Of course, understanding what "fair dealing with people" means depends largely on the corporate culture, the values ​​of a particular company. However, in any case, it is better to adhere to common ethical norms. If the attention of managers to issues of justice and respect for people is "slightly higher" than "usually," the employer will get a real benefit (at least, minimizes the number of complaints to the inspecting bodies) at the time of integration of collectives.

  2. Quickly respond to changes, make quick decisions and actions. The speed of reaction is one of the key indicators of HR's professionalism. If the problem is revealed, if people ask questions - you need to act immediately! It is preferable to correct mistakes more quickly than to take a wait-and-see attitude - in the hope that "it will resolve itself." (It will, of course, resolve, but not at all as you expect).

  3. To be open to communication, regularly inform the team about the direction in which the company is moving.

  4. Maintain human relations with those employees who leave, and with those who remain. For those who leave, it is also desirable to allocate financial resources: cash compensation to employees being dismissed, orientation programs, assistance in employment - all this works for the image of the organization. However, all the same, the main thing is to remember that when we join, not only does the company that we bought change! The others become both.

Methods of Adaptation in a New Team of Different Categories of Employees

Adaptation methods in the new company of different types of employees differ in their content, as for different groups the most significant are different values. Accordingly, various aspects of adaptation are coming to the fore in a particular group.

In general, among the aspects of the adaptation of employees in the new team can be identified: organizational (explains the specifics of the work, established business processes, interaction with other employees and services). It is also professional (it explains the main production algorithms, it affects the processes of training, professional growth); psychophysiological (determined by working conditions and intensity of the workload); socio-psychological (characterizes the relationship between employees and the existing psychological microclimate in the team).

For ordinary employees (so-called working personnel or labor), the most important is the socio-psychological aspect of adaptation, since in most cases this category of personnel works in teams or shifts. Essential for this category of workers have a professional as well as a psychophysiological aspect (not everyone can adapt to work standing at the machine tool or the conveyor all shift or work in a noisy or hot room) It should be noted that this category of workers is often "Voting with his feet" against the conditions that do not suit her, and she resigns, finding another employer. Such mobility can create particular problems in the reorganization since a shortage of qualified workforce characterizes the current labor market.

Specialists of various levels are one of the most numerous and susceptible to changes in the categories of personnel. The fundamental principle of work to adapt them to a new team is to build an integrated system that takes into account all aspects of the system. One of the essential tasks of adaptation is the creation of equal working conditions for all employees, regardless of whether they are representatives of an absorbed or existing company. Employees of the absorbed company should be sure that their place in the team, the conditions and amount of pay, as well as career prospects, will depend solely on the level of their professionalism and competence, manifested in the work of the new employer. Essential for the adaptation of employees in the new team is the socio-psychological aspect, the successful establishment of interpersonal contacts, smooth and friendly relations in the group about all its members, regardless of their affiliation to the absorbed or absorbed company. A unique role in the creation of such relations is assigned to the quick heads of the company's structural divisions and their deputies. To accelerate the process of adaptation is possible with the help of the mentoring institute, the presence of which allows preserving the connection of generations and instill in the young employee's corporate values.

Middle managers are one of the most complex categories of employees whose adaptation in a new team depends on how much they have managed to maintain their positions in the acquired company and how much their professional status has decreased in the new company. Unsatisfied with their current status, managers are dismissed, usually in the process of reorganization or within the first few months after the changes that have occurred. Successful adaptation of mid-level managers to the absorbed company will also depend on whether it finds mutual understanding with its new leader. The most conflictive in this case is the situation in which the head of the structural division of the absorbed company comes to the position of deputy head of a similar structural unit of the company that has incorporated it. Especially dangerous in this situation will be the development of a hidden conflict between the two leaders, in which the deputy will try to discredit the head of the structural unit, sometimes even to the detriment of the quality of work and the observance of the company's corporate interests.

The conflict of the top managers of the combined company looks the same dangerous in this context (but with even more severe consequences). When developing an absorption strategy and making decisions on the proposal to senior executives of the company to absorb high positions in the management of the operating company, it is necessary to assess the degree of interest of each top manager in cooperation with the new company, the desire to adhere to its corporate values ​​and accept the proposed conditions. With all apparent risks, one should not refuse to cooperate with the management of the acquired company, since the knowledge, experience and business ties of this category of employees are essential for the successful construction of business ties of the already reorganized company and the preservation of frequent customers.

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  • Paul Merkel

    Good stuff

  • Owen Hart

    Thoughtful post

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Anas Bouargane

Business Expert

Anas is the founder of CEF Académie, a platform that provides guidance and support for those willing to study in France. He previously interned at AlphaSense. Anas holds a bachelor degree in applied economics from the University Paris Sud.

   

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