Roles Played by HR in the Merger Between Westpac Corporation and St. George Bank

Subject: Management
Pages: 10
Words: 2815
Reading time:
11 min
Study level: PhD

Introduction

When a merger occurs between two organisations, tension is created between the different entities. According to DeVoge and Spreier (2005), employees are the most affected elements of an organisation in the event of a merger (p.31). The role of HR in the merger between Westpac Corporation and St. George Bank is important since resolution of tension created between employees and any two organisations forming a merger is necessary to ensure the success of the merger.

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Daniel (1999) claims that HR plays the function of helping in the management of the challenges accruing from different organisational cultures of the organisations coming together to form a merger (p.23). This role is done through the analysis of the different organisational cultures in the effort to determine cultural compatibility. Where incompatibility is identified, HR as a strategic partner in the process of forming mergers serves as a cultural integration organ for the two units making the decision to form one unit that can withstand market dynamics better through gaining better competitive advantage.

When the merger between Westpac Corporation and St. George Bank was formed, issues of cultural differences fear of retrenchment, and survival syndrome emerged. This implied that the HR had to play significant roles both as a strategic partner in the merger and as an employee’s champion. This paper investigates how these two roles of HR stood out in the merger between Westpac Corporation and St. George Bank from the context of Ulrich’s four-role model.

Ulrich’s Four-role Model

Ulrich’s model for strategic roles of human resource is a four-role model that was first postulated by Conner and Ulrich (1996). Ulrich later developed it in his scholarly work titled Human Resource Champions: the Next Agenda for Adding Value and Delivery Results (Ulrich 1997). The model enumerates the critical functions of HR within an organisation during organisational merging process. Dave Ulrich is an expert and a scholar in the field of HR. Ulrich’s model marked a sporadic shift of HRM approaches from inclination in human resource within an organisation to focus on strategic partnerships.

Enhancing partnership calls for organisational business changes (Mathis & Jackson 2007, p.71). Merging is one of the ways in which the business of an organisation changes (Jerjawi 2011, p.68). From the basis of Ulrich’s four-role model, HR enhances success of a business in several ways among them being enhancing maximisation of quality together with cost minimisation (Armstrong 2006).

The circumstances leading to the formation of the merger between Westpac Corporation and St. George Bank were driven by the need to enhance market cost effectiveness for optimal performance. In this extent, in the merger between Westpac Corporation and St. George Bank, HR roles were significant since HR had to play the role of enhancing the selection of the most talented employees to be retained in the organisation in situations where elimination of work redundancy was necessary.

HR as a Strategic Partner in Mergers

From Ulrich’s four-role model, HR plays the functions of being a strategic partner upon the formation of a merger. Playing out this role in the merger between Westpac Corporation and St. George Bank was important since HR manager operates to enhance the success of an organisation in terms of improving its profitability by enhancing the effectiveness of employees in the execution of roles by managing conflicts amongst their peers and the organisation (Jerjawi 2011, p.65).

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Employees fear organisational change. They respond to merger organisational changes by developing fear about the uncertainties of their jobs (Jerjawi 2011, p.65). To overcome these fears in the merger between Westpac Corporation and St. George Bank, HR as a strategic partner played the role of smoothening employees’ transition to embracing change by calming fears. In the merger between Westpac Corporation and St. George Bank, this goal was accomplished through addressing questions emanating from employees on the implications of the merger at their individual level.

Employees’ fear about the implication of a merger on their job security creates survival syndrome. According to Halel (2000), such fear leads to reduced employee performance levels since their worries shift from maintaining their set standards for organisational performance to worries on the capacity to remain employed by an organisation (p.40). Jerjawi (2011) amplifies this argument claiming, “If employees of both companies do not have as much fear over the change in the event of merger, productivity is more to likely to stay at previous levels” (p.68). Fear among employees is propagated through rumours.

For the merger between Westpac Corporation and St. George Bank, HR played the role of strategic partnership by detecting and effectively addressing rumours concerning the merger organisations’ decision to lay off employees where work functions were redundant. Other issues that HR addressed in the merger between Westpac Corporation and St. George Bank include the fear associated with office relocations and other physical changes that were required in making the operation of a merger effective. The HR then relayed this information to the management of the both organisations in the effort to seek mechanisms of ensuring that the fears do not persist even when the merger is in full operation.

In strategic partnerships, HR ensures that all risk factors to the success of a merger associated with HR mandates within an organisation are mitigated. For the merger between Westpac Corporation and St. George Bank, this task involved the evaluation and making of the decision on the impact of the structures and cultural characteristics on different organisations, which may influence the performance of employees.

Based on this information, the HR offers advice to the respective managers of the two organisations forming a merger on the appropriate decisions that are required while paying attention to the concerns of maintaining employees’ morale and commitment to the business of the merger (Leopold & Harris 2009, p.93). Contribution of the HR in influencing the decision of changing of merger structures and cultures is meant to enhance greater organisational efficiency (Losey & Ulrich 2008, p.35).

Contribution of the HR in strategic partnerships in mergers enhances quick making of decisions. Organisations in the globalisation age recognise the contribution of employees in enhancing their competitive advantage. Consequently, emphasis is placed on maintaining the work morale of employees existing before a merger. For the merger between Westpac Corporation and St. George Bank, this case shows how important it was for HR to have played the function of giving contributions to the decisions, which are made to ensure better success of a merger than when the merging organisations form single entities.

Additionally, in the merger between Westpac Corporation and St. George Bank, strategic roles of HR were played out through involvement of HR functions of both organisations in the determination of the resources, which were necessary for utilisation in the reduction of the cost of the merger. Attainment of specific levels of productivity of a merger requires deployment of given levels of labour input. HR is the organ within the merger between Westpac Corporation and St. George Bank, which can determine effectively the right amount of labour in terms of experience and quality that can achieve requisite productivity level at minimum costs.

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Roles of HR in strategic partnership narrow down to addressing staffing need of a merger. Pielstick (1998) amplifies this concern by arguing that well-defined approaches to hiring of new personnel in a merger need to be established (p.503). This means that employees in the merger between Westpac Corporation and St. George Bank merger needed to respond to one authority or organ, which addresses their needs.

However, in the case of this merger, addressing the staffing needs faced an incredible challenge. The merger agreement between the financial institutions did not declare total dissolution of the organisations so that the merger operated as a single entity. Yuki states that the merger agreement permitted St. George Bank to operate independently without taking any decision from the partnering organisation in Sydney suburbs (2010, p.96). This hindered the attempts to establish a single effective arm of HR to support HR strategic partnership for both organisations at equal thresholds.

Although a single HR arm could be formed by integrating the respective HR functions of both organisations in the case of the merger between Westpac Corporation and St. George Bank, recruitment of employees to work in areas where one bank operates as a single entity had to be done in consideration of only one bank’s organisational culture. Nevertheless, even if employees are recruited successfully in accordance with the organisational culture of both organisations, perception of avoidance is highly eminent since employees working within the Sydney suburbs would consider themselves non-subjects to the Westpac Corporation organisational culture.

Any form of monitoring and controlled exercise by HR personnel from Westpac Corporation making the integrated HR arm would be treated with deviance. This has the effect of hindering the effectiveness of HR as a strategic partner in the merger between Westpac Corporation and St. George Bank

Operation of HR as a strategic partner is tied within the concerns of enhancing profitability of organisations by enhancing the effectiveness of employees through strategies such as motivation and setting of reward systems. For the merger under study, playing out this role was problematic. According to Richard, Devinney, Yip, and Johnson (2009), employees’ trust on the capability of an organisation to meet their needs is important especially where they are in the lowest rank of Maslow’s hierarchy of needs (p.826). In the case of Westpac Corporation and St. George Bank, the merger was to operate under the control of a single CEO. The Corporation’s Bank CEO assumed this position.

Hence, St. George Bank was under the control of the Corporation Bank. Brockbank (2010) argues that organisations have different cultures shaping the perception and commitments of employees to the aims, goals, objectives, and missions of an organisation, which are communicated from the top-most level of management to the subordinate employees (p.338). This means that employees developing perceptions that they are no longer under control of leadership that satisfied their needs attract incidences of low motivation.

Organisations forming a merger believe that employing people having different organisational experiences give the resulting merger the advantage to develop the capacity to tap and benefit from a wide range of talents and knowledge bases (Dessler 2004, p.107; Daniel 1999, p.21). This way, a merger is able to innovate and create a wide range of products, which while traded translate into increased profitability. Nevertheless, in the merger between Westpac Corporation and St. George Bank, this brought together people who have different cultures. To resolve cultural conflicts in the merger, HR’s strategic partnership roles were important in helping to create a common culture by helping employees to understand that different people have different abilities and beliefs. Such differences should not be permitted to influence the way people relate with one another (Ollapally & Bhatnagar 2009, p.456).

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Employees of one organisation in the merger should not consider themselves inferior in comparison to persons from the other organisation forming the merger. This suggests that staffing for a merger needs to be done based on merit.

HR as an Employee’s Champion in Mergers

Ulrich model considers HR an arm that plays essential functions within an organisation by acting as the champion of employees in the formation of mergers. Working as the champion of employees, HR listens and creates mechanisms of responding to the concerns of employees (Fischer & Rush 2008, p.107). In the case of the merger between Westpac Corporation and St. George Bank, several concerns of employees came up.

Employees for both Westpac Corporation and St. George Bank were concerned about whom they would be accountable to. Barney (2010) appreciates the significance of this challenge by arguing that organisations must determine and set proper guidelines on the mechanisms and approaches for management of employees in the process of formation of mergers (p.58). Before the formation of the merger between Westpac Corporation and St. George Bank, a decision was made on the person to whom all staff members of the organisation would be accountable. The merger agreement settled to the CEO of Westpac Corporation. However, only line managers including the HR are accountable to the CEO.

In the determination of the persons to whom employees would be accountable to, several factors must be considered. One of such factors is the amount of assets of each organisation. Stahla (2005) observes that the organisation possessing more assets takes over the function of management for the merger in the process of its formation (p.78). This implies that organisations having the larger stake in a merger have the largest interest in the performance of organisations.

Therefore, in case of poor championing of employees’ interests, which may result in low productivity of a merger, the organisation having the largest stake would feel the highest pain. Westpac Corporation was the larger organisation. Consequently, upon considering HR as playing the role of employees’ champion in a merger, Westpac Corporation assumed most the managerial functions including having the largest stake including the HR.

The goal of championing for employees is to ensure that they are managed effectively to yield organisational success. Jerjawi states, “organisations in the past used to have good strategies for employees” (2011, p.69). Such strategies entailed the provision of security together with the creation of hope for future promotions. Daft further argues that some organisations do not seek effective mechanisms for enhancing good communication between the management and staff (2008, p.69). In the case of the merger between Westpac Corporation and St. George Bank, HR served the function of championing for employees’ concerns through facilitation of communication between the top management and employees. Hence, in the formation of mergers, communication strategies are crucial.

Decision to form mergers is steered by complexities encountered by organisations. Complexities make organisations constantly look for mechanisms of becoming competitive (Brockbank 2010, p.341). One of the ways of gaining competitive advantage is by “discovering and implementing a communication strategy that supports a company’s business objectives for its customers, workforce, and partners” (Perry & Bodkin 2000, p.89).

For merger between Westpac Corporation and St. George Bank, HR played principal roles in enhancing effective communication. According to Meisinger (2007), good communication strategies have multiple benefits for an organisation ranging from enhancing workforce motivation to the creation of additional customers and retention of the existing clientele (p.11). In the decision of forming a merger between Westpac Corporation and St. George Bank, retention and acquiring of new clientele were essential business objectives. This was difficult without the maintenance of work morale of employees and enhancing organisational commitment. Consequently, the HR could not forfeit its function as the employees’ champions.

Organisations’ leaders are ever placed on a constant pressure to comply with various demands by various organisational stakeholders while still ensuring that an organisation remains competitive in the short and long run. While ensuring compliance with these dual anticipations, organisational managers design and/or execute various business strategies (Malina & Selto 2009). One of such strategies is the formation of mergers and acquisitions.

Although any failure of mergers may initiate at the planning phase, many of them have higher failure rates at the implementation and execution phases. The repercussion of this argument is that inadequate expertise in the execution of merger strategies within an organisation may produce serious implications.

To avoid the failure of the merger, HR addressed all concerns of employees in the effort to make sure that business plans made during the merger are successful since employees are the implementers. Furthermore, in this merger, this failure was addressed through effective communication of the procedures used to select employees who would assume various positions. This ensured that employees developed the awareness that the selection criterion was based on expertise rather than discrimination and prejudice. This means that the merger between Westpac Corporation and St. George Bank anticipated success while HR worked as the champion of employees.

HR forms an effective source of motivation together with provision of an effective working environment in which employees’ demands and challenges are cutely addressed (Fischer & Rush 2008, p.135). Indeed, the quality of service delivered by the merger between Westpac Corporation and St. George Bank is a function of the ability of the HR to enhance coordination of employees. Coordination is unachievable without addressing problematic areas, which may hinder employee cohesion.

Conclusion

Westpac Corporation and St. George Bank announced to form a merger when they had no challenges in their performance. However, they wanted to gain an extra common advantage by becoming the leading financial institutions in Australia. In this quest, several challenges that could have impaired the success of the merger had to be addressed. One of the challenges was the role played by HR in the merger. Upon scrutiny of Ulrich’s four-role model in the context of the merger between Westpac Corporation and St. George Bank, the paper discussed strategic partnership and employees’ champion as the two most significant roles that were played by the HR during the merger formation and later in the process of the merger’s strategy implementation process.

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