The administrative role of the human resource department function entails the manner in which it develops and implements the processes used to staff, train, appraise, compensate and reward, promote and otherwise manage the turnover of employees in the organization (Ulrich 1997). One of the challenges that many HR functions face during mergers and acquisitions is the transition from a local to an international firm specifically if the M&A is transnational.
In such a scenario, the HR function is charged with the responsibility of addressing the development of an HRM department that would guarantee competent, fair and high quality HRM processes and practices. At the same time, the HR should pay adequate attention to the differences between the countries and business units within the new multinational organization. The merging country-based organizations are likely to have different HR systems and notions as well as differences across the business units of the organizations. Initiatives should be taken in the collection of data so as to gain a general idea of how the different HRM duties were executed in the different countries.
The HR function should also align job titles in the different countries and make efforts to synchronize the timing of salary conciliations across borders and across different job descriptions. This would help the managers to spend less time on such conciliations pertaining to the entire merged organization (Soderberg & Vaara 2003; Storey 1995; Katz & Kahn 1978).
In mergers and acquisitions, it is likely that the different organizations involved have different opinions of what constitutes best human resource management practices. The HR function should thus step in and educate the entire organization about these practices. This would entail the implementation of organization-wide modifications and fine-tuning at the group level. A group level HR function would help solve the many challenges that M&As encounter (Pfeiffer 1994; Legge 1989; Galang & Ferris 1997). This is because the institution of national HR functions would lead to an emphasis on national rules and would add to the difficulties that result from national differences. In addition, national HR functions would suggest national solutions which would in turn create barriers for joint solutions.
Other challenges of M&As include the difference in perceptions between the decision makers who were responsible for national HR functions and the inability of the organization to deal with new HR issues once the merger and acquisition have been finalized. Following M&As, the HR function should seek to invest in a group-wide policy for HRM data which would provide transnational HR data and would as well facilitate the alignment of HRM practices and processes across the borders and the business units (Barney & Wright 1998; Buono & Bowditch 1989; Sisson 2001).
Human Resource Managers as Employee Champions
The employee champion function of human resource entails the manner in which the HRM helps to improve the contributions made by employees (for instance, commitment) to the organization by paying attention to the needs of the employees (Ulrich 1997). The degree to which HR professionals have a close and trustworthy relationships with employees and, thus their ability to empathize and deal with the needs of employees differs from one organization to another, one region to another, and one business unit to another. In some organizations, the HR units operate as a central and somewhat technical department that typically deal with administrative HRM concerns for instance as hiring and firing contracts and remuneration.
In such organizations, the employees often fin it difficult to take their grievances and problems to the HR professionals with their grievances and concerns. In other organizations, the HR function not only plays its administrative duties but also promote the welfare of the employees by addressing their needs. In such organizations, employees feel free to approach the HR function with their problems. During mergers and acquisitions, organizations go through challenging periods of great turmoil (Cartwright & Cooper 1992; Stahl et al. 2004; Tsui 1984).
Changes in job titles, job descriptions and high expectations from the management can all have a negative impact on the employees and their commitment to the organization. It is therefore important for the HR to conduct counselling and support services for the workers as well as proactive actions which would promote employee work commitment. Shared expectations regarding the role of HR as employee champion can help mergers and acquisitions to avoid the loss of some of the employees who have crucial competencies at the organization. The solution to maintaining such core employees does not just rest on salary levels but on clarifying the number of other benefits the employees have.
Welfare services for employees can go a long way in maintaining core employees at the organization. The group-wide approach to HRM in M&As renders the HR professionals to be part and parcel of the organization both physically and organizationally. With time, such an approach strengthens the ties between the human resources personnel and the employees. The enhanced relationship between the HR team and the employee in turn makes it easier for the organization’s management to address the issues that arise within the organization promptly. The realization of this condition however is dependent on the initiatives undertaken by the HR team as well as the competencies of the HR personnel. More so, it would depend on the communication of the expected roles by the line managers and the employees (Tyson 1995; Wright & McMahan 1992).
Human Resource Managers as Strategic Partners
“The role of the HR as a strategic partner focuses on the ability of the HR to align the HR tactics and practices with the strategy of the business,” (Ulrich 1997, p. 46). While the representation of the organization’s HR function in the ladder of the organization can be perceived as a sign of its organizational status and its likelihood of participating in decision making during formal meetings, a more compelling sign of its actual tactical impact is the degree to which the role affects the results of strategic decision making (Purcell, 2001). Prior research studies show that the HR department, instead of being centrally engaged in strategy development, mainly is called upon to give suggestions regarding the implications of the people on business strategies when they are devised (Truss et al., 2002). During the process of merging and acquiring, the HR function ought to have a permanent “seat at the table” in the organization.
Unfortunately, this is not normally the case in M&As. Majority of M&As are done without fully involving the HR function. The development of the organization’s strategy often takes place without much influence from the HR function. As a result, many issues that concern human resources are not addressed in depth by the top management. In many cases, the top management actually lacks interest in the HR function during the negotiation process. This should not be the case. The HR function should have easy access to the top management.
The function should indeed be made part and parcel of the team that is involved in the development of the corporate strategy for the M&A. This is because mergers and acquisitions have considerable effects on human resource issues including staffing, redefinition of job roles and descriptions, as well as remuneration packages (Schuler & Jackson 2001; Jemison & Sitkin 1986; DiMaggio & Powell 1983; Hope-Hailey et al. 1997).
As strategic partners, the HR personnel should work together with the organization’s consultants in distributing the job duties within the organization, and in developing goals, tactics, rules and regulations, and procedures. In short, the HR personnel should be personally engaged in the corporate strategy negotiations. The institution and gradual execution of a group-wide HR function is aimed at promoting the tactical contributions made by human resource personnel in each business unit. The HR function and the services they provide should be directly focused on the specific needs of each business unit (Harris, Brewster & Sparrow 2003).
Human Resource Managers as Change Agents
The human resource also functions as change agents (Flood 1998). This role is particularly important in mergers and acquisitions in which different cultures merge. Mergers and acquisitions entail the integration of two or more organizations which have different business culture, values and policies. As a result, change is inevitable. Unfortunately, many mergers and acquisitions take place without taking into account the influence of the HR function on the change and integration process.
In general, socio-cultural issues are normally given little attention during the integration process after the merger and, subsequently, the acquisition (Søderberg and Björkman 2003). In business processes as significant as mergers and acquisition, it is inevitable to find some employees who are willing to embrace change and others who are either unwilling or slow to embrace change (Kay & Shelton 2000; Lindquist 2007).
It is thus the duty of the HR personnel to step in and create a balance between these two groups of employees (Ferris & Judge 1991). For those who are willing to embrace change, the HR personnel should work with them cautiously to ensure that the organization’s traditions and wisdom that have been built over the past are not entirely thrown out of the window but are instead incorporated skilfully and effectively into the new methods of doing business. On the other hand, for the employees who are either unwilling or slow to embrace change, the HR function should work with them by pushing for the desired change (Dowling, Festing & Engle 2008).
The change that results from the integration of two or more business organizations with different cultures can have a significant impact not only on employees but also on administrative duties such as the recruitment, training, and reward processes. Such processes should be executed in a way that supports the new business culture. Nevertheless, as change agents, HR personnel should not only advocate for new way of doing things but should protect the organization’s past which formed the foundation upon which the organization was built (Evans, Pucik & Barsoux 2002).
In conclusion, it is important to note that these four roles of the human resource function may conflict with each other. For instance, the role of the HR as employee champion can easily conflict with the role of strategic partner. Likewise, the role of administrative expert can easily conflict with the role of change agent. It is therefore important for the HR function to balance the four roles well to minimize conflicts and to ensure that the process involved in mergers and acquisitions runs smoothly.
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