HBR Case Study: Leadership Strategies in Mergers & Acquisitions

This case study delves into the complexities of mergers and acquisitions, particularly focusing on the conflicting values that arise during such transitions and the critical role of leadership in navigating these challenges. It begins by highlighting the dilemmas faced by organizational leaders when considering mergers and acquisitions, acknowledging both the positive and negative aspects. The report critically analyzes the risks associated with mergers, especially the integration of workforces and the impact on employee morale and productivity. It references the Pecking Order Theory to explain the financial decisions leading to mergers and uses Kurt Lewin's Change Management Model to illustrate the stages of adaptation. Furthermore, the study offers recommendations for resolving conflicts, such as framing integration plans, fostering clear communication, and aligning organizational and personal goals. The importance of maintaining customer support bases and considering alternatives to downsizing is also emphasized, noting the crucial role of Human Resource Management in supporting employees and reshaping organizational trajectories. The case study underscores that the success of a merger hinges on the ability to adapt to a changing work environment and effectively address the concerns of all stakeholders.

Running Head: CONTEMPORARY STRATEGIC MANAGEMENT
CONTEMPORARY STRATEGIC MANAGEMENT
NAME OF THE STUDENT
NAME OF THE UNIVERSITY
AUTHOR’S NOTE

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EXECUTIVE SUMMARY
The purpose of the report is to analyse and glance at the process of Merger and Acquisition of
the two organizations. The organizational leaders face a huge dilemma of whether to go for
merger and acquisition. They deliberate upon this idea for a long time after which they
eventually agree upon the idea to merge one company with the other company. There are both
negative as well as positive aspects of merger and acquisitions. The Human Resource
Management team in combination with the senior executives ensure that the positive aspects are
achieved after the tiring process of merger and acquisition.

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Table of Contents
INTRODUCTION.....................................................................................................3
DISCUSSION............................................................................................................3
CONFLICTING VALUES....................................................................................3
CRITICAL ANALYSIS........................................................................................4
RESOLVING THE CONFLICT............................................................................7
RECOMMENDATIONS AND SUGGESTIONS.................................................8
EVALUTION.........................................................................................................9
CONCLUSION.......................................................................................................10
REFERENCES........................................................................................................12

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INTRODUCTION
The Merger and Acquisition is not a favorite topic among the employees because some of
the employees have the experience of losing their jobs and career prospects after the company
where they were hired went for merger and acquisition. Merger and Acquisition therefore,
remains a tricky idea for the senior leadership to make. The Human Resource Management in
collaboration with the senior leadership have the responsibility to decide upon the merging of
two companies. The Merger and Acquisition process presents a series of concerns and dilemmas
for the employees. These issues and concerns need to be addressed immediately by the higher
leadership. The main topic in the report is merger and acquisition and its impact on the
employees. The recommendations to subside the impact of merger and acquisition are also
enumerated in the report.
DISCUSSION
CONFLICTING VALUES
The Merger and Acquisition is the most difficult decision for the top leadership and if the
situation becomes inevitable, then the leadership has no choice but to issue equity or shares for
the other companies to purchase, as a result of which the other companies end up owning a
percentage of shares in the organization. According to the Pecking Order Theory, the leaders of a
company are best informed about the running of the company. The underlying factors in the
Pecking order theory is that the leaders of the organization, upon realizing the fact that the
company has been drained out in terms of capital or resources, follow three steps in order to pull

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the organization out of the turmoil. The first step being that they internally collect the funds. The
unavailability of the funds leads them to the second step, which is to take loans in order to clear
the debts. If the situation further deteriorates and the leadership fails to clear the debts, then they
take the final and the third step, which is to issue equity. According to the Pecking Order Theory,
the leaders are the most efficient people in the organization to decide about the course of action,
the company or the organization is going to follow. Whenever Merger and Acquisition occurs,
several values get conflicted with each other. There is a dilemma in the minds of the employees
regarding the change in communication styles and there is a prevalence of insecurity in the
minds of the employees regarding their future in the current job (Tanriverdi & Uysal, 2015).
There is a constant fear lurking in the minds of the employees of whether they will be able to
retain their job with the common fear among the employees is that the new merger will be
disastrous for the career of the employees. These fears if not addressed properly, lead to the high
turnover rates in the company. The result which is witnessed after the merger of two companies
is that the employees of one company face the difficulty of adjusting under the new management
process. They were more accustomed in the previous working culture which prevailed in the
previous company. The work culture which existed in the previous company and which
comprised of the shared values and beliefs become obsolete in the present company and this
leads to the dissatisfaction among the employees of the former company.
CRITICAL ANALYSIS
There are a lot of risks attached to the process of Mergers and Acquisitions as the
problems which can arise after the process of Mergers and Acquisition are numerous in number.
The main risk which can arise after Merger and Acquisition is integrating the workers into the
present organization. The process of integration which includes both the old and the new into the

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current working style becomes very important to make the employees feel comfortable in doing
the job and that the work culture remains unaffected after the tiring process of Mergers and
Acquisitions. The main problem which arises after the tedious process of Mergers and
Acquisition is that the workers who have been incorporated into the new company are
surrounded by the fear of insecurity regarding their future in the company and whether they will
get fair treatment by the managerial authority of the new company. The working of the
employees are also affected by the changes which are made in the process of system dynamics
(Brueller,Carmeli & Markman, 2018). The difficulty faced by the employees include the
inability in adapting to the changes which are made in the process of internal politics, technology
and accounting methods. In order to decrease the costs and increase the productivity and the
efficiency of the employees the companies after they have initiated the merging procedure, opt
for downsizing and decentralization and this is done by completely changing the strategic and the
organizational goals. The former company’s workers might be accustomed of working according
to the previous company’s goals so adapting to the new organizational structure and policies and
to work according to the new procedural framework becomes a tedious process for the workers.
The merging process leads to the accruing of high costs as well as generation of low revenues
and less productivity. The Government policies become important in those cases involving the
merging process of two or more countries, and these policies decide the course of their outcome.
While doing business, the companies must take extra care when they interpret the rules and legal
laws which plays a determining factor in the running of their business. The laws can greatly
affect the business and the imposition of tariffs can result in the levying of more taxes on the
foreign companies. If the companies have a global presence and they are planning to merge with
the international companies, then it becomes imperative for them to be fully aware about the

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rules and regulations which are in prevalence in the respective countries. Any changes in the
management of human resources greatly impacts the performance of the employees. Besides
recruiting and hiring new employees, the Human Resource Management also performs the
important task reshaping the trajectory for the Organization as well as managing the stress levels
of the organization. The new employees are also provided on job training by the team of the
human resource management. The most common problem witnessed after the merger process is
when the comfort levels of the previous company varies with that of the present company after
the merger, and such situation results in the difficulty of the employees adjusting in the present
framework (Sherer, Hoffman & Ortiz, 2015). As a result, performances are lowered, and the
employees become demotivated which eventually leads to the high turnover rates. If the
employees are not provided any support whatsoever then they might start looking for better
opportunities elsewhere. The Human Resource Management therefore has the added
responsibility of finding a solution to address their concerns as well as resolve their issues. The
employees feeling insecure is natural during the process of merging, but it must be ensured that
the employee’s concerns are addressed by the Human Resource Management team so that their
work remains unaffected by the merger. It takes some time for the workers to get accustomed to
the working styles of the new company and initially they have less confidence in the new
Management team. The Change Management Model propounded by Kurt Lewin describes the
Process of Merger and Acquisition (Greve & Zhang, 2017). The initial stage of the model is
known as Unfreeze. Then the next stage is referred to Change where the workers get accustomed
to the new managerial style as well as the working environment of the new company. The last
stage is referred to as the refreeze and during this stage the workers are completely used to the
working patterns of the previous company.

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RESOLVING THE CONFLICT
Resolving the conflicting values can involve the framing of the integration plan in order
to facilitate the workers so that their ease of doing business improves. After the merger, both the
company’s top senior executives must collaborate and address the concerns of the employees and
try to solve them. Addressing the employees must happen right after the merger and doing this
enables the workers to become more comfortable in their working environment (Zheng & Sheng,
2015). There must be a clear vision regarding the path the organisation is going to follow as well
as the approach they will adopt in order to achieve their objectives. The employees must be fully
aware about their work done as well as the objectives and the procedures of the company so that
the alignment is present between their organizational and personal goals. There should be
absolutely no doubt regarding the organizational goals and the employees must be fully aware of
what they are expected to do. The deciding factor for the success or the failure of an organization
is the ability to adapt to the changing working environment after the merger and the senior
executives of both the organization must be fully aware of this fact and act appropriately (Lee et
al., 2014). Often, getting accustomed to the more demanding and intense work environment
becomes difficult for the employees who are used to working in a calm and hassle free working
environment. The senior executives of the new company, therefore, has the responsibility to brief
them about the new work environment. The knowledge of the employees regarding the
organizational operations can be increasing by getting them more involved in the work process.
Engaging the employees in a way such that their organizational and personal goals become
aligned can be possible only with the efforts of the management and the higher leadership. The
main concern after the merger in the minds of the employees is what will be the new
organizational goals and how will the company achieve them (Cooper & Finkelstein, 2014). The

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trajectory which the company is going to follow after the merger must be fully discussed and
elaborated with the employees. The most important duty of the organisation is to maintain both
the customer support bases of the two companies which merged together, therefore, maintaining
both the support bases is extremely crucial by addressing the complaints and concerns of the
customers (El Zuhairy, Taher & Shafei, 2015). As the information was shared with the
employees to keep them informed about the new work environment, similarly, the customers
must also be given information about the new work environment. The last choice for the
organization must be to cut down its staff by downsizing them. The employees with commitment
issues and less productivity are removed by motivating them to leave the company during
downsizing to reduce the costs and the extra work force. The transfer window allows the facility
to transfer the less productive employees to the other organizations as well as purchase the better
performing employees from the other organizations.
RECOMMENDATIONS AND SUGGESTIONS
The people in the Human Resource Management have an immense role to perform in any
organization. Any issue, whichever is afflicting the company, first comes to the notice of the
people in the Human Resource Management team and they are the backbone of the organization
(Gunkel et al., 2015). They have an important role to address the concerns of the people. The
Human Resource Management team in association with the high leadership in the organization
addresses the concerns of the people such as the change in organizational roles allotted to the
employees and the transferring of the employees to the new location. The Human Resource
Management team along with the senior executives have the responsibility to address the issue of
integration from a layman’s perspective. The employees should be made to feel at ease in the
new work environment, as it is a given fact that the employees are extremely concerned after the

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merger and acquisition process. It is then the responsibility of the Human Resource Management
team as well as the higher leadership to make the employees accustomed in the present
organization. The organizational goals and the path which the organization is going to follow
must be elaborated to the employees. The employees must be fully aware regarding the roles
which they are going to perform in the organization and the hierarchy in the organization which
is given in the organizational chart must be given to the employees. Doing these will ease the
concerns of the employees and unnerve them after the pressure of merger and acquisition
(Bontekoning et al., 2016). The Human Resource Management team should constantly motivate
the employees to perform at their optimum level and capabilities. In order to avoid any
discrepancy and issues, the new Organizational rules and regulations must be clearly mentioned
to the employees (Malik et al., 2014). The employees must be fully accustomed with the new
organizational work ethics and the Human Resource Management team must elaborate these
issues with them. The Higher-level leadership as well as the Human Resource Management team
must address any issue whenever they occur and resolve them instantly. Right after the merger,
the main focus should be to address the concerns of the employees rather than enumerating the
Organizational goals to the employees (Vorys, 2015). The performance of the employees can be
enhanced much better after they are made to work in a comfortable and relaxed work
environment, with the employees fully aware regarding their organizational roles and duties
assigned to them.
EVALUTION
Max Weber’s Bureaucracy theory is very useful when it comes to Merger and
Acquisition. According to the theory, the decision regarding the organization’s welfare was to be
taken by the higher-level leadership as they are the best available decision-making body in the

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organization. Weber said that the employees or the workers should not be involved in the
decision-making process and their feedbacks and suggestions should not be entertained. This
leads to the higher-level leadership being able to take a firm decision without appeasing the
employees or the workers. The decision of the merger and the acquisition takes place without the
involvement of the employees (Stranng, 2015). The Scientific Theory perspective also allows the
Merger and Acquisition to fit perfectly as the as the able and the most proficient employees of
both the organization work together and expedite the process of delivering the expected products
or services for the company. The guiding principles are the organizational goals which once
explained enables the workers to work efficiently. The sharing of experience and knowledge
becomes an important highlight after the merger. The specialists are given tasks which require
their expertise and the experts and specialists from both the organization are allotted tasks
according to their expertise. The significance of both these theories- Theory of Bureaucracy by
Max Weber and Theory of Scientific Management by Henry Fayol is immense and helps in
comprehending the issue of Merger and Acquisition. Both the theories enable the person to
comprehend the importance of management process and the behavioral criteria of human beings
and how they are affected by management organizations.
CONCLUSION
From the above analysis, the conclusion can be derived that merger and acquisition are
not so easy for the team of Human Resource Management to make. The inability to properly
address the concerns of the employees can turn the problem to escalate further into a serious
problematic issue. The important duty of assisting the employees to comprehend and get used to
the new work environment of the organization is done by the Senior Level Management in

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collaboration with the Human Resource Management team. The detailing and explanation of the
organizational goals is done by the HR team. The roles assigned to the employees is done by the
HR team and this leads to the employees staying motivated and performing to the best of their
abilities.