The paper gives an insight into the psychological factors influencing the workforce in companies which are in the process of takeovers and mergers. The process of takeover and mergers impacts the work culture and the work profiles change. Successful takeovers are those during which special efforts are made to address the employees' anxiety, apprehensions and fears to ensure the retention of the best people from both the organizations. The study aims at understanding the perception and experiences of employees in organizations undergoing changes during the takeover process. Data was collected from 50 executives from companies undergoing a takeover bid in the National Capital Region (NCR) through structured interview sessions and a specially designed questionnaire. The study concludes that the takeover is perceived as successful by the employees when the process mainly revolves around the change of ownership without significant post-takeover changes.
India
has become a global hot spot for mergers and acquisitions.
Liberalization and globalization have been the major reasons
for the spurt of takeovers and acquisitions. Takeovers are
generally strategic in nature and they are thought to have
secondary effects beyond the simple effect of the profitability
of the target company being added to the profitability of
the acquiring company. A takeover may be in form, i.e., friendly
takeover or hostile takeover or reverse takeover. Reasons
as to why takeovers take place and what are their gains and
losses differ from case to case, but still there are a few
commonalities which are worth mentioning. Takeovers are increasingly
becoming a popular strategy for achieving corporate growth
and diversification. But there continues to be a controversy
about the reason why so many takeovers and acquisitions fail.
So far, analysts have tended to focus on financial and strategic
factors with a view that takeover success and failure are
due to industry-related factors between the acquiring and
the target company. It was only recently that researchers
have begun to analyze softer, less tangible social, cultural,
and psychological issues involved in takeover (Cartwright
and Cooper, 1996; Schweiger and Goulet, 2000 and Marks and
Mirvis, 2001). This stream of research, which has emerged
newly focuses on the `human side' of takeover. Many of the
empirical-based research studies show that, in spite of their
popularity, only half of all mergers and acquisitions meet
the targeted financial expectations. "Failures are attributed
to the fact that the merging parties mainly concentrate on
the financial strategic aspects of the deal at the expense
of cultural, organizational and execution aspects" (Morosoni,
1998). The implementation involves complex economic, legal,
technical and social procedures. Often, the latter ones are
neglected, and as a consequence, many otherwise healthy mergers
are negatively affected by post-merger integration difficulties
originating from cultural clashes and differences in management
style. In the recent years, however, factors such as cultural
fit, the pattern of dominance between merging firms, management
and the social climate surrounding a merger or acquisition
have increasingly been recognized to be of critical importance
for the success and failure of mergers and acquisitions (Stahl
and Sitkin, 2001). The feelings which mergers and takeovers
arouse among the employees may not be expressed openly, but
they are very much evident in a number of common post-merger
and acquisition symptoms, e.g., increase in executive turnover,
breakdown of lines of communication and control, general apathy
or resistance among executive to implement changes, etc. For
instance, after the merger of Warner Hindustan and Parke Davis
in 1988, almost 30 top executives left within a period of
two years. |
