Introduction
The objective of this paper is to compare two mergers from strategic HR perspective, the first merger case is Emirates Bank (EBI) International and National Bank of Dubai (NBD) of Unites Arab Emirates and the second one St. George Bank and Westpac Corporation of Australia. Both the mergers took place between financial institutions, the first one held in 2007 among two public sector bank while the second one is from private sector and held in 2008. Among the diverse element of merger, this paper would only focus on the HR perspective of the two mergers including their staffing, rightsizing, survivor syndrome, cultural issues, role of employees union and unethical restriction imposed by merger consequence.
HR Perspective of Merger
Schuler and Jackson (2003) pointed out that in the era of globalisation mergers are vastly used to strengthen and uphold the market position considering it as a comparatively speedy and resourceful means to penetrate into the new markets, integrating with new technologies as well as innovation although there is no guarantee to success the merger. A majority of the mergers fail to attain their settled goals, objectives as there are abundant of social costs, countless job cuts, missing income of the communities, and lost taxes to the operating jurisdiction, such social costs are at tolerable range to the stakeholders if the merger is successful (Grobler 2006).
The reason of merger failure underlies into the financial and market factors while lots of research confirmed that most of the merger letdown due to absence of systematic addressing to the different factors of human resource management, thus for the present study this paper argue for the human resource perspective of the two mergers as follows-
EBI and NBD Merger Reviewed From an HR Perspective
Salim (2011, p.6) pointed out that the human strategy at EBI1 and NBD2 merger was an early and quick decision regarding workforce at an early stage, while the decisions connecting the employees were all the time tough as an important factor for the bank to formulate the process as quickly as possible. The merged management did it with the human resource mangers and restructuring team organised with the members of both the organizations with the aim to retain best talents of the two banks who are most competent to coup with the changing dynamics carried out from the merger.
At the initial stage, the management of ENBD had no plan to apply the concept of downsizing or layoffs in order to keep the employees silent or to assure the staffs that the provisions of job contracts will be remain same though practically this was not possible and feasible approach for the firm (Salim 2011; Reuters 2011; John 2008; Kandula 2009; Uppal 2008; and Stensgaard 2007). Here, it is significant to state that it was a common strategy of the leaders to avoid pressure, protest or violence from the side of the employees; however, the company finally took layoff decision (Salim 2011; Reuters 2011; John 2008; Kandula 2009; Uppal 2008; and Stensgaard 2007).
There was an incorporation team formulated to assess and decide regarding the skills and competence of the staff that worked a driver for the whole process of merger in accordance with a road map that clearly set out detailed work plan, downsizing targets for different level of executives and to determine and review the process repeatedly by communicating with management.
In the business momentum EBI and NBD merger, the role of existing executives and their alignments were very significant to commence the merger of the two banks, the chairperson and CEO of EIB has remained unchanged at the first instance of combination, and majority of the top executives of EIB continued to prop up the existing leaders. Rick Pudner the CEO of EIB turned into the CEO of the merged company Emirates NBD and served for seven year, it has already pronounced that Rick Pudner would leave the merged organisation in this year and serve up to the end of 2013 until the company is getting a new CEO.
The merger case of these companies illustrated that the leadership of one organisation has prevailed after the concluding merged company; in addition, the leaders of the old corporation controlled incorporated executive team to make it certain change by generating common objectives, short-term goal and values for the new company bannered ENBD; so, it would follow guidelines of management (Salim 2011). The revised vision of the company stated that it would establish a globally recognised and most dynamic financial institution that would serve in the Middle East region with successful record of accomplishment (Emirates NBD 2007)
St. George and Westpac Merger Reviewed From an HR Perspective
Owens and Bellion (2009) pointed out that in an interview with the HR Network Group, the CEO of Westpac Ms Gail Kelly expressed her deep concern with the HR professionals of the merged company, and she urged that the departmental managers would be relay similar favour for the human resource perspectives. Kelly who came from St. George, at her first six months experience to working at Westpac realised that the strength of the merged company underlies into the culture, values, and the potentialities of the human resource, as a result, she immediately set a new agenda to attain financial ambition of the merger by managing its people.
Her policy strongly concerned that the major tools to deliver bold HR agenda to every single employee, the leaders at all levels of the business required to be answerable for managing their staff by which the right person would be in right position with correct roles by providing clear direction, coaching for skills, clarifying accountabilities with eagerness to attain results. As the Westpac and St George both is triumphant organisation with iconic brands along with opposite cultures with a myriad of staff issues necessitate to addressing in the merger, it is the biggest challenge for the merged management to settle on the HR teams.
The balance between the human resources turned into more complexities as the both organisations have similar people for same task and most of them are proud and committed to the organisation, its customers, and communities while post merger strategy accelerate the merger objectives required to generate substantial HR input and output. The merged management settled the key attributes to generating a great HR professional are the passion and commitment to the values of Westpac; the HR managers also required have a profound understanding of the how the financial institutions are making profit, a strapping affiliation with the organisational leaders could provide right attributes to be great coaches in this regards.
The HR Perspective of the Westpac and St George merger strongly urged to generate working effectively across the employee’s task, depth of commitment to ongoing improvements, and keeping customers at the heart all organisational action while the future role of HR Management would be aimed to deliver a new combination diverse solution and service to boost business prospects.
Owens and Bellion (2009) also added the merged management of the Westpac and St George has aimed to provide elevated excellence of strategic advice to its HR on how to generate excellent of attraction, motivation and preserve the right staff to carry out the business goals in order to face future challenges. Such HR professionals would carry on strapping business insight, organisational growth strategy, along with project management skills based on a superior benchmarking, employees analytics, considerate to the competitor’s movement, and dedicated to the organisational mission and vision.
The HR professional in the merged organisation also needed to provide cost effective solutions highly value added products and services, such solutions necessitate to maintaining standards above the existing economics of scale, fully automated to generate sense, and customised to deliver business value that is deeply concerned with analytic skills, capabilities to design systems and working flexibility.
Baxter and Chua (2010) pointed out that the following the merger Westpac put into practice of its ‘Squashed Tomato’ strategy to demonstrate the organisational fresh approaches to the relations of the stakeholders connecting to the community criticism, pledge to transparently, and internal process where the focal point kept on the human resources and environmental sustainability at top priority.
The key sourcing of the sustainability strategy aligned with the distribution of human resources and its allotment of time where the organisational resources and its new structure would support to implementing the new strategy by cross-functional mechanisms integrating with the communicative data generated from the organisational processes of the momentous dialogue of the stakeholder. At Westpac, HR Team contributes to attain strategic objectives as the management considers HR people as a vital part of its business who are well valued for their individual contribution with exceptional of talents and successful record of accomplishment and the organisation engages more efforts improve their capabilities competent to generate right solution at right time.
The Strategic Staffing at Merger Process
Valentine (2007) presented the definition of ‘strategic staffing’ arguing it as a course of action to recognising and carrying out the staffing implication to achieving the business objectives complying the operational and diverse strategies of the corporation, the practice of identifying and addressing the Strategic staffing is a major challenge for modern business. Staffing is a critical subject, which plays a significant role to become a successful bank for which it is essential to inform the existing employees regarding merger decision and the proposed structure of the new firm (Kotter 1990; Pikula 1999; Buono & Bowditch 2003; Valentine 2007; Wilson 2005; and Galpin & Herndon).
The impact right staffing could assist to attaining the business goals quickly, but the wrong staffing could seriously influence of the merger process and could ruin the business plans, thus in the pre and post merger stage staffing is a most vital issue the organisations need to impose highest emphasis. For pre and post merger integration, the major factor to managing staffing needs, it is essential to integrate a strategic procedure by conducting an assessment of the position of the staff rather than the staff himself, due to strategic approach to the merger perspectives and the staff would think from the optimistic views.
At the same time the merger situation could higher new staff by layoff the existing that may generate leadership crisis in the organisation due to forced retirement, while the newly recruited executive would be more obedient, less paid and more dynamic and energetic. This section of the paper enlighten on the staffing of EBI – NBD and St. George – Westpac discussed as below-
Staffing After EBI and NBD Merger
Emirates NBD (2007) pointed out that under the under the leadership of Ahmed Humaid Al Tayer as chairperson with six board members the staffing of the merged company evidenced with Rick Pudner formerly served at HSBC with 27 years working experience in the financial industry as the first CEO of the merged company. Mr. Sanjay Uppal previously worked in Standard Chartered Bank has appointed as the CFO of the new company, moreover Joyshil Mitter a previous manager of NBD has chosen as the general manager, and Mr. Shahzad Shahbaz former Managing Director of the Bank of America has appointed as CEO for Investment Banking division.
The staffing policy of the Emirates NBD has aimed to downsizing its large HR, by enthusiastic to gather most competent and dynamic people from all over the world who are competition to take challenges of 21st century. The staffing strategy of Emirates NBD aimed to pursue its staff potential to bring remarkable growth in retail banking, skilled for Wealth Management offering, eager to enhance market position in the corporate banking, improving regional Investment franchise and proficient in the practice of Islamic Banking to explore in the GCC market through appropriate use of existing organisational resources.
Kumar and Fernandez (2012) pointed out that Emirates NBD to improve its staff performance it has integrated system upgrading following its merger from 2007by introducing ICT integrated banking system instead of traditional banking practice, adoption most powerful ERP system, and incorporating accounting and human resource and financial management software that motivated all level of staff to work for increasing productivity.
Such staffing policy resulted to boost the merged company’s expectation in the year 2008 while Emirates NBD attained 90% of its financial targets with significant reduction staffing expenditure as part of cost cutting policy. Although the company incorporated a combination of both bank’s ATM and SDM3 services along with 650 booths for this program in 2008 and incorporated mobile and online banking with thirteen payment partners, there were no expansion in the staffing expenditure. In the mentioned financial year there was a 45% boost of the operating costs for Emirates NBD which were more investments for infrastructure development, system integration, and network expansion cost rather than the staffing expenditure from its historical perspectives.
Reuters (2011) reported that Emirates NBD continuously struggling to finding right leaders for every department those would be capable to cope with the changing dynamics of the merged company, thus, in 2011, the company appointed Mr. Van Der Tol and Douwe Oppedijk as head of wholesale banking and commercial banking respectively those have successful track record in the industry. In the same year, by an internal circular Emirates NBD selected Mr. Wajid Kamran as the general manager for newly opened financial advisory service department, the management also recognised the appointment of Al Tayer as the chairman of bank who is uncle of the ruler of Dubai and it was a forward moving staffing decision merged Emirates NBD.
Staffing After St. George and Westpac Merger
To address the staffing complexities aroused from the Westpac and St. George merger, FSU (2009) raised the question whether it is a merger or takeover and argued that it is a takeover regardless to the that the companies used to describe the venture as the result has demonstrated the slaughtering of the independent identity of St. George with less competition. Moreover, 5000 staff of St. George Bank would lose their job within three years of merger although from the first instance there are requirement for more people to perform more duties, but Westpac announced its plan for cost saving by staffing freezes that would depart various departments with seriously short-staffed that may generate over pressure to the sustained employees. To implementing such cost saving job cuts, Westpac already expressed its intention to integrate back office services by outsourcing that would result in significant system changes with additional off shoring along with new measures to follow that may seriously affect on the service quality that that customers are habituated.
FSU (2009) also added that the staffing policy of Westpac has consolidated among diverse departments where jobs are centralised to a few locations where it has own branches and shutting down some of St George branches, under such situation the staff you could be forced to move at any location which is not suitable to an individual.
Due to domination of Westpac over the venture, it has already expressed its views that job cuts are a ‘natural attrition’ and there would be no replacement for the people who leave the organisation, thus, it would result in short-staffing while the amount of redundancy payments would assist to achieving its cost saving target. As the future preparation of Westpac faced to the job cutting, off shoring, centralisation, and outsourcing, none of the staff is secure under this circumstance no mater from where the staff has originated either Westpac or St George staff member, it has already set up its target of $300 million cost saving by cutting jobs and shutting branches.
However, the aim of the management team of Westpac Corporation and St George was to attract and retain the best people to perform at this Bank to meet the objective and become the best bank in Australia; therefore, the company tries to provide full support to the staff to make them happy.
Table 1: Westpac’s Commitments on Staffing after merger with St Georges Bank.
According to the report of Yukl (2010, p.96), St. Georges Bank was an independent firm and responsible for all the operational activities of the branches, but Westpac Corporation took over most of the management policies after merger of these two financial institutes. On the other hand, it became a critical factor to asses who is truly in control the firms, and how these two companies come to meet the problems related with overall management system; as a result, staffing was one of the most challenging factors for these two firms (Yukl 2010, p.96).
At the same time, St. George Bank was subsidiary of the Westpac Corporation for which the management had to concentrate on the side of the customers’ need to recruit sufficient number of employees to control a particular branch and provide customer service efficiently (Yukl 2010, p.96). On the other hand, St George Bank had to play precise responsibilities and roles under the provisions of this merger; in addition, it had specific jurisdiction for which it has own CEO though Westpac is now controlling St George Bank in some extent. Here, it is important to note that St George Bank has exclusive control over the management of some selected branches; however, the new union operates other branches of this bank in accordance with the memorandum of the bank and direction of the CEO of Westpac Corporation.
Post Merger Rightsizing
Band and Tustin (1995) argued that rightsizing or downsizing is most common approach inside the corporate strategy in order to changing the organisational structure from what current stage to a sustainable and economical edge without hampering to satisfy the customers’ needs and requirements, it has provided the strategic aspects that confront an organisation by reducing cost and people’s engagement. In the organisation layoffs, short staffing are the diverse approach of rightsizing that leads logically to a general idea of the strategic grounds of rightsizing while downsizing is more often than not the first or last tools for management to keep the competitive edge of the company focusing on the overall strategy that the company put into practise (Guest 2009).
It has assumed that rightsizing provides an insight into that assist to settle on the economic welfare of the company by maximising the value for the shareholders through cost saving, the process also identifies the people who are competent to stay with the company and who would leave that would ultimately deliver the strategic option for burdensome job cuts. The rightsizing issues of the said mergers have illustrated as follows-
Post Merger Rightsizing of Emirates NBD
Appelbaum, Delage & Gault (1997) pointed out that in the post merger era the corporations conduct remarkable downsizing by cutting jobs and laid-off employees with the intention to maximizing profit without any responsibility to the workforce, to hide the panic corporate restructuring, they termed it as ‘rightsizing’ instead of downsizing which is a greedy fattening to turn the staff jobless. Following the merger Emirates NBD faced the basic dilemma of corporate restructuring is that they continue the rightsizing process as an ongoing strategy until now although they are going through a profitable times, although the merged entry has gained tremendous profit and overcome its emergency.
At present Emirates NBD based on its inconsistent vision of human resources, that may lead employees and organization to work well, but generated panic among the people for job lose and an injurious cultural alignment in the workplace, and the employees suffering from tension that eventually all the elderly employees would be made redundant. In the new environment Emirates NBD, employees needed to have sufficient time and space to match with the changing dynamics and to move from the old practice that they habituated, the employees are eager to keep stability and continuity, they are moderately enthusiastic to settle on the innovation, sensibly stable platform for learning and creativity in the financial market.
The rightsizing drive of Emirates NBD carried a message that is very clear and loud to the employees that they are not safe in the organization whatever his current position or performance is, downsizing could at a moment throw out anyone, it teaches staff that they do not have any control over the situation or what is going to happen. In the verses of psychologists, it is a state of ‘learned helplessness’, for the employees where there is no remedy at once to bring the situation favourable. Appelbaum et al. (1997) compared it as a situation where the physically assaulted women stay with the torturer husbands by keeping their mouths shut off and try to consider that to having regular physical assault are their common fortune; thus, it is better to tolerating until there no alternative solution.
Cooper (2012) that the rightsizing drive of Emirates NBD turned the entry as a biggest financial institution by turning net profit three times above than the previous which has figured at $174 million, but stopped at least eight branches, closed 64 ATM booths and fired 750 employees along with right off its bad debts aggregately increased operating profit $518 million. The CEO Rick Pudner met the press and added that after downsizing the Emirates NBD conducting its operation with 104 branches and 566 ATMs that contributed the bank to overcoming the loss-making scenario before merger and gradually improving the economic performance due to rightsizing impact.
The restructuring of Emirates NBD through downsizing and rightsizing already increasing profitability by reducing operating cost and improving operational efficiency of the employees, but such reengineering has failed to address the main cause to falling NBD the extreme burden of governmental borrowing, with an outstanding $19.7 billion the bank has granted new $1.7 billion loans to the government. Although the central bank kept continuous pressure on Emirates NBD to settle on the outstanding debts, the bank is taking different rightsizing initiatives to move the public focus from the major problem to the minor, downsizing is not a response to the unrealized governmental debts.
Post Merger Rightsizing of Westpac St.George
UTS (2010) mentioned that during the post merger of St. George Bank and Westpac Corporation it was spoken to the employees that both the brand would be sustained especially the St.George’s brand and all of its branches would stay undamaged in the post merger entity in 2008, thus, the staff engagement contributed to the high levels of financial performance. The St. George Bank entered into the merger process with 9,000 employees and 400 branches all over the country that inherited from a strong customer loyalty supported by exceptional service quality, an idiosyncratic interior culture, along with a higher degree of employees’ engagement faced to the community-oriented outlooks with brilliance of performance.
At the time of merger announcement, 48.6% of staff had informed, 30.7% were uninformed while 61% of the St. George Bank were performing excellent, 13% were poorly performer, but there were no such assessment with the employees of Westpac Corporation and at the first phase of merger, 2000 employees of St. George including top executives were fired.
The remaining employees of St. George Bank traced Westpac as a dangerous ‘Dragon with unique culture’ and suffered from the threats of downsizing and rightsizing that undermine the main spirit of establishing the merger, employees as well as local communities expressed their concerns regarding impending job cutting threats and closing branches that destabilised the workforce and workplace environment. LeMay & Galt Media (2010) pointed out that the downsizing drive by the Westpac has closed IT related jobs those prevailed in the merged company from St George Bank and shifted the IT infrastructure in India through an outsourcing contract with the IBM the may provided a cost cutting opportunities, but abolished a strong establishment of own.
The Conference Board (2013) pointed out that the management of Westpac realised after a long rightsizing and that their strategy of downsizing and adopting panic by survival syndrome was very wrong. The management of the Australian banking giant Westpac Banking Corporation confessed that at the post merger downsizing strategy was one of the major mistakes that the company implemented at first phase was emphasising on the acquisition-based strategy, they learned that it is very significant to attain age balance among the employees and it is necessary to consider retention existing employees. The further assessment of the management identified that the matured and competent staff are the greatest component of the workforce and the Westpac Corporation must appraise and manage the mature employees, it is essential to plan to retain pre merger employees with recruiting policy for matured workforce.
Survivor syndrome
The concept of survivor syndrome has developed and intensified with the concomitant prevalence of downsizing practices; however, it is a psychological condition and it negatively influences the workforce who survives a lay off exercise (Donia & Appelbaum 2000; Bloomberg 2012; Pires 2009; Ahmed 2013; Al Jerjawi 2011 and Kinder 2009). It is a side effect of downsizing or the trauma of the job terminations, which is detrimental for the company and the existing employees; therefore, the performance of the company can drop significantly (Donia & Appelbaum 2000; Pires 2009; Arora 2013; Al Jerjawi 2011 and Kinder 2009).
Moreover, it disrupts the concentration of the staff to focus on the tasks and show their talent in the workplace; however, this situation can start when an employee witnesses a job layoff exercise or receives news that his closest colleagues are the latest victims of the layoff exercise (Donia & Appelbaum 2000; Pires 2009; Al Jerjawi 2011 and Kinder 2009). The provisions of the employment agreement with any company before merger become valueless in some extent for which these workers usually view the process as unfair (Murdoch 2008; Donia & Appelbaum 2000; Pires 2009; Al Jerjawi 2011 and Kinder 2009).
The Survivor Syndrome at Emirates NBD
Appelbaum et al. (1997) and Sahdev & Vinnicombe (1998) and defined ‘survivor syndrome’ as a panic strategy organisations generate by downsizing initiatives where the human resource of an organisation demonstrate a mixed bag of attitude, behaviour and emotional expression that often exhibit that the remaining staff possibly will lose their job in the next phase regardless to their post or position.
The practice of organizational downsizing generates survivor syndrome among the human recourse with negative impact by dividing the HR into several groups like group of fired staff, noticed to be redundant group, group that independently thinking to leave the organisation, and a beneficial group who have advantaged by the downsizing. The amalgamation of such groupings in the organisation is very difficult where most of the employees are highly confused with the reason and attributes of fairing jobs and when an individual would be noticed for next job cut, and how to save own job from such uncertainty.
A number of research illustrated that the implication of survivor syndrome strategy within the organisation delivers a quick and instant increase in the productivity as the staff engage their highest capabilities and competence with hardiest working rescue themselves from job cutting, but in long run the increased productivity don’t sustain and generate HRM difficulties.
Uppal (2008) added that the employees always look for effective communications with direct, clear, timely, and truthful statement from the organization that would assist them to think about their future carrier path, but the Emirates NBD story of merger has failed to do so. As a result, the employees from lower level to the to executive Rick Pudner have suffered from the threats of downsizing and have to leave the bank facing survivor syndrome while the remaining employees sustained in the organisation with similar reactions.
The Survivor Syndrome at Westpac Corporation and St George Bank
In the second quarter of 2008, the business performance of St George had seriously hampered due to adverse effect of the decision of merger with Westpac Corporation; in addition, it had to take action to control different issues, which brand consideration dropped by 23%. In this context, different journalists and reporters have predicted many aspects related with post operating system of this bank and they expected that many employees would lose their job because of merger (Murdoch 2008, p.1).
On the other hand, Westpac Corporation committed to treat St George as an independent brand within the Group for which the leaders of St George had concentrated on the employees since they were the main contributor to the reputation and success of the bank. At the initial stage, the management of Westpac Corporation had decided to cut the job of more than 2000 employees from the combined entity particularly from the technology departments and back-office operations to reduce duplication as a result of the merger (Murdoch 2008, p.1). Here, it is important to note that employee satisfaction rate of the St George had increased rapidly, for instance, this rate was 48% in 2002 and 75% in 2007; however, industrial practices and management of this bank had assisted helped to deliver high employee satisfaction ratings and increase staff retention (Bull 2008, p.3).
Because of survivor syndrome, this rate decreased significantly from the last quarter of 2008 due to the decision of merger (Murdoch 2008, p.1). To overcome the employees from the survival syndrome, the management of Westpac Corporation needs to consider the challenges of right sizing, job security issues, implementation of new strategies, negative consequences on their performance, and commitments on the staffing, and hierarchy of needs of the employees to reach its goals within a short period.
Cultural Influence on the Merger
Weber and Camerer (2003) pointed out that although the culture has gained less importance from the economist, but culture contributes an organisation with a greater competence to the problem solving, development of corporate culture removes uncertainty of HR behaviour, provides greater understanding to the social factors, and enhance effective communication that ultimately rescue the merger from diverse risk of failure.
Thus, during merger culture is an ‘efficiency-improving asset’ that the merged management could utilise to coordinate among the people who gathered into a common platform from diverse organisation, the amalgamation of such virtues could improve internal interaction to exchange their understanding and skill transformation and would formulate a causal effects to mitigate conflict within the organisation. This segment of the paper compares the cultural issues of EBI – NBD and St. George – Westpac presented as below-
Cultural Issues in the EBI – NBD Merger
Salim (2011, p.7) added that the combined management of EBI and NBD were eager establish a cultural integration that would best fit with the mission, vision, and values of the merged company and to do so they introduced 107 cultural workshops to bring the employees under a new dimension of corporate culture. At the preliminary phase, the employees reacted with a greater antagonism to cooperate with their counterparts and suffered from serious anxieties due to many of their colleagues fired and forced to leave the organisation, even they evidenced a huge cultural gap due to combination of multicultural people.
Among the employees, those who get better position and superior responsibility in the merged organisation were satisfied with the changing dynamics though the new culture and values were introduced, the prevailing cultural values of the existing managers, leaders, and staff were strongly necessitated to reflect the fresh cultural orientation within organization. Thus, from the point of view of the cultural integration in the merger case of EBI and NBD, the position of Emirates International Bank kept at the forward block and it would take enough time to bring cultural change where the cultural workshops and training would contribute better outcome for cultural integration.
More than 90% of the total population of this nation is expatiate from the emerging Asian countries for which UAE has diverse cultural background; however, ENBD have emphasised on the local employees and it has already recruited 35% Emirati workforce and interested to increase this rate by 40%. According to the report of the CEO of ENBD, the management of this bank had arranged cultural workshops for 5,000 employees in 2009; however, the aim of this training programme was to broaden the knowledge of the employees about the organisational culture and vision of the Bank to develop the workplace environment (John 2008; and Kandula 2009).
At the same time, Salim (2011) stated that it was difficult for the employees of EBI and NDB to take proper decision at the early stage of the merger process; therefore, the integration human resource teams have formed to help ENBD to retain the best talent to ensure fairness, transparency, and consistency in handling the sensitivities of the organizational cultures. However, Buono & Bowditch (2003, p.134) and Galpin & Herndon (2007, p.208) stated that the management should handle sensitive issues carefully; otherwise, these sensitivities had the potential to fuel up hostility between the staffs of the two banks, which would undermine the success of the merger.
The leaders of this bank had organised 107 culture integration workshops with intent to build a team and share recent development to work jointly; however, most of the workers faced the anxieties in spite of taking such steps from the company; some of them were satisfied with the change (Salim 2011; John 2008; Passion 2010; Uppal 2008; and Stensgaard 2007).
On the other hand, ENBD gave better job responsibilities to some employees for which it was possible for them to adopt new culture and values within short period (John 2008; Passion 2010; and Salim 2011). On the other hand, the leaders had allocated large budget for transformation and total cost for this purpose was AED 33million; most significantly, the organisational culture of ENBD had changed slowly after the culture workshops and training programmes (John 2008; Salim 2011 and People Link Inc. 2013).
In addition, this company ensures the idea of a flexible, diverse and extremely creative work environment to assist the staff to match with changing personal and professional responsibilities with intent to enhance energy level, creativity, ability, commitment and contribution to maximize profit margin using human resources (Emirates NBD 2013). On the other hand, the employees of diverse workplace become more confident, enthused, and better capable of handling stress and meet family needs; in addition, the vision of the company to ensure highest performance for the customers for which employees are the key assets to implement the latest business trends (Emirates NBD 2012; Salim 2011 and Stensgaard 2007).
Cultural Issues in the Westpac Corporation and St George Bank
According to the annual report of Westpac Corporation, the organisational culture of this company based on some key issues to build a customer centred, high performance workforce, such as, customer satisfaction rate, perform as a team, value each other, proceed with integrity, encourage a strong compliance culture, enhance the diversity of workforce, show interest to deal with change, and accomplishment. In addition, it focused on the culture of accountability and responsibility of the workforce; however, it was an independent company and the operation system had not linked with St. George Bank (Westpac Corporation 2012, p.114).
The leaders of Westpac Corporation intended to develop good corporate organisational culture by providing equal opportunities to the workforce; in addition, they give the opportunity to disable people and women, for instance, more than 12% of total employees have a disability, and about 30% of the board of directors are women.
On the other hand, CRICOS (2010) conducted a survey on 400 employees of St. George Bank before entering merger agreement with Westpac Corporation and reported that more than 30% employees were not aware about the merger for which about 41% employees showed negative attitude and 13% employees of this bank failed to adapt new culture and performed poorly. According to the survey report, a significant part of the employees did not get information related with merger from the bank at the initial stage of the merger process; however, more than 61% of the employees of St. George Bank were satisfied with their new job responsibility and they showed outstanding performance in the new environment.
At the same time, the management of this Bank had established “Merger staff communication programs team” to use available communication system, hold proactively with workforce, widen connection with parent company and observe the behaviour of the employees, improve consistency and timeliness, launch a new combine of online along with face-to-face communication method, and so on (CRICOS 2010; and Salim 2011). After merger, the employees have performed well in the changed environment rapidly; therefore, the employees provide positive feedback about new organisational culture though the vision, mission and values of Westpac Corporation and St. George Bank were different from each other.
Table 1: Comparison of cultural issues between two mergers.
Risk of Human Resource Management in Merger
Bryson (2003, p.1) pointed out that in most cases mergers are very risky business approach and the evidence illustrated that they repeatedly fails due to the malfunction and disappointment of risk management of the human resource, the merger data of the present decade illustrated that 50% to 80% mergers have carried out negative outcomes depending on different industries. The literature of managing HRM argued that the poor merger would often result an accredited attributes to the HRM and generate organizational dilemmas linked with the maintenance of workforce stability in order to mitigating the HRM risk (Kotter 1990; Pikula 1999; and Okumu 2013).
There are many studies on extensive mergers, which identified huge loopholes mainly in connection of lacking of deliberation for the function of unions as well as diverse employment relations guidelines that the merged company put into practice (Bryson 2003; Robbins & Judge 2008; Stensgaard 2007; Salim 2011; Pikula 1999; Reuters 2011; and Stahl 2012). This section would demonstrate the impact of union involvement in the HRM initiatives and discover to extents of employment relations policy taking into evidence from two financial sector merger cases of Westpac Corporation and St. George Bank Australia and the merger of National Bank of Dubai and Emirates Bank UAE.
The Role of Employees Union in the First Merger Case
The Finance Sector Union (2008, p.10) pointed out that the FSU4 is an employees union in the banking and financial institutes of Australia that represent 50,000 employees of major banks that urged to the Australian Competition and Consumer Commission (ACCC) to block the merger of Westpac Banking Corporation and St George Bank. The FSU added due to the existence of both brand alive, the merger would improve the extents of welfare in the Australian financial market by increasing service quality, but it would reduce competition and boost substantial employment losses that would generate serious unemployment in the economy.
The St George’s has developed itself over the last decades as a customer friendly brand 357 branches and about 8,000 staff and its merger with second tier bank Westpac would generate at least 5,000 jobs cutting purely as a consequence of integrating the operational functions of the two banks in the post merger period.
The employees union in the banking sector of Australia is deeply concerned that the combined effect of these banks and its change in management configuration and philosophy would emphasis to cutting jobs at an effect of the merger that may keep detrimental impact on the service quality, reducing branches and agencies that may create hazard to the customers. Moreover, the opportunity for new job creation would be decreased as the merged entry of the Westpac and St George are more likely to adopt aggressive off-shoring strategies and engaging outsourcing call centres from the Asian emerging counties by integrating modern ICT enable services.
The Finance Sector Union (2008) also expressed its forecasting that the merger would take at least three years to attain positive earnings that would ultimately generate uncertainty and instability to the workplace environment threatening health and safety of the employees in the pre and post-merger execution system, therefore, the union had imposed pressure to protect this initiative.
The Role of Employees Union in the Second Merger Case
In contrast, in the merger case of NBD – Emirates Bank, there were evidence of job cutting because of the merger and acquisition, but due to the rule of Arab monarchies and lack of democratic rights and absence of employees union there was no protest from the staff like Australian merger of the Westpac Corporation – St. George Bank. However, Hashmi (2007, p.6) further added that the aggregate number of banking employees working in the domestic and foreign banks are 16, 408 in the United Arab Emirates as per data presented in 2003, but there is no single platform for them to attain collective bargaining in order to protecting the interest of the workers.
Although the number of branches and employees are gradually increasing, there is no indication to improve employee’s rights, rather the government has introduced new law to prevent employee’s turnover in the financial sector that would turn the employees into slavery.
Hunter (2012) reported in The Nation that due to the merger National Bank of Dubai – Emirates Bank the 15% of the NBD5 employees have to leave the organization while Emirates would cut around 750 jobs as part of its internal restructuring in order to attain in the merger. The process of every department to downsizing would continue for more six months of merger in order to attain the first position in the financial sector of UAE, such decision of the combined management generated huge fear with the organization that impacted top executives and some executives including deputy chief executive, head of investment and treasury already left the organization.
Another distinguishing NVBD and Emirates Bank merger is that the finance of such takeover was backed by the government with the aim to rescue Dubai Bank from the weight of bad debts and in the post merger, the bloated bureaucracy accelerated huge numbers of staff turnover to make the merged bank a national champion in the Middle East region.
Thus, the both evidence of merger Westpac Corporation – St. George Bank and National Bank of Dubai – Emirates Bank illustrated that merger couldn’t provide full potential devoid of positive employee input, although the management always to adopts mergers as an opening to decrease number of employees and recover employment conditions as an implication of cost reducing strategy. Even in the pre-merger state the employees start to suffer from the fear of job losing which is a hidden agenda of management; consequently, the enduring industrial dispute along with litigation significant increase and generate tremendous risk to the HRM risks while maintaining workforce stability turn into a major concern for the merged management strategy. Thus, the existing literature of merger continues with huge gaps to addresses employment relations strategies, workforce stability, and the role of workers union in this regards, the further research is essential to mitigate dilemmas of such merger cases.
Unethical Restriction Imposed by Merger Consequence
News Corp (2013) reported that the merger of the Westpac Corporation – St. George Bank has evidenced with unethical restriction on the human resource that is violation of human rights and contrary to the modern employment relationship policy. In favour of the financial sector employees the FSU reported that 188 employees of Westpac Corporation were forced to train the new staff those replace the victims lay out of work and could not join to any new job until they make the newcomer efficient for the large-scale reform in the banking technology along with back office service providing.
More unethical dilemma in this case is that the newcomers who replaced the 188 skilled natives were from India without working visa, the sacked 15 years experienced employees were forced to train these illegal workers and to teach how the day-to-day job in the baking sector. Such unethical drive of training was named as “knowledge transfer” where the newcomers were sucking in as much more information from the Australian employees of Westpac with very lower salary than the natives. The FSU blamed that the tremendous record of profit by four banks around $24 billion were just the consequence of firing 3300 employees within a year while the IT section of Westpac were totally operated by ditched staff from outsourced companies.
On the other hand, the government also warned the Westpac regarding their violation of immigration law by bringing in overseas workers to substitute the Australian native workers, more over the violation of employment policy for not to discriminating people depending on their ethic, colour, race or origin while the foreign employees are also requisite to compensate in the same rate.
FSU also reported that worse people are hired from the overseas market those are incapable to take learning or useless to keep their own role in the organisation, while the Westpac was contacted in this regards, they reacted the local staff have to ‘act professionally’ to transfer knowledge to the foreign employees. The merged management of the Westpac Corporation – St. George Bank considers that there is nothing immoral for to hire foreigner or use outsoaring service to maximise profit by adopting cost cutting policy in a global scale.
On the contrary, in merger case of National Bank of Dubai and Emirates Bank merger, although the employees downsizing context was less than the Westpac Corporation – St. George Bank merger, but the extents of unethical restriction imposed by merger consequence were similar, the employees of Emirates NBD were forced to climbing the Kilimanjaro Africa’s highest peak. Ahmed (2013) pointed out that hundreds of employees of ENBD, as part of its 50th anniversary celebrations, have planted the bank’s flag at the top mountain, mainly to raise fund; in due course, the employees were thrown into a challenge to rescue their job taking serious risk.
The employees including top to lower were spending six days on a charity with a group of 25 in each and reacted that it was an ‘unforgettable way of celebration’ for fund rising without any experience of mountain climbing that resulted fear and sickness altitude and they get headaches, suffered from vomiting and move violently with their digestive system. To support the merged management decision, the HR manager reacted that the program was initiated with threefold objective to build up a group of competent people from different nations with better team spirit while the relationship manager argued that the high-intensity of the mountain drive would assist employees to face the worst challenges of their career.
Conclusion
This paper presented several human resource issues and activities at the post mergers integration from the comparison of EBI – NBD and St. George – Westpac mergers those are most trumpet challenges for both companies including their staffing, union activities, culture and communities and society, , rightsizing, survivor syndrome, cultural issues, role of employees union and unethical restriction imposed by merger consequence. The outcomes of this study would assist the companies aligned for merger with better understanding human resource management perspectives and illustrate how the companies could avoid the risk of human resource integration at the post merger reengineering with strategic options to reducing social cost and urge for further research in this regards.
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Footnotes
- Emirates Bank International.
- National Bank of Dubai.
- Smart Deposit Machines.
- Finance Sector Union.
- National Bank of Dubai.