EXECUTIVE SUMMARY The rapid changing business scenario in the market place, due to the globalization, growth in the

outsourcing mode of working, the need to speed up growth, and the shortening of product cycles, has forced companies to think different to meet their business goals. From the earlier steady growth method, it has now become almost mandatory for companies to chalk out a fast paced growth as a part of their business strategy. Mergers and acquisitions have thus become increasingly the sought after mode for companies to meet their business goals. For some companies it is seen as a need to maintain the position, while for many others it is seen as the path to grow and enter into new markets, and for some it is seen as a quick way to gain access to new technology. With mergers becoming the need of the hour, and depending on how the two companies see the situation, they are broadly seen as fitting into one of the four situations rescue, partnership, adversarial and hostile. Regardless of the reasons for the merger route the objective of a merger and acquisition is to produce advantages for both the buying and selling companies that is the resultant entity should be greater than the sum total of the individual entities. VALUE (A+B) > Value (A) + Value (B) Research findings indicating reasons for failure in mergers include unrealistic expectations, hastily constructed strategy, talent is lost or mismanaged, culture clashes going unchecked, transition management failures, and power and politics that outplay productive objectives. While reasons for success cited include leadership, well thought out goals and objectives, due diligence on hard and soft issues, well managed team handling the merger, successful learning from past experiences, key talent retained, and extensive and timely communications to all stakeholders. For the success of the merger, it has become very important to understand the process of managing the human resources in a way where they are not only retained, but also collaborate effectively to contribute higher levels of performance. ABC Ltd. A company incorporated in India in 1991, with its business focus in the information technology sector grew based on their performance and had a head count of 868 people as on 31st march, 2005. At this stage, acquisitions came into their strategy and in the process of two years acquired 4 companies globally for varying motives and saw varying levels of success. By 31st August 2007, they had grown to a head count of 2264 people. In addition to the head count growth, their financial performance also grew from INR 1452 million to INR 2988 million. They also entered into strategic new business domains like BPO Hospitality BPO Healthcare and clinical research, which could use the strengths of ABC technology expertise in these areas besides entering international markets of US and Singapore. They have charted similar plans to enter Europe.

This company thus is a good case to study and understand to determine the processes that they followed and analyse the effectiveness of these processes vis a vis their business objectives. The study clearly brings out that the success of any merger is as effective as its ability to retain the human resources and to have them work together to achieve higher performance goals. Based on the qualitative assessment over interviews with 19 employees that left the company during and immediately after the merger, interview with the 16 employees who stayed on, and the data related to financial performance, head count, and exit interviews, this study attempts to bring out strategies to effectively manage human resources during the merger process, in line with the business objectives of the company. The study looks at the various stages in a merger, the issues that arise in these stages, and the results of the actions taken in these stages, particularly focused on the role that HR can play to manage these human assets. In the Pre-Deal Support Stage, the human Resource Function needs to focus on Strategy and planning. Understanding the objectives and due diligence labour cost projection. In the Employee Advocacy stage, Effective Communication, and Response to concerns, these become the important activities. In the Post Deal HR Integration, it is essential to look at HR readiness, Workforce alignment, and Compliance issues. Finally, in the On going Accountability, implementing action plans, monitoring integration process and talent management and people development are the areas to work on. The highlights of the study are summarized below; 1. Strong need to manage the human assets to realise the full benefit of the merger 2. Need to communicate the vision and business plans as early as possible to the employees of both the companies. 3. Need to involve HR in due diligence stage to understand the cultural factors that could impact the work force integration, and also to estimate the costs of integration. 4. Need to develop the new business goals and the organisation structure to meet them. Further, it is essential to map the competencies of the people and integrating the findings to the organisation structure. 5. A dedicated team to handle mergers would be beneficial in the process of integration, as they can be seen as neutral bias, and working with clear objectives of integration for the new objectives. 6. A process of communicating a clear message quickly and then continuously stay in contact, is essential.

7. A point of contact must be established for employees to contact for clarifications and this person should have access to senior management to be able to respond to the queries quickly 8. A high priority must be given on managing employees with unique skills and the ones who influence customers. 9. Engage employees in productive work to manage their commitment levels. The study brings out that for mergers to be successful, it is important to address issues revolving around a. Clarity provided at the earliest and constantly addressed to satisfy queries from employees is a must manage situation. Companies must look at establishing suitable processes that could be set up to manage this as suited to their work environment. b. Competence must be the focus area to assess quickly and establish its link to the new business plans and strategies. It is important to be able to utilize the existing competencies to further the objectives of the company. c. Commitment from all employees needs to be obtained, and this is possible by bringing into alignment current and future needs of employees with the objectives of the company.

INTRODUCTION There are stages to everything in life. To grow, learn and to sustain oneself are the basic necessities in life. However, there comes a point in life, where one feels the need to explore new horizons; to gain and enrich experiences. Marriage for e.g. is a stage where two individuals unite and carry on progressing in life only now with each others combined strengths and weaknesses. Similarly in a business scenario, there comes a stage where the business entity needs the strength and support of another, to go ahead in the commercial race. Organisations are increasingly realising the need and importance of Growth. So much that the need for growth has given birth to an all new executive position called the growth officer. (David Meer, 2005)

In terms of strategies adopted by organisations to achieve growth there are various that include product development, market development, diversification and many others. (Campbell & Craig, 2005) Clearly, mergers and acquisitions are the growth strategy of choice (Carleton and Lineberry, 2004) The Business journal Mckinsey Quarterly states that the recession has indeed hit most or all of the organisations. Organisations have tried various plans; organic that involved internal investment and/or inorganic through activities such as mergers and acquisitions, alliances and joint ventures. However it was noted that among all the companies, the ones that came out comparatively better than their competition had invested in inorganic growth. (Karakolev & Rishi, 2007) Mergers and acquisitions facilitate the entry of the organisation into newer markets, access to newer and better technologies and many other benefits. (Silva & Mchenry, 2009) An organisations corporate strategy that involves buying, selling and combination of various companies that helps in the financial situation or in the overall growth of an organisation can be summed up as mergers and acquisitions. A merger occurs when one company is combined with and totally absorbs another. Operations, facilities and functions are rationalized and combined for maximum efficiency. The cultural beliefs norms and infrastructure of the acquired organisation generally change to the acquiring culture for the integration purposes. The acquired organisation effectively loses its identity. Acquisition is a process used to transfer stocks or assets from one company to another (from seller to buyer). The process of acquisition can take place as a purchase of stock, purchase of assets or a merger. Acquisition is a generic term used to communicate the transfer of ownership. A merger may or may not be a part of an acquisition. One can do an acquisition followed by a merger or by means of a merger or one can also do an acquisition where no merger takes place. Fundamentally, acquisitions create value when they enhance the strategic capabilities of both the companies, improving the competitive capabilities of either or both, resulting in improved financial results. There are companies that on their own probably would not be able to make it, but when combined, are able to create a better set of products and services that could have been otherwise provided to the market. Acquisitions can help grow a companys market position faster than internal development strategies. It can also provide a way to bring in new capabilities and leverage existing ones that would be difficult without the synergy of an acquisition.

Mergers and acquisitions are being used by firms to strengthen and maintain their position in the market place. They are seen as a relatively fast and efficient way to expand into new markets and acquire new and useful technologies. There are valid and well thought out reasons that are driving this trend of mergers and acquisitions, and the most important being globalisation. (Anon, 2001) There might be several reasons for organisations to opt for the mergers and acquisitions and many motivations behind it too, however unfortunately as it may be, the success of mergers is not assured. Surprisingly most of the mergers and acquisitions fail to attain their goals and objectives. (Straub, 2007) There are valid and well thought out reasons that are driving this trend of mergers and acquisitions, and the most important being globalisation. (Anon, 2001) The main objective for mergers and acquisitions could be summed up as below; Horizontal mergers for market dominance or economies of scale Vertical mergers for efficient channel control Hybrid mergers for spreading risk, cutting costs, creating synergies, or could also be a defence mechanism to survive against competition. Growth for global reach Survival by developing a critical mass Acquisition of cash deferred taxes or even excess debt capacity Acquire a bigger asset base to leverage borrowing Top line growth objective, financial gains and personal power. Adding a core competency to provide more combinations of products and services. To acquire talent, knowledge and technology. These objectives arise as a consequence of the following changes in the business scenario; Globalisation Outsourcing Speed of growth Shorter product life cycles.

Regardless of the reasons companies have for merging, there are some basic assumptions that are being made and these include: Mergers and acquisitions are the fastest and easiest ways to grow Mergers and acquisitions are likely to fall short of their initial goals. Mergers and acquisitions are difficult to do Creating synergies is a major challenge Shaping and adapting cultures is a major challenge Due diligence is necessary but not sufficient Pre planning can help increase chances of success.

In recent years, mergers and acquisitions have dominated the business world to such an extent that one can hardly pick up a business newspaper which does not have any news on a proposed bid or the announcement of a merger or an acquisition. The merger climate is mainly governed by financial strategic and psychological motives and the following specific factors, individually or collectively can be considered to have facilitated or promoted the current wave of merger activity. (reference) Changing market conditions Increasing availability of capital More companies for sale Easing of regulations The need to share risk The existence of complex indivisible problems

Acquisition strategy has been described as an area of corporate strategy where inappropriate mathematical theory and a yearning for greener grass, has prevailed over common sense. (reference) The objective of a merger and acquisition is to produce advantages for both the buying and the selling companies, that is the resultant entity should be greater than the sum total of the individual entities, that is; VALUE (A+B) > Value (A) + Value (B) Until the last two to three years, the news that an Indian company has acquired an Amrican or a European company was almost unheard of.

However, this scenario has changed. Nowadays the news of Indian companies acquiring foreign businesses is quite common. The buoyant Indian economy, extra cash with Indian corporate companies, liberal government policies and newly found dynamism in Indian business people have contributed to this new acquisition trend. Indian companies are now aggressively looking at American and European markets to spread their wings and become the global players. The Indian IT and ITES companies already have a strong presence in foreign markets; however, other sectors are also now growing rapidly. The increasing engagement of the Indian companies in the world markets, and particularly in the US, is not only an indication of the maturity reached by Indian industry but also the extent of their participation in the overall globalization process. The table below gives the top 10 acquisitions made by Indian Companies worldwide. Table 1: Top 10 Acquisitions/Mergers made by Indian Companies Worldwide. ACQUIRER TARGET COMPANY TARGET COUNTRY DEAL VALUE in US$ (Millions) 12,000 5,982 729 INDUSTRY

Tata Steel Hindalco Videocon

Corus Group PLC Novelis Daewoo Electronics Corp. Betapharm Hansen Group Kenya Petroleum Refinery Terapia SA Natsteel Thomson SA

UK Canada Korea

Steel Steel Electronics

Dr. Reddyd Labs Suzlon Energy HPCL

Germany Belgium Kenya

597 565 500

Pharmaceutic als Energy Oil and Gas

Ranbaxy Labs Tata Steel Videocon

Romania Singapore France

324 293 290

Pharmaceutic als Steel Electronics

VSNL

Teleglobe

Canada

239

Telecom

These ten deals itself account for over US $21.5 billion. The most frequent and serious issues that mostly affect the success of most of the mergers and acquisitions are culture clashes, incompatibility and losses of key talents. (Bianco, 2000 and Fairlamb, 2000b). the vice president of a parent company who had recently merged with another, observed that buying is fun, merging is hell. (Marks and Mirvis, 2010) it has been estimated that between 60% to 70% of the mergers and acquisitions fail. (Mirvis & Marks 2003) The failure of the mergers and acquisitions despite all the efforts executives fail to understand that what hampers a mergers success is the mismanagement of the individual personalities of the two companies that come two together that is constituted of the human resource assests of the organisation. (Caswell, 2006) The total M&A deals for the 5 months of the year during January May 2007 have been 287 with a value of US $ 47.37 billion. Of these, the total outbound cross border deals have been 102 with a value of US $ 29.19billion, representing59.5 percent of the total M&A activity in India. The total M&A deals for the period January February 2007 have been 102 with a value of US $36.8 billion. (Reference) of these, the total outbound cross border deals have been 40 with a value of US $ 21 billion There were 111 M&A with a total value of about US $ 6.12 billion in march and April 2007.(reference) of these the number of outbound cross border deals was 32 with a value of US $ 3.41 billion There were 74 M&A deals with a total value of about US $ 4.37 billion in May 2007. Of these the number of outbound cross border deals was 30 with a value of US $3.79 billion. The sectors attracting investments by Corporate India include metals, pharmaceuticals, industrial goods, automotive components, beverages, cosmetics and energy in manufacturing; and mobile communications, software and financial services in service industry, with pharmaceuticals, IT and energy being the prominent ones among these. The challenges faced in the process of integrating the workforce are many. While one would expect that a merger would bring about a growth quite easily, a majority fall short of their goals and objectives. While some failures can be explained by financial and market factors; a substantial number can be traced to neglected human resource issues and activities. Numerous studies confirm the need for firms to systematically address a variety of human resource issues and activities in their merger and integration activities. Statement Of problem:

Mergers are failing to meet their objectives. In the last decade, mergers and acquisitions have become a worldwide growth story, despite the high risks attached, and the information that over 85% of them have failed during the process of integration. (reference) While one would expect that a merger would bring about a growth quite easily, a majority fall short of their goals and objectives. While some failures can be explained by financial and market factors; a substantial number can be traced to neglect human resource issues and activities. Numerous studies confirm the need for firms to systematically address a variety of human resource issues and activities in their merger and integration activities. There have been very few cases (estimated at less than 15%) where mergers and acquisitions have been successful during the process of integration, in line with the strategic objectives that the management had envisaged. It also has been determined that most cases of failures have been because of employees not being able to adjust to the new environment, and/or many good employees leaving the organisations during the process of integration. Despite a well planned strategy acquisitions have found to be a failure, and the main reason attributed for the failure is the challenges faced in managing people related issues. 1.2 Purpose of Study About a decade ago, the HR teams were not given significant representation in the top management level. They have always been considered to be a backoffice requirement. Presently, this perception is slowly changing, and the importance of involving them in strategic business planning is being recognized. HR is now being seen as an important part of strategic business planning, and not merely a support function, carrying out fixed administrative tasks. Considering the mergers are increasing and many companies are finding it as a need, and the fact that a majority of the past mergers have been failures, and further, the cause for these failures being attributed to poor handling of people resources, the focus of this study is related to Human Resource Challenges and activities when there is an attempt to integrate two or more companies to form a single unit. 1.3 Objectives of the Study: Preliminary discussions with the President and CEO of ABC Ltd. indicated that the company was facing serious issues and challenges in managing the people post integration and that understanding the peoples concerns was required, especially keeping in mind that the company was gearing up for a lot more acquisitions across US, Europe, and India, so that in the future, the process of integration can be improved. This case study thus has the following objectives;

1. To study the impact of communication of the decision of mergers and acquisitions on the employee of both the organisations. 2. To study the effect of the specific HR related actions have had over the employees at various levels of both the companies. 3. To understand the role that the HR department can play to help meet the objectives of the merger, in areas like, reformulating the vision and mission, designing new policies, integrating the workforce and managing the performance levels, facilitating and sharing the benefits of mergers and acquisitions 4. To analyze the ways and means adopted by the management to retain the employees and to understand what makes the employees remain with the organisation after it is merged. There has been a phenomenal growth in M&A activity in the past three to four years, and with forecasts of further increase in this activity. Considering this trend, the study aims to assess the following; The role of the HR department in top management The approaches of mergers and acquisitions The human factors involved in the success or failure of a merger. The overall impact of mergers and acquisitions on the organisation in general, and on human resources in particular.

1.4 Research Questions This study seeks to answer the following questions;1. What is the impact of the communication of the decision of Mergers and Acquisitions on the employees of the organisation proposed to be acquired/merged? 2. What should be the involvement and role of HR in Mergers and Acquisitions? 3. What new HR policies and philosophies can be formulated for the new unit? 4. How the HR could be involved in reformulating the vision and mission statements of the parent company and/or the new business unit. And facilitate the integration of the workforce and manage their performance 5. How HR can facilitate the sharing of benefits of Mergers and Acquisitions among the stakeholders, and manage the right-sizing of the merged organisation from the viewpoint of the employees as well as the organisation?

6. How the HR department can help the organisation retain the employees, post merger, in the organisation? 1.5 Scope and Limitations of this Study The scope of this study is to seek answers to the above detailed research questions, by studying the practices of Company ABC Ltd., which is based in a Metro city in India, and analyzing the effect that their practices have had on the employees the ones who have left and the ones who have stayed on and how it has impacted the strategic objectives of the company. Due to the time constraint, only one company with four mergers has been considered for this study. Studying many such companies could have provided an in-deth analysis. The findings of this study are valid only for the specified time period of the study. Further the findings are from only one industry vertical Information Technology. These findings cannot be generalised.

ADD OWN SOP, SCOPE OBJECTIVE ETC ETC. CHAPTER 2 A lot of research and writings on Mergers and Acquisitions exists, highlighting the integration process and their impact on managing the new business unit in terms of the business strategies. However, we do not find literature on the same extent on the specific impact on HR of the merged companies. Now with the Indian Industry getting into the mode of acquiring companies, the need to understand this aspect is very high, considering their impact on employment and growth in the Indian society.

LITERATURE REVIEW:!!!
2.1 Conceptual Review Distinction between Mergers and Acquisitions A merger occurs when one company is combined with and totally absorbs another. (REFERENCE) an acquisition is the process of trasnferrring stocks or assets from one company to another. Thus, acquisition is a generic term referring to transfer of ownership. A merger may or may not be a part of an acquisition.

Motives behind Mergers and Acquisitions. Mergers and Acquisitions are considered to be rational financial and strategic alliances made to benefit the organisation and its shareholders. Literature (Napier, 1998) suggests that merger motives are financial (value maximising) in nature, or, in many cases, managerial (non value maximising) too. However, these two are often related. Apart from these ways of presenting the benefits to the shareholders, there are some unrecognized psychological motives too, often initiated to satisfy the needs of an individual or a small group of individuals, rather than to gain long term benefits to the organisation. Moreover the trend of Mergers and Acquisitions is followed by some executives without thinking it through and thus ending in a disaster. Announcing a merger or buying out a company fuels the success and fame or the executing CEO. There might be huge financial gains for the top executives as well, irrespective of the success or failure of the later stages of integration. (Deans et al., 2003). Some senior managers are motivated to instigate a takeover to be recognized as people with high desires to grow the organisation and looking for new opportunities, and as an action against their own fear of obsolescence. (Levingson,1995). Out of a feeling of insecurity of their job, many mergers have thus been instigated. Career moves, egoist needs of power, and empire building attitudes have been unstated psychological motives that have prevailed over the rational motives. Categories of Mergers and Acquisitions. There are various forms of growth that organisations turn to; these come under the category of organic growth which also involves strategies like increasing sales and new customers for the existing products and services offered. It has been said that going the organic way could be a slower method of expansion however it guarantees that the organisation is headed in the right direction. (The Times 100, 2008) Taking the inorganic way and especially taking the Mergers and Acquisitions route to growth has been an option that many organisations have taken. (Glynn, 2008) There are several reasons as to why inorganic ways of growth are preferred over the organic ones; Inorganic ways of growth lead to increased earnings and efficiency. The speed at which the companies can enter the markets is relatively faster. Buy buying into similar companies the completion is eliminated. The assets of the merging or acquiring entity that include invaluable human and intellectual capital are also acquired. (ONeill & Barnett, 1980) In terms of setting up and getting a whole new venture running the costs involved in the process of mergers and acquisitions are relatively lower. (George & Lynk, 1992 Mergers fall into four general categories, rescue, and partnership, adversarial and hostile takeover. (REFERENCE) in each category the resistance levels between the people of the two organisations are quite different- from full co operation to complete resistance. A rescue is a response to a financial assistance call, and hence the acquiring organisation is normally looked upon in a positive light.

A partnership category merger, where most mergers take place, is when both parties actively desire to combine. The adversarial situation is when only one firm has a strong inclination in the deal and the two parties invariably want different kinds of deals. The maximum resistance is faced when there is a hostile takeover, when one party is actively trying not to go ahead with the deal. What can go wrong in mergers? Merges fall into four different categories- rescue, partnership, adversarial and hostile takeover. In each category the resistance levels between the people of the two organisations are quite different- from full cooperation to complete resistance. A rescue is a response to a financial assistance call, and hence the acquiring organisation is normally looked upon in a positive light. As Patrick A. Gaughan from the college of Business, Fairleigh Dickinson University has written in his article, certain types of mergers such as diversification tend to yield poor results. Unfortunately, many other acquisitions and mergers yield mediocre results and some are outright failures. Prominent examples include the Snapple acquisition in which Quaker oats overpaid and synergies were impossible to find. Others include the various failed deals in the automobile industry such as the BMW Rover acquisition, Daimler BENZ acquisition on Fokker and merger with Chrysler. While hindsight is omniscient, it is hard to see how Quaker oats could justify the high premium paid in a market that was saturated and showed limited growth potential. The adverse result in the Snapple deal is illustrative of one of the pitfalls of mergers- overpaying; the higher the price that a bidder pays, as a multiple of earnings, the higher growth in earnings is needed to justify the price. Sometimes bidding contests can cause expectation of growth. This is why successful bidders in takeovers battles sometimes get inflicted with what is called as the Winners curse. Other recent examples include the failed Rite aid acquisition programme. Rite Aids 1996 $1.4 billion acquisition of the incompatible Thrifty, Pay Less chain was one of the factors cited for the firing of the companys chief executive. When a potentially compatible acquisition of Revco was halted by the federal Trade Commission, the company went to a less favourable choice. Rite Aid also did not anticipate the integration problems it would have following the acquisition. This underscores another pitfall of mergers and acquisitions Post merger Integration. In spite of abundant premerger planning, it is sometimes difficult to predict all of the post merger integration problems that will occur. A study conducted by A.T. Kearney found out that 58% of the various forms of corporate restructuring; those include mergers and acquisitions; were unsuccessful to produce the results and value expected. A study conducted on the same lines suggested that 83% of the mergers that took place were unable to gain any sort of benefit to the shareholder value (KPMG, 1999). (Habech et al.,

2000). Facts, figures and reports suggest that majority of the Merger and Acquisition deals have proven to be unsuccessful. The companies suffer both ways, the ways being financial or quantitatively as the merged organisation fail to create any additional share holder value. Moreover qualitatively, the objectives that the companies had in mind are failed to be achieved (Tobak, 2007) Reasons cited are various ranging from incompatible organisations, culture clashes, over ambitious executives. The reasons that are most commonly cited for the failure of mergers or acquisitions are execution and integration related problems, poor preparation and guidance. (Allen & Hamilton, 2007) While entering into any merger or acquisition, the financial and the strategic factors from the sales, marketing, markets, better and improved technologies, well spread supply chain etc. are given utmost importance before and after the merger however, the factor that is majorly ignored by the deal makers and the people involved in the post deal integration is the Human factor. The human resource areas have started to gain attention and also toward the cultural effects of the merger process and also the efforts that have to be put in to the post merger integration of the two entities. It has in fact been observed that the problems that affect the mergers the most are internally generated and are due to the new dynamics of the new entity. (Waddington et. al., 2005) Mergers and acquisitions can have huge impact on the various aspects of an organisation; especially on areas like, organisational structure, systems and processes, the culture of one or both the firms involved and this in turn reflects on the human resources of the organisations with feeling of stress, disoriented, frustration confused or even frightened employees. These feelings do not only surface at a professional level but also at a personal level leaving the individual feeling with a sense of loss and or psychosomatic difficulties. These factors hamper the performance of the organisational members resulting in lowered commitment and productivity, lack of satisfaction and loyalty, tendency to switch jobs resulting in high turnover especially of key managers. (Buono & Bowditch, 2003) High employee turnover is one of the biggest problems that organisations face while going through a merger or acquisition and it also is the most serious of all problems. (Stamati, 2009) Coffey, Garrow, Holbeche point out to some reasons that lead to M&A failures, mismanaging organisational and human issues, inability to maximise potential synergies, unfavourable customer and competitor reactions and misunderstanding the nature of the asset to be acquired.(Coffey et. al., 2002) As mentioned earlier, organisations pay very less attention to any responsibilities toward the employees of the organisations involved; focusing their maximum attention to issues that are legal and financial. Although these issues are highly important and most of them are made obligatory by the law, they alone dont make mergers a success. In fact scholars through their studies draw attention to the fact that the success of any merger or acquisition majorly depends on the executives handling of the human side of the merger and also to conduct not just any integration but an integration from the psychological point of view. The top management has always been unable to fathom the importance of the involvement of the human side of any organisation in a merger or acquisition. Antila, 2005 argues that the top most challenge of managers and executives in a merger or acquisition is People Management. There have been

numerous studies conducted by scholars that stress the importance of HR planning during mergers and acquisitions According to Jeris et al. (2002) during the initial stages of mergers and acquisitions, there was minimum or no involvement of HRD and it was given the status of non strategic function in the whole process For newly merged or acquired businesses to succeed and be valuable, they have to be integrated into the companys top and bottom lines. The new organisation on the other hand has to acquire new skills to operate in a new environment for it to generate the value for which it was originally intended. However, many deals never realize their full financial and strategic intent. The main reason is that the people factor has been grossly under estimated, because, after all, most deals are driven mainly by financial considerations. This failure to recognize the tremendous change the people in the organisation have to go through before, during, and after the merger often leaves the organisation in a vulnerable position, resulting in loss of business and reputation or leaders and talent that would have been the key drivers for success. (Matin-Chua 2009) Like a successful marriage, successful mergers require love. (Moran, 2008) There is no doubt that mergers create and provide ample possibilities for organisations to transform themselves, however, what remains the biggest and most difficult tasks for executives to manage is the integration of the human resource forces; and that is what fuels growth and value. Unfortunately this fact is something that does not dawn on most of the executives. This leads to generation of anxiety and apprehension not only in the outside world but equally or even higher on the inside. The only ones who benefit from this situation are the competitors who woo and poach your human and intellectual talent. (Gupta et. al, 2009) 2.2 Empirical Evidence: The book successful mergers and acquisitions, is the result of a well conducted research effort put in by more than 400 HR executives on the HR challenges that companies face during the process of a merger, supported by the expertise of the Towers Perrins consultants. It goes on to provide a road map of how HR can add value at every step of the merger process. It focuses around the theme that it is the people that make or break the objectives of a merger. People are the key to making a merger work, and it is the people related problems like cultural clashes, management disputes, loss of talent and the inability to manage change, which are the basic reasons why mergers fail. The data gathered makes it clear that there are major differences between successful and unsuccessful mergers - and similar differences in attitudes, synergies and the ability to overcome obstacles between companies that did succeed and those who did not. The reasons for the failure of merger and acquisitions can be divided into two main categories; 1) Inability to comprehend and predict the impact a merger or

acquisition would have on the culture of the companies involved 2) Failure to plan for systemic and systematic and efficient integration of those cultures. (Carlton & Linberry 2004) The statement above gives rise to the fact that there has to be some thoughts put into the post merger integration prior to the actual deal. This gives rise to the concept of Due Diligence. Due diligence can be defined as a tool that assists management to justify the price of a mergers, acquisition, alliance or joint venture by verifying, validating and analysing available data. (Spedding, 2008) Due Diligence in essence is a process that helps the management to gather information about the various aspects of the organisation they wish to merge with or acquire that include financial legal marketing etc. Source: Beckmann 2007 pg. 14 Buying an organisation is a complicated task and there are numerous elements that affect the decision. The characteristics of the two organisations involved along with the external factors like the market trend, economic environment etc make it even more complicated. This is where due diligence comes into the picture. It helps the buyer in understanding in depth the prospective target (Howson, 2003) and all the information relevant to the buy. But, of course due diligence can only go so far, as the execution during the post merger period is the most integral part of the M&A and if handled poorly will lead to disaster. The other aspects of an M&A like financial, legal etc can be researched and logical decisions would help executives to take right decisions, however the phase that involves integration of the human resources truly tests majority of corporate leaders. This part of the process cannot be solely relied on logical and researched decision as a more humane approach needs to be taken to handle it. (Zeleny, 2007) As very well pointed out by Dennis Zeleny that three quarters of the mergers dont go according to plan. The CEOs and leaders those have had successful M&As stress the importance of post merger integration and getting it right as this part of the deal is way more difficult than making the deal itself. He also states that, there is a huge amount of human dynamic within an organisation and M&As complicate this very dynamic resulting in various human emotions like anxiety stress and fright. In doing so, you must take into account the cultures of the two separate entities, the norms, the formal channels, the ingrained processes and the values under which they operated. (Pande, 2008) Thus, the culture and people based issues related to the mergers and acquisitions should not be ignored and due importance should be given to the HR faculty and its role in M&As

Books written about mergers and acquisitions bring out the methods of the traditional and the new perspectives on mergers and acquisitions, including aspects like due diligence, integration planning and implementation. The fundamental concept throughout is the notion that people are the key to making

a merger work, and that people related problems; such as culture clashes, management disputes, inability to retain and the inability to manage; are the basic reasons why mergers fail. Schmidt brings out the fact that strategic people management is as crucial to a successful merger or acquisition as a sound strategy or fair valuation. According to the survey participants, the top seven obstacles to achieving success in a merger or acquisition are; 1. An inability to sustain financial performance 2. Loss of productivity 3. Incompatible cultures 4. Loss of key talent 5. A clash of management styles 6. An inability to manage/implement change 7. Objectives/ synergies not being well understood. Figure 2: Mergers and Acquisitions Worldwide: Why they fail?

FIGURE 2
All these obstacles are either directly or indirectly related to the strategic management of people and that cultural differences between companies may be the single highest barrier to success. HR professionals usually have little involvement at the pre deal stage, which goes a long way to explaining why people, organisation and culture issues tend to get overlooked, the usual members of the deal team not being trained to identify or assess such issues.

According to Schmidt, there are marvellous opportunities for HR, which can assume a new role as business partner in the emerging company, speaking the language of the business. However, to become fully fledged business advisors, HR professionals must know more about the merger process overall and understand how to capitalise on a deals expected value by identifying and managing key people issues. A review in the financial times (REFERENCE) quotes equipped with the skill, HR professionals could contribute on equal terms with their counterparts in finance, operations, legal and other functions at the early strategic stages of the merger and acquisition process. Reading this book would make a good start. The introduction of the book quotes, more than three quarters of all mergers and acquisitions dont live up to their expectations. To help HR managers reduce the risks that are inherent in a merger or acquisition, this book gives them the required tools for creating careful planning and implementation, realistic expectations and consistent well conceived communication with employees by gathering together the expertise of authors who understand the intricacies of HR management. Schmidt has compiled a book that can help leaders understand and appreciate the importance of HR in any merger or acquisition. Schmidt writes that, when exploring the success of a merger, Study after study concludes that even well conceived deals often fall short of their promised benefits. This is frequent because of people or people related issues, he explains. It offers new insights into understanding and successfully managing the people challenges of mergers and gives HR professionals the ideas, information and practical tools for playing a strategic role at every stage of the merger process. The four clear stages are described and the various HR challenges in each of these stages are discussed. 1. The Pre Deal stage In this stage, acquirers search for compatible targets or merger partners, typically, this involves developing a growth strategy that defines the role of mergers; setting criteria for candidates screening, evaluation and selection; identifying and assessing potential candidates; deciding which candidate offers the best foot for a deal; and developing an action plan for executing the deal HR is least involved in this stage. 2. Due Diligence After an offer to merge or acquire has been made, companies must ensure that the proposed deal is sound from strategic, economic and implementation perspectives. This is the time to discover whether a proposed acquisition meets the needs or standards of the acquirer. At this stage, HR professionals

should help negotiators understand the potential impact of people, organisational and cultural issues to enhance the deals chances for success. 3. Integration Planning. During this stage, successful acquirers or merger partners create a comprehensive plan for all aspects of integrating their businesses and organisations. This stage begins when both sides are reasonably confident that the deal will go through. HR should help to ensure that people, organisational and cultural issues are found, evaluated and resolves i a timely manner. 4. Implementation The final stage of the merger life cycle builds on the planning that has gone before. Maintaining business continuity and momentum during this stage is the single most important factor in the ultimate success of a merger. Employees will influence the success of this stage, and HRs actions will influence employee attitudes and behaviour. Figure 3: HRs role in Mergers and Acquisitions

IMPLEMENT ACTION PLANS, MONITOR INTEGRATION PROGRESS TALENT MANAGEMENT & PEOPLE DEVELOPMEN T STRATEGY & PLANNING, UNDERSTANDI NG DEAL OBJECTIVES, DUE DILIGENCE LABOR COST PROJECTION

HR READINESS WORKFORCE & STAFFING ALIGNMENT COMPLIANCE

HUMAN RESOURCES FUNCTION

EFFECTIVE COMMUNICATI ON. RESPONSE TO CONCERNS

FIGURE 3
It offers useful advice for HR professional recognise Impacts and Respond Appropriately- and recommend that HR must learn more about the merger process and how to capture a deals expected value by identifying and managing the people issues involved. By knowing more, HR managers have more of a chance to join their counterparts in finance, operations, and legal and other functions while the early stages of the merger process develop. When HR can prove its value in the merger process, it can participate more fully in key decision- making and management activities. A merger or acquisition has a profound effect on the people of both companies, and managing this impact is an important part of managing a successful transition to a unified leadership, business model, and

organisation. By recognising and responding appropriately to the impact of the deal on each employee, HR managers can set the tone for long term success or failure of the new company. The Research publication by Umicoe (REFERENCE) using data gathered from over 450 companies. Provides insight into the HR drivers that contribute to the success of a merger. In the pre deal stage, it is the organisational design that needs focus, particularly assessing and selecting the right leadership talent Right people In the right Position. Remuneration also plays a key role and needs to be considered from the multiple perspectives of strategy impacting employer, employee, and cost. Maintaining and building morale and loyalty, and treating fairly are the other areas in this stage that plays a significant role. The activities recommended are; 1. Communicating to employees a. Welcome packs b. Calming fears c. Keeping people focussed on their current work d. Clarifying misleading information e. Providing immediate answers to queries. 2. Announcement of new organisational structure 3. Readiness of internal HR functions and processes in the enw entity. In the post deal stage it is the responsibility of the Hr to plan and manage the integration process. The activities recommended are; a. HR policies and procedures integrated step by step, over 1 2 years b. Training programs delivered to improve the employees technical and personal skills\ c. Implementation of health and safety standards d. Recognition and promotion of individuals that have demonstrated capabilities. e. Deal with internal resistance f. Align the team to management thinking g. Smart sizing and re-staffing

h. Sales Force management i. j. Communicate effectively Talent retention

k. Performance management l. Building corporate culture/

FIGURE 4
The Towers Perrin survey (REFERENCE), covering over 200 companies, it was found that about 80% of mergers completed in the last two years had substantially met key strategic objectives. The reason cited is that the HR functions now have a greater involvement in the process than in the past, and the involvement is at the earlier stages as well, which makes the companies better prepared to identify and address the many HR challenges that arise in the integration. The involvement has evolved to involve them in the due diligence as well. Further, the companies that rated themselves in the category of, ready to deal with a broad array of people related M&A challenges, managed the people impact far better than less well-prepared companies. They report helping their organisations deliver better results across vital people metrics like productivity and engagement in the critical months after their deals closed. The survey found the following reasons that resulted in successful integration of the workforce; Detailed HR due diligence Employee communication Integrating benefit programmes Talent retention and selection Integrating the HR function Integrating pay and benefit programs globally Integrating pay and performance management programs Hr planning and project management Leadership development Integrating HR technology platforms Change management and culture

Bain & Company, a management research company has examined over 50 cases and analysed 15 years of mergers and acquisitions data, and surveyed 250 CEOs and senior executives about the real success and failures of the acquisitions. The top three reasons that emerged from their study were; a. Ignored potential integration challenges(67%) b. Overestimated synergies (66%) c. Problems integrating management teams and/or retaining key managers (61%) This is clearly indicative of the importance of the role of Hr, in mergers and acquisitions (REFERENCE). Further, it was found that with proper preparation, mergers need not be as big a challenge as it otherwise poses. In te article HR Issues and Activities in Mergers and Acquisitions, Randal Schuler and Susan Jackson explain that the pressure on companies today push them to look at the merger and acquisition route; to grow fast, be efficient and profitable, be flexible and adaptable, so as to hold a dominating position in the market. Jac Nasses, CEO of Ford Motors (REFERENCE) is cited in an article as seeing that merger and acquisition activity will exponentially increase over the next few years. Another observation cited is that companies now have the experience of mergers and consequently have built a good team to handle the tasks around such an activity, however, jack procity, partner- in charge of business integration activity at KPMG, states that businesses have a long way to go when it comes to effectively integrate their businesses.

2.3 CONTEXTUAL REVIEW Of all the HR challenges, the report then brings out the following three stands out; a. Managing Cultural Integration; The inability to rapidly integrate the cultures of the acquirer and the acquired companies is a major source of post deal regret and last value. The fact that only a third of the C level respondents viewed culture as an obstacle integration, while 62% of the employees viewed corporate culture as the main obstacle, suggests that they may face a serious challenge post integration. The article suggests that the first step in mastering the integration roblems is to understand the unique culture of the target company and its key players. The second step is to understand ones own culture.

This would enable identifying areas of potential conflict. Once the potential areas of conflict are identified, a strategy for dealing with them must be formulated. The article also suggests that this must be done as early as possible. The translated version of Lao Tzus citing, he who fails to Plan, Plans to Fail is an apt quote that emphasizes the need for managing cultural integration at the earliest possible time. It its often thought that integration starts once the deal is done. Researchers based on the experience suggest that the best practice is to begin in the pre deal phase. 67% of survey respondents point to the cultural integration as the most important people issue and critical success factors in any M&A transaction, and also believing it to be the most important factor in achieving the full value of the M&A transaction. b. Retaining and focusing on key talent. Producing value is the main objective of a merger, and experience shows that it is the people that are key to adding value. Keeing the right people on board is a major challenge, as identified in the study. 59% of respondents identify this as the most important issue. Acquirers generally expect to have a strong role in running target companies while they are aware that the current management team has the required experience and the connections they need to be successful. Thus, retaining key people is critically important. The economic boom experienced and the shortage of talented managers makes this task even more difficult. The tools for retention that are available include incremented remunerations, long term post merger contarcts, and training programs and the effective solution found by the research indicates that a combination of compensation benefits and career development works best. Companies that succeed in retaining key talent often provide both long term and short term benefits. A glaring fact unearthed in the research was that while companies hire lawyers and accountants, they very rarely use the professional services of local HR specialists, in the process of a merger, to help them with the work force integration. It is true that lawyers and accountants are required to put the merger transaction together, but with the objective of the merger producing value, the role of HR is also required as a key element. c. Maintaining relationships after the deal. Change is an inevitable part of a merger. From the acquirers perspective, some change management problems can be handled as a part of the pre deal negotiations itself. Involvement of local

management is necessary in the change process. Use of a team completely from the acquirers side could create resentment and resistance. After the change is completed, maintaining relationships becomes very important to ensure the ongoing success and thereby achieving the objectives of the merger. It was found that 43% of respondents on the survey were concerned about maintaining relationships with customers, suppliers, and government authorities post the merger. Losing important relationships, they felt destroys the deal value, as personal relationships are the most important part of doing business. The financial vaue of relationships between company personnel and external stakeholders is easy to overlook because relationship value cannot be quantified, unlike the tangible assets. Yet it is critical to the success of the merger. The relationship value begins in the pre deal phase with the identification of key business and regulatory relationships. Once these are pinpointed, steps can be taken to assure the retention of the individuals who support them.

Some writings in the European Management Journal (REFERENCE) have described the reasons for failures in mergers based on their research findings, these are; 1. Expectations are unrealistic 2. Hastily constructed strategy, poor planning, unskilled execution. 3. Inability to unify behind a single macro message 4. Requires a very high level of synergy 5. Talent is lost or mismanaged 6. Culture clashes go unchecked 7. Transition management failures and underestimated costs of transition 8. Financial drain 9. Defense motivation 10.Power and politics outplay the productive objectives.

The reasons for success have also been described in the same research, as; 1. Leadership 2. Well thought out goals and objectives 3. Due diligence on hard and soft issues 4. Well managed team handling the merger 5. Successful learning from past experiences 6. Planning for combination steps completed early. 7. Key talent retained 8. Extensive and timely communications to all stakeholders. In an article by Mercer Human resource Consulting (reference) where the contributions were made by six people from different parts of the world- Robert Cudemus- latin America, Peter Horan UK Stephen Lee Canada Larisa Muravska Eastern Europe, Sunit sinha India and Bruce Wang Greater China, also confirms that the greatest challenge in a merger is the HR related challenges, and this is a global finding. The article highlights that for the growth oriented enterprise, there are plenty of opportunities in the global emerging markets. But, maximising these opportunities through mergers and acquisitions is challenging, especially if you are an outsider and unaware of the local rules and regulations, and customs particularly on the people side of the business. HR specific due diligence and integration planning, guided by people with local knowledge can improve the probabilities of success. International mergers pose a challenge in the following areas; 1. The regulatory, political and economic environments. Experienced business people understand their own domestic environment very well. They are well aware of the rules governing hiring, firing and bringing in foreign nationals, benefits obligations etc. They would be very familiar with the political and economic trends that would affect the human capital side of their businesses. All markets are driven by different regulatory, political, and economic forces. For example, political red tape that can slow the pace of growth and progress, varying labour laws across jurisdictions, varying wage levels, varying severance costs, restrictions on hiring foreign nationals, reasons for mass exodus of employees, GDP growth, increasing wages and social benefit obligations may not be great deal makers, but is critically important that the people costs be projected and understood

for the buyer to get a more accurate evaluation of the target companys real value. 2. The availability and accessibility of key information. Different countries would face different challenges to get information related to the local rules governing employment and separation. Very often, private analysts would have one set of figures while the government has another, leading to ambiguity and confusion in the minds of the buyer, with reference to which set to believe in and use. Accurate data on the economic erformance is another such area where data collection poses a similar challenge. At the company level, HR data and written employment policies and contracts are often incomplete, verbal assurances on compensation and perks, sometimes workers receive cash payments too; all of which makes the assessment of the payroll and HR due diligence a very difficult task. Some emerging market economies, like India, make information on these regulations accessible; others do not. Even when such information can be found, regulations may be ambiguous, even in the native language regulations are being revised, as government efforts to keep pace with rapid economic change is a reality. Some countries, like China, have different rules for domestic and non domestic enterprises; because of which a foreign buyer may have costs that a local competitor does not.

TABLE 2
In this confusing situation what can be done about the problems in an emerging market is suggested in the article. Before the deal: Agree on an information exchange protocol with the target or partner Determine where the information is located Avoid relying solely on documents and verify by cross checking information Involve a local partner who knows the terrain. As the concerned company moves to close the deal: Anticipate delays Always have a plan B if the other side drags its feet in providing internal data or provides questionable data Communicate clearly.

3. Cultural Integration: The major sub area of the HR challenges faced in a merger is the issue about culture. It is also the most difficult area to understand ad get right in combining two or more organsations. The article goes on to describe the steps a company can take to help reduce the potentially negative impact of cultural differences. Anticipate cultural challenges Ask for guidance on cultural issues Understand the cultural differences can exist within the same country Have a strategy for overcoming cultural conflicts Remain alert to the symptoms of the post deal cultural clash Recognize that business culture in emerging markets does not stand still.

The challenges faced on the cultural integration, is suggested to be handled using following 8 steps; 1. Build transaction context and rationale 2. Determine degree of organisational integration 3. Assess organisational hypotheseis 4. Determine drivers of behaviourial change 5. Design appropriate drivers 6. Implement change 7. Measure and reinforce change outcomes 8. Develop hypothesis 4. Local leadership An issue in any merger worldwide is that leadership matters. More than anything else, local leaders determine the success or failure of a crossborder deal. Top managers know their customers, suppliers, and employees as well as their customs and cultures, and they function as the critical link between the buyer and those important stakeholder groups. Replacing them with foreign nationals breaks all those contacts that are critical to the business. Hence, the experienced acquirer retains competent local leaders and uses clear incentives to align their interests with its interests and business goals. Because, leadership is

so important and critical to the success of the merger, acquirers seek answers to these questions during pre deal due diligence stage itself, to plan their strategy to retain key talent. How qualified is the target companys leadership team? Is there a strong pipeline of leadership and managerial talent or is there potential to develop one? Are these people with whom business can be done? And also- what will it take to retain these key people and motivate them to perform well.? 5. Change management Universally change is an inevitable consequence of mergers. Achieving the optimum value of any merger transaction usually requires some changes in the organisational structure, operations, reward systems and people. Change, has its problems, it is very upsetting and dislocating, and hence a proactive management is needed for the change to produce the anticipated benefits. Entrants to emerging markets should approach change with full knowledge of the forces involved in the market dynamics and a clear understanding of the local rules and the local culture in how the local workforce expects to be treated. Some change management challenges can be avoided by solving them as early as the stage before the deal is actually finalised. For example, reduction of the workforce, changes in local leadership, etc. The acquirer could insist that the rarget company handles these issues as a pre requisite to close the deal. The epicentre of change is also important. In cultures where participative management is common, as in United states, success is more likely when top manahgement and mid level managers jointly identify problems and create change solutions. In other cultures, including many in emerging markets, a top-down approach to change is more appropriate. Nevertheless, an acquirer should involve local management in the change process. Bringing in expatriates to manage or lead is likely to create resentment and thereby resistance. Thus, it is recommended that one should observe the principles of successful change management. Communicate with employees about the necessity of change Explain how change will benefit them Provide visible incentives for change Manage the stresses that go hand in hand with workplace change Get it done quickly, even as the market environment is changing

Establish a clear and visible link between change and business improvement

These are universal principles but get highly magnified in emerging markets. The gap in understanding between leadership and the stakeholder groups without proper preparation and a clear communications plan for the entire process can erode shareholder value, and defeat the purpose of the merger totally. The book, -Successful Mergers Getting the people issue Right Marion Devine (Reference) has suggested the lists of M&A synergies which include both tangible and intangible assets such as: Corporate brands and well defined reputation Capital and new streams of revenue Core competencies in management or business processes People who posses unique skills or customer relationships Needed element of a culture or operating environment Management resources.

Many of these assets are people based. Employees at every level of the organisation help to forge a corporate brand identity and reputation. Based on the thoughts by Marion Devine, in the same book, the learning cycle in mergers shows how from the vision a full cycle of integration can emerge.. starting with the Vision going on to the Purpose, Planning, Commanding, Controlling in the emergent strategy part, flowing into the integration part with Reacting, Improving, Fire Fighting, Adjusting, and coming back to the emergent strategy are with feedback, Analysis, learning and back to Vision. Marion Devine goes on to detail a process of Coordination CooperationCollaboration- commitment cycle and maps the stages of negotiation, integration, process and communication strategy, in each of these stages. These are best explained in diagram in figures 5 , 6 , 7. The stages of negotiation as illustrated in figure 5, gives an idea of how at different stages in the merger process, the co ordination, cooperation, collaboration and commitment dependencies change. In the process of engagement, the integration process is described in figure 6, and the communication strategy in figure 7.

FIGURE 5, 6, 7

While many articles have given their views of how mergers need ti be handled, it is important to see how it would actually work in oractice. A case study of a company that has taken up multiple mergers nationally and internationally would thus throw more light into the practical aspects of mergers and the consequences thereof. In pursuit of this goal, this study has been taken up.

3. RESEARCH METHODOLOGY

The framework for conducting research in an organised manner is called Research Methodology. (Saunders et.al., 2007). Management and business research strive to find solutions to managerial and business problems. (Saunders, 2009). Reports are formed to answer the questions that have created problems in organisations and businesses and these reports should be planned, executed and investigated in a specific way in order to be understood by scholars and researchers (Ghauri & Gronhaug, 2005) in order to conduct research, a certain way and manner has to be followed and research methodology helps in formulating this method. Research methodology dwells into the various ways of conducting research i.e. theoretical and philosophical (Saunders et.al.,2007). After defining research objective, it is important to determine the research design to be used to evaluate the topic. Saunders et al. (2009) research onion can be very helpful in determining research process. It consists of five stages as shown in the figure. It starts with the determination of research philosophy, research approach, research methodology, time horizons and data collection methods. ( Saunders et al., 2004) 4.1. Research Objectives The aim of this dissertation is to understand and explain the role and importance of the Human Resource function of any organisation in the event of a Merger or Acquisition. Mergers and Acquisitions have been taking place in the business world for a long time now. However, statistics state that majority of the mergers fail. (Pautler, 2003) The research conducted by many scholars points to the direction that there has been a lack of involvement of Human Resource part of the organisation and it has also been neglected while taking strategic decisions. This prompted me to further investigate the importance of the Human resource function in any organisation during the merger or Acquisition process. Research Approach: The types of research approaches can be divided into two categories; inductive and deductive. In the deductive approach a generalisation or hypotheses is made and then it is proven with the help of research. Saunders et al., 2009 In case of

research where literature on the related topic or hypotheses is already available, deductive approach can be used. (Merton 1967, Chalmers 1982, Bryman and Bell 2003.) On the contrary inductive approach is used in situations where observations are made also measurements in terms of quantitative research and then conclusions are drawn. (Bryman and Bell, 2003). Based on the various needs and requirements and the basis of this research, this research will be carried out following the deductive approach. There has been vast amount of research conducted on the topic chosen by the author and hence deductive approach will be best suited for the research. A small part of the dissertation will take the help of Inductive research to analyse and draw conclusions with the help of Case study analysis. Research philosophies The researchers aim and objective are the factors that determine the research philosophy selected. The various philosophical views defined by Saunders are a) Positivism b) Interpretivism c) Realism. The philosophy of Positivism is based on the fact that research conducted can prove or disproven the hypothesis maintained in the first place. According to Easterby-Smith et al. (2002) the task of the researcher is to coolly observe and analyse in a detatched way making interpretations from the data collected. (Ethridge, 2004) Realism does share some features of positivism however it believes in the truth only independent form any human beliefs or thoughts.Saunders (2009). On the other hand realism shares some parts and features of Positivism. Realism is derived from the view that reality exists and is independent of human beliefs and thought. Interpretivism seeks to develop interpretations that are based on the cultural and historical perspectives. (Crotty & Flick 1998) on the basis of the aims and objectives of this research the author will be following a positivist approach to research as the hypothesis of this research has already been drawn and the literature available will be used to prove it. A Positivist Research often follows a deductive approach by deriving hypotheses from theory and using the collected data to test them (Frankfort and Nachmias 1996). Research strategy: Selecting a research strategy depends mainly upon the objective of the research. The availability of the literature on the topic of research i.e the importance of HR in Mergers and Acquisitions makes it easy for the author to use this for its research. Also the use of a case study in which data collected from real life cases is analysed (Dul and Hak, 2008). 3. The objective of the research plays an important role in selecting research strategy. Abundant literatures are available on mergers and acquisitions, the reason for their failures and the role and importance of HR in making these deals work. Hence ample literature is available on the selected topic and case study would be the right research strategy to gain substantial knowledge. Thus conducting a thorough literature review and analysing a case study is the right research strategy for this research

This study is explanatory in nature. This chapter deals with the profile of the companies concerned and the respondents. 3.1Company profile ABC ltd. Is a public listed company head quartered in one of the metro cities in India. The company was established in 1991, with its business focus articulated as being in the field of Information Technology. After a successful growth record consistently for 8 years, they had gone ahead with an initial public offering, in 1999. They further expanded their business presence geographically, and now have offices in USA, Singapore and India. They have been steadily growing year on year, with a track record of uninterrupted growth and profits. However, having seen and felt the need to grow at an even faster pace, they decided to look at the possibility of strategic acquisitions, in addition to the internal growth that continues. They moved ahead and made 4 acquisitions, 3 within India and 1 overseas in the United States. The company has made these acquisitions during the period April 2005 to December 2006, with mergers getting completed by July 2007. Press releases made by the company shows that they are looking out for many more acquisitions internationally. The range of service offerings in the global market includes Application Management Services, Business and Technology Consulting, BPO services, project Management Services, Enterprise Security and privacy Practices, and Staff Augmentation Services. The employee strength of the company was 868 people as on 31st March, 2005, and grew to a size of 2264 people as on 31st August, 2007. A1 was one of the first companies acquired by ABC ltd. A1 was in business of developing Custom software products addressing the inventory management needs in the manufacturing sector. This company was based in the same metro city of India as ABC Ltd. At the time of the acquisition the company was having a head count of 30 software developers, with an average work experience of 6 years, and total employee strength of 42. The two founders of this company were technical entrepreneurs with over 12 years of experience each, and had come together on this venture about 4 years ago. The financial situation of the company was rather bleak with a carry forward loss aggregating INR 6 million. The customer base was 6 active clients and an overall base of 19 clients =, the annual sales turnover at that time was INR 7 million. Their customer base was totally US based customers and consequently their basic product was also designed to suit the US market needs. An attempt to make the product universally suitable was in the plan stage but due to lack of funds did not permit them to carry out this plan currently.

A2 was the second company acquired by ABC Ltd. A2 was in the business of developing and implementing ERP solutions for the hospitality industry and also had a division for recruiting and placing consultants (software developers) to customize ERP solutions for their various clients. They would offer some initial training to these consultants in the basic ERP product and the clients specific domain of expertise and then have them work at the clients location to implement the product. This company was based in another metro city of India where it was estimated that such human resource were easily available. A2 was founded by three ERP technical entrepreneurs who had experience of about8 years each. They had a strong local customer base of over 22 clients in their three years of existence before the acquisition. The customer satisfaction survey of those clients before the merger indicated that they were very happy about the services offered to them. The annual sales turnover before the merger was INR 9 Million, and had an order base that would ensure that the next three years turnover would exceed INR 11 million. The employee base had grown from 6 at start in 2002 to 45 out of which 40 were in the operation team. A3 a company based in the East Coast of USA was the first international acquisition that ABC Ltd, ventured into. The main motive behind the acquisition was to get a jump-start in their international business growth. A3 was a company offering software solutions in the health care related segment with a high focus in the clinical research area. They were certified implementation partners to the top two products available in the market. The geography covered in the business focus was the East Coast region of USA. They had plans to spread their region exposure to cover the entire USA and Canada markets. For this purpose they and obtained the interest of a Venture Capital company to partner with them, however post the acquisition this did not take place. As the acquisition itself was expected to get them the required funds for their marketing plans. The company was founded by one person and then after about 7 years of business, two other entrepreneurs joined in and invested in the company. The company then went on to float an IPO and had themselves listed in the New York stock Exchange. After another four years (after 11 years of starting the company) they were acquired by ABC Ltd. And at that stage they were reporting a turnover of US $18 million, and had a workforce that was 82 people strong. These people had shown loyalty to the company that was very unique. 77 of the 82 people were with A3 for over 6 years and in the software development area in the US this is a very rare situation. A4 was the fourth company being acquired by ABC Ltd. A4 was in the business of providing BPO services to the health care and hospitality sector and was based in a metro in India. They also had a marketing office in the Silicon Valley of USA. With a focus on high value BPO services this company pioneered the work-at-home concept and had 30 doctors in India as their workforce, supported by 17 people handling the

technological infrastructure, marketing and other accounting and administration support. They also had employed 2 people in their US office. The company was then handling a turnover of INR 44 million. They were facing a crunch on getting more manpower as needed, mainly because the level of specialisation needed was very high, and these practicing doctors already had their own lucrative clinical practices. To get over this situation they needed to expand their India presence to multiple cities, as this was the only route for their further growth. The experience of home based working was like a stage based on which they could embark upon this expansion plan. This experiment was a phenomenal success and appreciated by the clients and the employees too. The hypothesis is the involvement of HR at every stage of the M&A process helps in the successful integration and management of the workforce of the new business unit, leading to the achievement of the strategic objectives and the mission and vision of the company RESERACH DESIGN: As the study is limited to the HR aspects of the merger, the primary source of information is by interviews. The interviews were held with various levels of people in the organisation across various departments as follows; a. Vice president b. Managers c. Executives. Further, some of them have left the organisations, when the news about the merger was received, while some others have left during the integration process, and the rest left within three months of completion of the integration process. Interviews were also held with some of the existing employees also. This is a case study using analytical and descriptive design. ABC Ltd. which has acquired four companies has been selected for this study. This chapter presents the profile of the concerned companies and the research methods adopted for the study. The data on the performances before and after these mergers would be analysed. Interviews with the Hr personnel, and some of the employees from different original companies that are now in the merged company and also interviews with the people who separated from the company would be conducted and the findings analysed. This sample would compromise of employees at various levels. The list of people with their contact information, who are no longer with the organisation that was compiled and available, was 24. While attempts

were made to gather information from all these 24 people, only 21 of them responded. Even after repeated attempts, 3 people could not be contacted. Further out of the 21, 2 of them responded saying that they were not willing to answer the questions. This narrowed down the analysis to a base of 19 past employee respondents. From the existing employees, the interviews held were with 16 people. All of them had responded and the data was available for analysis. The sample size was restricted to this level because of the time constraints, however, it must be stated that this sample can be looked upon as appropriate, based on the coverage across the various types selected. Data about the companys financial performance and the head count forms the secondary data 3.2.1 Primary Data: The mode of collection of data was by holding interviews, some of them in person, while some others were done telephonically. These interviews were unstructured. The data available to contact the 24 employees who left was as follows; 1. Vice president Business Development A1 2. Vice President HR A1 3. General Manager Global Delivery A1 4. General Manager Technology A1/ General Manager IT ABC Ltd. 5. Manager Recruitment A1 6. Manager- Finanace and Admin A1 7. Project Manager A1/ Manager Operations ABC Ltd. 8. Chief Executive Officer A2 9. Vice President Technology A2/ Chief Technology Officer ABC Ltd. 10.Vice President Marketing A2 11.Head of Operations A2 12.Manager Sales A2 13.Programmer Flash 14.Vice President Sales A3

15.Head People Practice A3/ Vice President HR ABC Ltd. 16.General Manager- Operations- A3 17.Senior Manager Accounts- A3 18.Manager- Facilities A3 19.Software engineer JAVA 20.Associate Vice President- Marketing A4 21.Head HR- A4/ Vice president Training and Development ABC Ltd. 22.Senior Manager Operations A4 23.Manager Networks A4 24.Manager- Public relations A4. Sampling Plan of Current Employees. The data available to contact 16 of the current employees were as follows; 1. President and CEO 2. Chief Technology Officer 3. Vice President International Business Development 4. Vice President HR 5. Associate Vice president Global Delivery 6. General Manager Finance 7. Manager- Recruitment 8. Manager Administration 9. Project Manager 1 10.Project Manager 2 11.Manager Sales 12.Manager Transition 13.Project leader 14.Sr. Developer JAVA 15.Sr. Programmer Graphics 16.Programmer MS Technologies. .

The selection of the sample has been done considering the following aspects; All levels of employees covering top management, middle management, and line executives, and who have worked with the company or the acquired company for over two years. People who have left the organisation on announcement of the merger, those who left after the merger was completed, and those who continued to work with the company. People from the various departments Sales and Marketing, Technology, Finance and Administration, Human Resource, and Operations. People covering various stages of their career People in different geographical areas. People whose contact details were available with the company. SECONDARY DATA: Exit interview information of the 24 people who left and whose contact details were available with the HR department was collected and analysed. In addition the head count information as on the financial year end date of 31st March for the last three years was also obtained. The financial performance related data was gathered from the Registrar of Companies and the internet, and were later vetted out by the VP Finance of ABC Ltd. The agenda of the interview of the people who left the company after the merger was planned with major aspects like, knowledge and source of the merger information, immediate reaction, expectations, and the decisions and reasons to move out. For the detailed questions, refer Appendix I. Interview with 16 current employees was conducted with the agenda covering major aspects like, knowledge and source of the merger information, immediate reaction, expectations, and access to required information. For the detailed questions please refer Appendix II. This agenda was prepared with the intent to analyse the stage of HR intervention and the effects that it had on the employees of the acquired companies. Of the 24 employees who left the organisation the request for a telephonic interview with the agenda sheet was sent via email. 21 of them responded to the email, with 19 people giving a suitable appointment, 2 however said that they did not want to discuss the topic. Thus, from the employees who have left the organisation and

whose contact details were available, data was obtainable from 79.17% of them. From the 16 employees who continued with ABC Ltd. Data was obtained from the entire group (100%). Thus from the total of 40 people to be interviewed, response was obtained from 37 of them. The response rate therefore is 93%. TECHNIQUES USED FOR ANALYSIS. Except the major descriptive statistics the analysis is quantitative in nature. As the study deals with the HR aspects only, data cannot be quantified. Content analysis has been done on the data from the interviews and the data gathered regarding the exit interviews. Additionally information on the employee head count and the financial performance of the companies has been analysed to gauge the level of success that the company has had with the merger plans.

4 DATA ANALYSIS AND INTERPRETATION: This chapter presents the data, along with the analysis and interpretations. 4.1 Financial performance data and employee head count. The financial information collected and vetted are as given in table 3, and the employee head count in table 4.

TABLE 3, 4
The exit interviews indicate that people left the organisation mainly for the following reasons; 1. Merger not seen as favourable to the individual 2. Ideas plans and strategies not clear for a long time 3. Feeling insecure over the new job role 4. Culture clash between old and new system of working. Though the exit interview data cannot be taken as totally true, it is significant to note that the points listed above also appear in the interview findings. 4.3Interview response from ex- employees

The data gathered over the interviews of the employees who left the organisation during the merger period, for the basis of analysis is as follows;

TABLE 5
THE DATA GATHERed OVER THE INTERVIEWS OF THE PEOPLE WHO LEFT THE COMPANY AFTER THE EMRGER, FOR THE BAASIS OF ANY ANALYSIS IS AS FOLLOWS; 1.Vice President Business Development A1. M.S. from a US university, 38 years of age; was with A1 for 4 years before the acquisition, worked for 2 years after education in software development area and then shifted to sales. Total experience of 13+ years. The news of the acquisition came to him indirectly though the internet and then read about it in the newspapers. He was shocked to hear about it as he had no clue about any such thing happening in the office. He felt really let down by the management team especially as he was a senior resource and had been with them from the start. He had worked with A1 and seen it go through the start up pangs and also seen the ups and downs and was in a way responsible to bring it up to the stage it was in. Being a shareholder (although a very small stake which he had invested in the start) he felt that he should also have been a party to the acquisition decision and discussion even if he was not really consulted about this option. He was also surprised because the company was not under any serious financial crisis to hastily go for such an option. On further fact gathering, he felt that his future would be insecure in this new company. He did attempt to gather information and though the team did tell him that he would be continuing as before and would continue to handle the same work, he felt uncomfortable and decided to quit. Being in a niche vertical, his targeted approach for another job got him one easily and he chose to move. He mentioned that an acquiring company must connect with at least the senior members, if not everyone and should also clearly state their plans and vision at the earliest possible opportunity. He added that had such a thing had been done, he would have stayed on and it may have been useful for ABC Ltd. Considering that he was very familiar with the customer base. As an afterthought he felt that his decision was emotional rather than factual or logical, but having gone ahead he had no regrets. Given an opportunity to get back, he would consider at that stage, and did not have any comments about the same. He did mention that he felt betrayed and let down and his investment in the company did not get him par returns to the level the CEO got, and was very unhappy about it. 2. Vice President HR A1: post graduate 17+ years of work experience with the company from its start up stage. He was party to the acquisition talks and hence not surprised about it. He did not feel the decision to sell out by the CEO was a good move, but had no option to be able to cchnage the course. With the new team not communicating clearly made it hard for him

to answer questions that the team members at A1 were asking. Unable to cope with the situation he made a decision to quit, and planned his move by securing another job of his liking before announcing this decision. As an afterthought, he feels that the acquiring companies must involve the HR team of the acquired company and communicate openly and quickly to ease the tension created amongst the workforce. He felt that his staying on would definitely have been good for the company as it would have built a lot of confidence amongst the stakeholders and the workforce. On the question of getting back to the group he did not want to reply, but stated that he is quite happy with his current role. 3. Manager Recruitment A1: Graduate, 4+ years of total experience, had heard information of possible acquisition through internal sources. His decision to quit was to move aong with his boss who was the VP- HR. He did not want to discuss anything more specific, except that he was happy that he maintained loyalty with his boss. 4. Chief Executive Officer A2. Post Graduate previous experience of 12 years in 3 different companies, before taking the entrepreneurial step to set up A2. Having built the company very well in the 3+ years time, he sought the acquisition actively. The acquisition got him a high valuation and was very content to accept it and quit with the intent of starting another venture in the education area. He had no further things to add, and ended with I wish them great success. 5. Vice president A2/CTO - ABC Ltd:. Post graduate, 18+ years of experience, joined the company at start-up stage. Was aware of the acquisition plans right from the start. He was looking forward to a good corporate growth after the merger, as it would bring in international businesses and would elevate his role to CTO of a much larger entity. After the announcement of the acquisition, he was surprised to see the CEO quitting. Nevertheless, he felt that his decision to stay was good. As the merger took place, he found himself in a situation where the business direction and thrust area was not clear. Some decisions from the management team did not find his favour as it did not make integration sense. After various attempts to provide strategic direction which were constantly being put down, he felt that the merger did not make sense, and as such there would not be any chance of its sustainability- let alone growth. Further, the lack of being able to discuss with a senior colleague as in the earlier days, amde him uncomfortable, and the new heirarchial culture proved a difficult area to adjust with, as compared to the earlier open and transparent mode of working together. As an afterthought, he felt that he would not fit in the new culture of the organisation and thus his moving out was beneficial to all parties involved. He thus did not feel it logical to think of moving back into the company, even if such a chance came his way.

6. Vice President Marketing A2: Double graduate, 14+ years of experience all of it in sales and marketing. Was with the company for over 3 years, and was responsible for bringing in large ERP orders in the hospitality sector based on his existing contacts. The enws of the acquisition by a large company made him feel insecure, as he felt that it would now no longer be a contacts game. He was looking for clarity in the new vision of the group and trying to understand how his skills would fit. The ultimate act that pushed his decision to quit was when he was asked by the VP- Marketing of ABC Ltd. On whether he would like to relocate to Europe. He took that as a clear indication that he would not be allowed to continue in his comfort zone area of work. He has been tracking the growth of the company particularly in the area of hospitality and felt about its progress. He feels that his staying back may have helped grow at a faster pace, but was not willing to comment on the area of his willingness to return. 7. Head of Operations A2: Post Graduate, 15+ years of experience, all of it in operations. The news of the acquisition took him by surprise when it was announced by the CEO. On discussing future options, he was not given any clarity, as the core team were themselves moving out. Taking this as a signal indicating that things are not likely to change for the better, planned a careful exit. It was about 4 months from the time the news of the acquisition was known, that he got another option, and then made the move. During this entire 4 months, of continually seeking clarity and information, he was unable to understand anything at all, as actions and words did not match. Further, during this period, the other senior team members had also moved out. As an afterthought, he felt that he had stayed the company would have been immensely benefited, since many customers depend on the person delivering the work rather than the brand of the company. He has been tracking the growth of ABC Ltd. And feels that he may consider re-joining the company if he is approached, however, on his own, he may not like to pro-actively seek a job there. 8. Manager Sales A2: Graduate, first job into A2 directly from campus, was very happy with the direct mentoring from the VP Marketing. The news did create confusion in his mind, and looked for guidance from his mentor, on hearing that his mentor is going to quit, he followed him into a new company. He was not sure of what to comment about how he could have been asked to stay back or any comment on whether he would like to return back to the company. He was not aware of the current progress of the company as he was really not tracking it anymore. He did mention that it is nice to know that the company is doing well and growing fast. 9. Programmer Flash: Graduate, first job into A2 directly from campus. Was with the company for 2+ years. The news of the acquisition was first known via the press. A high feeling of insecurity crept in and when approached for another job, jumped in without any further thoughts. He had no communication from anyone about what to expect after the acquisition, and did not want to wait for it either. As an afterthought, he felt he made a

rash decision, but has no regrets about it as he is quite happy with his new company. He has no track on the developments about ABC Ltd. As his new job keeps him quite busy in a different vertical altogether. 10. Vice president: Sales A3: Post Graduate 18+ years core sales experience, was responsible for closing about 80% of the existing business in A3. He had a fair ideathat an acquisition was on the cards and was initially very happy about it as he saw a lot bigger opportunities coming up. His ESOP equity was not handled in a fair manner and did not get the valuation that was appropriate from his context. Lack of information from the management team about his directions to take got him upset. He felt that because of this situation, he was being put through embarrassing situations with his clients. He sought information from various sources to see how he can hold on and not getting anything exceot, just hold on, we shall get back to you made him take the decision of quitting. His physicalexit was also very abrupt. It appeared that he was not wanted anymore and this is the reason why he would never want to return back to the group. 11. head People Practice A3/ Vice president HR ABC Ltd. Post Graduate 16+ years of total work experience, had handled various roles in HR. He was aware of the takeover plans and was looking forward to being a part of a new large entity. He eventually left the company when he found that the integration of the work force was moving very slowly and without very clear directions. He did try to convince the management team, and made various presentations to try and push the pace, and also to get clarity in the plans, but after almost 10 months of efforts, he decided to drop it there, and move on. After an active search for a job he left the organisation in a months time. He was sure that the management team could have made things work a lot better and felt that they have lost a lot of people in the time delay that took place in terms of integration and communication. He felt that all good workers easily get jobs and are among the ones who leave early. He does not intend to get back to the group, even if he is called back. 12. General Manager Operations A3: Post graduate, 17+ years of total experience covering sales, and operations. Been with the company for 3+ years and was his 4th job. He was shocked at the news of the merger, as he was on leave during the period of announcement. He started connecting back to the office to find out more details. In his words I sent out frantic emails to everyone I could think of to get information from. He felt that his role would be taken up by someone else from the acquiring company. A few months ago, he was asked to create a knowledge bank of his operational processes, and he felt that this was a discreetly planned move to have his role taken over. He announced his intent to quit the company soon after his return from his holiday, and decided to start his own entrepreneurial venture, in the area pf placement of technical experts in the BPO industry.

13. Senior Manager Accounts A3: management graduate with 9+ years experience was with A3 for over 2 years. Subtle changes in the way reports were requested for , that gave her a hint of something happening though the news of the acquisition when told to her by the VP Finance was a little sudden. Her initial reaction was not very strong, but after discussing with her family and friends, she felt that she should look for options before something adverse takes place with reference to her job. She got another job quite easily and moved on in a natural transition. She has not kept pace with developments in ABC Ltd. And had not specific comments about her plans to rejoin. She also felt that a move was called for as a security measure for her than anything else, and if she was given an assurance of continuity, she may not have even contemplated the move. As a general comment she mentioned that such events are scary and she has seen many people have changed jobs in a hurry and have not always been satisfied about it. She had no suggestions on how this could be avoided, as she says it is natural for everyone to think about themselves first, and also to hedge risks. 14. Manager Facilities A3: Graduate with 5 years of experience with the same group of people. The news of the merger came as a surprise, when he read about it in the papers. He states, I came into work that day quite scared not knowing what to expect to see in office, and did not really know what to do. I did not know whom to talk to. It took me a whole week to muster courage to get around to talking to the People Practices team. He was asked for information on the assets about 4 months ago but did not think it was with the intent of any sell out proposition. E was aware that the company was doing very well and had large growth plans also, but again, did not think that they would opt for a route of this kind. He immediately approached the Head People Practices but got a very negative communication. His reaction to this scenario was very negative and this planned his exit very impulsively and started looking for alternative options. While the formal announcements of the new plans was still not made, he quit to join one of the existing customers of A3. He felt that he should have stayed on as he later found that the information he obtained from the Head People practices was not exactly true. It was uncertainty that created a fear and he in a hurry made his move. He did not want to answer the option of returning to ABC Ltd. And brushed it aside by saying that it could only be wishful thinking and not a practical one. 15. Software engineer JAVA A3: Graduate, aged 33 years 11 years experience. Joined A3 as one of the early employees, and was head hunted into a large MNC during the same time that the merger was taking place.she had already planned to exit before hearing anything about the merger. Nevertheless, she was anxious about her colleagues and mentioned that she could see the stress levels in them, during the long period of silence from ABC Ltd. And she mentioned that it would have been nice if ABC Ltd. Could have communicated their plans much earlier. She, having moved into a company where there is high internal potential, and

not one who likes to change jobs often, feels that she would not like to return. 16. Associate Vice president Marketing A4: post Graduate, aged 31 years, 7 years experience in sales in the USA, 3 years with A$ as his econd job, interested in sales, happy to be based in the USA. He was aware of the merger based on the market talks and had partly confirmed it almost a month before the formal announcement. He had done his research about ABC Ltd. And was aware that their strength in marketing was very high. He was also aware that his role could have continued with different sales focus and also possibly a different geographical area. He was searching for good options and his exit coincided with the formal announcement only by chance, since it was during the same week that he had got another job that he liked. He did not feel that anymore on information could be expected as he felt that most company management teams would keep it a closely guarded secret till such time that it needs to be announced. He was fortunate that he got a better job during his search and being currently a good performer has no plans to make any changes,, not even the possibility of returning to ABC Ltd. 17. Head HR A4/ Vice President Training and Development ABC Ltd. Post graduate, passionate about the HR role in recruitment and compensation planning, 18+ years experience at the time of the acquisition, was with the company for the last 4 years, and was a part of the core planning team. he was aware of the merger to take place and was fully aware of the plans of the team in A4. He was surprised at the new rle offered to him as Vice president of training and development, which was not a desirable role personally. He was expecting to be handling the recruitment function where he had proven his skills in A4 earlier. He attempted a change of role by talking to the new management team but found a clash in role with the earlier ABc LTd. Team and could not be accommodated. He quit after almost 4 months of being given the new role in the merged entity. As an after though he did not feel that he had made a wrong move as he was clear about his career alignment with his personal goals being high priority. He was tracking the progress of ABC ltd. And was happy that they were doing well. Given a choice of handling the areas of his choice he would be willing to re join ABC Ltd. But emphasised that only if he gets the role of his choice. 18. Senior Manager operations A4: Post Graduate, third job, total experience of 12+ years with 2+ years in A4, had earlier faced a situation of acquisition which suddenly found her out of job. The news of the takeover was scary, especially since it came from a neighbourhood friend and was worried that she would be asked to leave very soon. Immediately, she tried to get information further had her worried. She tried her best to get information of people in the similar position as herself in the acquiring company and the information further had her worried. She tried her best to get information about her new role, but though she was assured of a good

role, she was not convinced. As soon as she could get another job, she quit. She moved to a much smaller company at par remuneration. As an afterthought, she felt she had made a mistake, as her colleagues in A4 who stayed on were doing well. She had also heard that they recruited many more people of her experience level and background. She was very candid about the fact that the HR team and the management team should have spoken to her and explained the plans, especially considering that she had earlier had a bad experience of another acquisition and also that her team was a high contributor to the compnays top and bottom line, which information was on record. She also mentioned that the news of the merger should be internally announced before the press release. 19. manager Public relations: A4: graduate. Earlier background in media and advertising, aged 32, total experience of 9+ years. The news of the takeover came as a shock when he saw it on the internet and then got the confirmation when he asked the Head HR about it. The immediate reaction was one of confusion and high insecurity and immediately started looking for alternate jobs. The feeling of Job insecurity was very high and was concerned that his regular monthly living expenses would not be met if he would be asked to leave on short notice. He ffelt he would not be needed in the new company. As he was in the PR area, he was able to easily connect with people and got another job in a similar role with a large BPO company and left immediately after completing the notice period. No comments about whether his continuing would have been useful, as he had not given it a thought, but was clear that he would not like to rejoin the new entity, as he felt that he was not taken into confidence in the earlier acquisition.

1 to 16 views.
The data gathered over the interviews of the employees who continue in the company after the merger, for the basis of analysis is as follows;
1. President and CEO: in the current scenario, acquisition is a need,

driven by the market forces. If we want to stay on the path of our vision, the way forward is by strategic acquisitions. We have started on this path, and we know we have made some mistakes in our attempts to integrate the workforce, but we are learning and we shall find the right mix as we go along. He was instrumental and a prime mover in all the acquisitions. He expressed his dissatisfaction in the way many key resources left the company, and felt that it did partly hinder the plans. Chief Technology Officer (CEO in A4): The acquisition has been a God sent and it is unfortunate that many of my other colleagues did not stay on. I was also tempted to move out, but I am
2.

glad that I stayed on, as I quite enjoy my role focus being more on the technology side now. Of course, I started with an entrepreneurial dream when A4 came into existence and I got tremendous support from my entire team, but then growth at this pace would not have been possible. He was instrumental in the acquisition, by virtue of being the CEO and the majority share holder. His expectations of the acquisitions was that the growth would be very high and fast, though he admitted that in the initial stages there was actually a dip down in the results, which had him worried. The fact that many good people had left, and also lost some good customers because of the same, was bothersome. He felt that this could have been avoided had the new team been a lot faster in announcing the needed changes. He felt that in the future acquisitions planned, the learning factor from this experience would make this much better. Vice President International Business Development (VPMarketing in A4): the acquisition did create a scare, but then it also brought up an opportunity. I only wish that we could have kept the entire team intact, as in real sense that would have meant a perfect acquisition from the view point of the business strategy. He was informed about the plans of the acquisition by the CEO directly along with the purpose, and his sense of security was the fact that the CEO was going to stay on, and hence he was certain that the company would do well. From his expectations point of view, he was quite satisfied with the way his role was explained to him, though he felt that this should have been done at least three months ahead, since for a period of about 4 months he had no direction in his job. The dealing with existing customers was becoming uncomfortable and he found himself avoiding talking to them, which should never happen.
3.

Vice President: HR (Head HR in A2): The acquisition left me feeling let down by a friend (former CEO of A2) but from my viewpoint, I feel I have grown in my career. I must admit that I was looking out for opportunities but fortunately I stayed on. He got the news of the acquisition about a week before the deal was officially signed. He found the transition period to be a nightmare, and feels that something should be done about it. In his recommendations on managing an integration of workforces, he had stated the need to communicate early, communicate clearly and continuously. He felt that it is one of the things that an acquiring company must do and be ready with a team for it before venturing into an acquisition. He also felt that it is very essential for the two HR teams to meet and clearly understand the existing organisation charts and plan the transformational steps to the new structure. He emphasized the need
4.

to be able to identify the key talent and take them into confidence at the earliest possible time frame. As he is part of the core team looking into further acquisitions he would like to ensure that appropriate steps are taken to manage the workforce in a more systematic and planned manner. He was also clear on the fact that where separations are necessary, even this can be handled effectively to ensure that relationships continue to remain strong. Associate Vice president: Global Delivery (Head Operations in A4): As i was based in the US the acquisition had me initially scared and confused. However, as my performance was very strong and when I learnt that ABC Ltd. Was keen to add the domain of healthcare in their business model, I was very confident and confident that i would be a key player in the part of the new entity. I got the news of the acquisition just the night before I saw it in the news the following day. The next three to four months were tough as I was answereing queried fom my customers and really did not know what to tell them. Further discussions also revealed that lack of communication for a very long time from the acquiring companys side created a very difficult situstion, and the sales efforts were down to zero. Some contracts that were coming up for renewal weer kept on hold, as there was ambiguity in the process to be followed. It was very difficult to get the attention of the new team to respond to queries related to these contracts. Taking personal ownership for these projects, the work was continuing to be executed, hoping that soon, the contracts would be ratified. Fortunately, the personal rapport with the clients, and the previous good performances helped, and all issues were resolved over time. One o the key message that was shared was that the acquiring company must necessarily communicate immediately with the people about their plans and establish all the new contact points for the various functions in the organisation, so that clients and client facing employees are clear about what they need to do. It would be a good practice t make the organisation structure and the roles described clearly at the time of the acquisition itself. He stated that he found it very difficult to get cooperation from colleagues from the parent company in sharing critical information and that this could have been avoided and lot of money could have been saved if there was clarity in the knowledge management process to be followed during the in between phase.
5.

General Manager: Finance: Having been with ABC Ltd. For over 7 years, still it was a troublesome period, as people from the acquired companies would constantly contact him and expect answers in time frames that were unrealistic. As a key contact point
6.

for approvals both in financial terms and in legal terms, it was a very difficult time during the transition period. Most of the senior management team members were very busy with other activities, and often decisions were made on gut feel rather than clear understanding. Some of our good employees left and due to the situation no one in the operational positions could do anything to help save the situation. On strong recommendation that he had, was that it is very essential to create a small focus team of separate people to manage the transition, and who would be the intervention point of taking decisions in alignment with the objectives. How this can be achieved was a point that could not get any specific answers, but he did suggest that one should consider (if necessary) even taking on a consulting team that could handle this phase. Manager recruitment (Asst Manager HR in A4): One of the most troublesome periods in my life was going through the acquisition phase. In A4, I was reporting to the Head HR, and all of a sudden he was no longer available to interact with, as he was moved to handle training function. The new person I was asked to report to, had no idea about how we recruit doctors and how we offer very flexible working terms, considering that they are all working as cardiac surgeons and this is a secondary role they play in the available time that they have. Further, the compensation package and facilities offered to these surgeons were unique to each individual and do not follow any pre-designed specific formats. It was very difficult to decide on how much information i was supposed to share as i was confused about about my own role thereafter. This phase was over in about 6 months, but clarity in the new role would have helped ease the pressure. Wjen the Head of A4, moved out of the company, there was a great temptation to do the same, as disclosed during the interview. However, as an afterthought, and on deeply thinking about it, he felt that it turned out to be good. Since the responsibility was on managing a set of highly professional people, the hardships of transition were not so bad after all. Except for one doctor, who in any case would have left due to personal reasons, none of the billable employees left. The new role after a promotion was announced was another feel-good factor and an indicator that the future was promising.
7.

Manager- Administration Manager in A4: having recently joined A4, she was expecting to be asked to leave, and was looking for opportunities. With the market being slightly slow, she had not got any appropriate options to consider. Meanwhile, her new role was detailed and she was comfortable with it, and did not have anything
8.

specific to suggest. Overall, she did not mention that it would have been better if the enw team could have been introduced in a combined meeting that could have been done soon after the announcement of the merger. Project Manager-1: Having been in ABC Ltd. For some time, he had seen the improvement in the process of managing the takeovers. The biggest challenge that we face as project managers comes from the fact that we are suddenly handling more customers, and new team members. Many of these team members look upon us as people on the other side of the table, and I have to work hard to convince them that we are really working together for common objectives. He did not have anything specific to add as suggestions, and felt that managers must really take charge pf making the team members comfortable. Often, they need to go the extra mile to understand and support the customers also.
9.

Project Manager -2 (Project Manager in A3): one of the consistent star performers in A3 was very confused about the purpose of the merger. The news came as a surprise as she first saw it in the newspapers. At work, she did not see any specific changes for a long time, except that everyone was talking about changes expected to come, as a result a lot of projects started slipping on schedules. With some of the good employees leaving, her role was becoming more difficult. Her interactions with the HR also did not help. The Head People Practice of A3 leaving further added to her fears. She had almost accepted to join another company, but as they had delayed in the final offer being sent to her, in which time frame things had started to settle down (about 10 months after the merger), she decided to stay. She was very vocal about the fact that the acquiring team must not only proactively communicate their strategy, but they should also do it very fact, and be accessible to answer questions, so that one can gauge their intent and be comfortable in deciding the course of their own future. In her own words, I do not think it is right or fair for them to be inaccessible, since it is a fundamental right of employees to get clear information and take informed decisions which affect not only their career but their entire families. She added that there should be some sort of a law that establishes mandatory actions considering that many families are being affected.
10.

Manager Sales (Sales Executive A3): the acquisition came at a stage when he was expecting a promotion. Being a specialist in the field of Clinical research gave him the confidence that his role would
11.

be enhanced. However, he was very uncomfortable for almost 8 months, as he had no means of getting information on his new role with ABC Ltd. As there was no specific financial pressure on him, he was willing to give them the time to decide, but was conscious about the fact that during this transition stage his performance was adversely affected. While he was managing the clients queries about the future, he admitted that he was making a lot of assumptions and was scared to make commitments. He had no suggestions on how mergers must be handled, but he was candid about the fact that it was not a good experience when he was not getting answers to his queries for long sells of time. Manager Transition (Manager- Operations in A1): this was a very key interview, where she has been managing transitions for clients transferring work from within to an outsourced party. She thus had a good idea about how transitions are better handled. She had been doing it for A1 for over 3 years and had helped make 8 project transitions. In her words I got to know about the merger almost two weeks before the announcement, and was scared. My role is not visible as I am more a facilitator for new projects, and once the projects are transited I am out of the core deliveries. I was wondering whether the new team would even know what I was actually doing and how important my role was for the organisation. Further, my resume did not contain any great story for me to easily get another job. As she stayed on and was finally moved into a specialist role of transition, she realized that the company understood her role and its importance. Nevertheless, she did mention the company understood her role and its importance. Nevertheless, she did mention the following points to be taken into consideration to help such mergers in the future.
12.

a. The CEOs of the two companies must together call for a meeting and address all the function heads of the objectives b. A single point of contact must be established on day 1 itself, to whom people can go to and seek clarifications, especially about how their roles fit into these objectives. c. As early as possible the new organisation structure must be announced
d. Meeting of the new team compositions must be facilitated by the

point of contact, and be a facilitator of these meetings to clearly define how they need to work in the new environment.

e. Communication over email should be continuous, updating everyone of what is happening in the company, highlighting them against the objectives. Project leader : one of the top performers as a Project lead in the team, she has been consistently responding well to handling larger teams and has been instrumental in building good team members, as is evident from the fact that developers have always been seeking opportunity to work under her. She was a person recruited from the campus and has grown in the ranks. In the interview she was very explicit about the fact that during the merger with A1, she was very scared that she may lose her job. During the interim period, she made a lot of efforts to ensure that all her work is made visible to all people, including the HR team. When she saw some of her team members and colleagues leaving, she was further distributed, and had even initiated the process of planning a career move. As she was sent overseas on a project at that time, she ws unable to follow the process and thus stayed on. Meanwhile she was anxious about developments happening within the company and was always trying to remotely find out about things going on, to an extent where it had even affected her work at the client site. By the time she returned, things had settled down with respect to her role, and she continued to stay on. Having gone through this process, she was not affected much during the other mergers, except to an extent that she would make the additional effort to let everyone know about her contribution in the work place. When asked about what she felt that could have been done to make this merger process more comforting to the employees, she did not want to speak about it, and felt that it would be inappropriate for someone at her level and with no background about business and HR practices, to comment.
13.

Sr. Developer java (Sr. Developer in A2): Thought a certified project Manager was keener to stay Hands-on as a developer. He was very confident and comfortable during the merger process. Though he did not mention that he was not sure about what this new role would be, but was very positive that his good work would be recognized and needed i the new entity. His colleague had moved on to seek better opportunities and was also urging him to follow, but he reminded in the organisation, and was very hopeful that the merger would unfold new growth opportunities for the company and for himself. He did try to get some information and when he did not get clear answers, he was content to wait for the information to come to him at the appropriate time. He had no suggestions to offer on how things could have been done better.
14.

Sr. Programmer Graphics (Programmer in A2): when the merger was announced, he admitted that he was very scared that he may lose his job. He supported that saying that his skill on graphics was not a core strength that could be considered and was in the process of looking for other opportunities. He also said that he was unable to get something suitable for some time, by which he was given clarity in his career prospects. He recalls that the phase of almost six months was very scary and did not want to go through anything like this again. He felt that if the top management could clearly lay out the thought process behind the merger and the business plans of going ahead, it would have helped. He went on to say that this should be a key responsibility of senior management team members to take up during such a phase.
15.

Programmer MS Technologies (Programmer in A2): As a programmer who had newly joined A2, he was not very clear about what was likely to happen. He was unable to gather any information as he was not aware of whom to interact with on this matter. He waited for a long time and eventually got his role clarified when he was put on a maintenance project by the new team. He mentioned that he was uncomfortable for some time as he was on the bench for a much longer period than normal, and was worried that his skills of a programmer that he had acquired would soon become obsolete. He also admitted that the thought of looking for other options did cross his mind, but he never got down to pursuing it.
16.

Views of the members of the top management teams. The opinion amongst the top management team members brought out the following salient points,
a. Human resources are valuable assets and must be retained to

derive the true benefits of the merger.

b. The new vision, mission and companys business plan must be

provided at the time of announcing the merger. c. Communication that is specific clear and timely can help remove perceived fear amongst the employees of the acquired company. d. Job roles and responsibilities must be reworked out and provided very fast. e. Steps must be taken to train people to adjust to the new environment, culture and processes and simultaneously help sensitize people to expect some resistance to change.

f. A single point of contact to manage flow of information is a must to manage the integration process better. g. A specialist (outsider who is seen as a neutral person) consultants services to manage the inter personal conflicts during the change process would be very beneficial to implement the change faster, which in turn would still be perceived fear/risks in the minds of the employees. h. Minimize the time taken in the physical merger/ integration work. i.Involve the HR heads in the process of the talks in the pre merger stage itself, so that suitable steps can be pre done and thus save time in the integration process. j.Too much emphasis on the financial side of the work is given, and the HR side is almost ignored. This must be addressed in the future. Though these points have been provided from within the compnays employees itself, they have not been able to improve the process significantly even until the 4th acquisition. 4.6 Key reasons why employees left after the merger. an analysis Based on the information given by the respondents and the exit interviews, the top reasons why employees left the company after the merger is as follows. a. Lack of transparency during the process of negotiations for the merger b. Feeling that the new management would not be able to recognize the importance of their roles. c. Lack of timely communication about their roles and responsibilities. d. Did not see their career alignment with the objectives of the company e. Job insecurity as there were other people with similar competencies f. Changing cultural factors made them uncomfortable. 80% 8 out of 10 of the senior management employees felt that they should have been involved during the negotiation process

of the merger. This lack of transparency made them feel that there was an element of mistrust or a lack of confidence. 88% 7 out of 8 of the managers felt that the new management would not recognize the importance of their roles and their past performance may not get the rewards that were due this was especially high, at 100% when their previous managers to whom they were reporting had also left the company. 84% respondents felt that the delay in communicating their roles and responsibilities made them uncomfortable and as they had nothing to do for quite some time, it made them consider looking for other opportunities. 82% respondents who were managers and above felt that the earlier planned career growth and alignment would now change and also that they do not see how their personal aspirations could match the new companys objectives. Figure 8 shows the four areas that need to be aligned. 78% respondents felt that their skills were similar to many others in the acquiring company and hence they may be asked to leave. 61% respondents felt that the change in the process and interaction amongst co worker was going to make it difficult to work with the same degree of freedom and team work, which would make it difficult for them to hold the level of performance that would be needed. Hence over a period of time, their performance levels may not hold to the expectations and would then see it as a hurdle to continue in the company. The analysis reveals that there is a need to focus on early communication of the new business plans and strategies of the company, quick recognition of the job roles and responsibilities, and the alignment of personal and company objectives.

5. FINDINGS CONCLUSION AND RECOMMENDATIONS. This chapter lists the findings of the research, and some conclusions that have been arrived at. It also provides some recommendations. 5.1 Findings.

The research findings clearly indicate that ABC Ltd. did not get the optimum benefit of the merger. While the financial data does indicate that they have achieved some growth, it could have been a lot more had they taken some measures to retain key people, and some key customers too. The delay in communicating the vision and business plans proactively; and also not establishing processes for employees to seek clarifications with respect to their roles, caused some loss of opportunity and key talent, with respect to the intangible human assets. Perception of the board of directors: The board of directors were unanimous in their view that there is a strong need to manage the human resources and their knowledge base during the process of the merger, failing which the full value of the merger is not realised. 75% of the Board of Directors mentioned that there is a need to involve the HR perspective during the due diligence period itself, to get a better idea of how the cultural differences could impact the integration of the workforces. The board was divided in their opinion of how and when to announce the merger, as 2 of them were of the opinion that the new business vision, business strategy, and the organisation chart would have to be developed before the announcement, while the other two were of the opinion that it could be announced with a time indication by when the new plans could then be tabled. Perception of the Senior Management Team: All the 14 senior management team members who responded were of the opinion that losing key people was a loss to the company. All of them felt that it is essential to have a dedicated and specialized team to handle mergers and use the services of external consultants, and this team could then be seen as people with specific interest in the merged entity, and not biased towards any one of the compnays employees. 79% felt that the communication delays were the main reason which caused job insecurity, and the good resources

got other options easily and were among the early ones to leave the company. 64% felt that the announcement of the merger should take place as soon as it is signed so that employees get first hand information, and would then hold the trust level with the management team.50% felt that attrition to some extent is to be expected and cannot be avoided in a merger, as it is not possible to accommodate all people in the new organisation structure. However, it is essential to focus on the key employees the ones with the unique skills and the ones who have direct influence over customers, and do all that is necessary to ensure that they are retained. Perceptions of the Manager level Employees All the 11 people who responded were of the opinion that it is extremely important to retain all the people, since mergers bring about additional lines of business, and it is important to combine the knowledge and expertise that exist amongst the erstwhile different teams. 91% felt that, if people were to leave, they would find it time consuming to manage the work that would be left incomplete and would take a longer time to complete, as appropriate competency and understanding of the work would not be easily replaceable. Besides, they felt that when managers leave they invariably also take away with them other good people in their teams. 64% felt that if they were provided clarity in the onward business strategy, they would also be able to play a significant role in being able to retain key talent. The others however felt that retaining people during this period would have dealt with by either the senior management team or the HR team. Perceptions of the Executives: All the 5 people who responeded felt that in any merger, the fear factor in losing their job is very high. This needs to be dealt with at the earliest possible opportunity. They felt that the two things important are to communicate their new role and responsibility, and to re affirm that they are aware of their past performance and their career ambitions. If the managers can also communicate about how they see their

career aspirations fitting into the new business plans that would be a very significant measure in making the employees comfortable. 80% of them felt that after the communication is done, it is very essential to establish a point of contact for interaction to specifically clarify their doubts regarding their careers. 60% of them felt that it is not possible to completely eliminate the fear of losing jobs, but if a strong effort was made to communicate plans, ABC could have at least held back 50% of the employees that left. 80% felt that an attempt to bring back the employees who left should also be made, justifying their stand by saying that if we can get back some of the people, the message going into the market would be favourable for ABC in the future mergers. Exit Interviews: The analysis of the 19exit interviews reveal that 90% of the people felt that the most important rreason for their exit was lack of communication about the ideas, plans and strategies of the merger. 84% felt that the merger was useful only at the investor level, but worked against the interest of the individual. They especially felt that it is clearly not in alignment with their individual career aspirations and plans. 58% felt that the enw culture would not suit their work style. 58% indicated that a strong reason for their exit was the feeling of insecurity about their job role. 58% indicated that to fit into the new environment was going ti be a big challenge where they would be seen as second group as compared to the acquiring employees, they felt that the merger would leave them short changed and would have to prove themselves with extra ordinary performances to be visible in the new environment.

5.2

Conclusion:

The business strategy/ need of amerger can be successful only when the merger contributes a performance level that is greater than the sum of the individual performances. This also means that the existing workforces would need to come together and derive synergic collaboration benefits to generate higher level pf performance. This leads to the synergic collaborations benefits to generate higher levels of performance. This leads to the conclusion that in any M&A, HR issues need to be addressed very effectively, and the reams not just retained but also motivated to work together collaboratively. The success level is thus directly proportional to the effective handling of the integration of human resources. ABC did benefit from the mergers, financially; but was only partly successful in exploiting the opportunity to the full potential tat it had brought before them. From the human resource perspective, they did lose out a significant amount of knowledge base along with key talent, toward which they could have taken some steps to cpaitalize on the opportunity that they had. The merger with A1 saw ABC losing 7% of the employees with A2 11% with A3 7% and with A4 6%. This does indicate that the company is still grappling with this problem of managing the human resource side during the process of the merger. 5.3 Recommendation:

The following recommendations are being put forth for companies to consider in making the process of mergers useful in retaining the people and thereby protecting perhaps the most valuable assets that the company has acquired. 1. Evolve a clear vision and business strategy of the merger during the process of negotiation, and have it ready for communication across the two companies. 2. Involve the HR early in the cycle of negotiations to map tthe culture of both the companies and where necessary evolve a culture that suits the merged entity. 3. Create a new organisation chart and take up a detailed audit of the competencies of the employees to map their roles and responsibilities as aligned with the new chart.

4. Establish a strong communication system, to proactively stall the fears and insecurity amonsgst the people. Establish a single point of contact for the employees of the company to talk to and seek clarifications. Answers to their queries. This person sgould have easy access to the senior management team to get their views to help clarify matter that arise. 5. Communicate to provide clarity of plans, and communicate continuously. If needed, using an external agency that can be seen as a neutral agency, for this purpose could also be considered. 6. Engage employees in productive work and keep their motivation/ commitment levels at the highest possible levels. For the merger to have the performance in line with objectives of the merger, with reference to the Human Resource area, it is essential that there is alignment of clarity, competence, and coomitment. The figure 9 illustrates that the area of performance is the overlap area of these factors. It thus becomes essential that ht etop management teams provide the clarity to the maximum, and at the earliest opportunity. Steps should be taken to map the competency level, and obtain commitment from the employees by obtaining alignment of their personal objectives with the companys objectives. Keeping in mind that the company is continuing to seek acquisitions, it may be very beneficial to establish a dedicated team to manage their mergers especially with respect to integrating work forces.

FIGURE 9 scope for further study!!!!