Human Resources Role in a Strategic Acquisition - Sample Solution

Question: What is the role of human resources in a Strategic Acquisition? Answer: Human resources role in a Strategic Acquisition During the planning and execution levels of any kind of merger or acquisition the role of Human resource revolve around employment, the compensation and finally the benefits related issues. There are six stages or levels that usually Human resources could involve or likely to involve during the merger and acquisition functions. These are Target screening Planning stage or pre acquisition strategy Negotiations about employees or related things Due diligence Planning of integration Post deal integration procedures Aguilera along with Dencker strategized the approach to human resource management in all kinds of merger and acquisition processes. Strategic Human resource management is the explicit link that Human resource management has with the strategic management process of the organisation. In plain terminology the strategic Human resource management can be summarised as follows: Strategic Human resource management is basically a systematic pattern of connecting employee with the concern firm. Concerned system of this field exerts a vital connection the between the atmosphere of the business activity and strategic human resource. It emphasises co-ordination or complete connivance amongst the various Human resource management usability like Human resource plan staging, process of recruitment, and method of selection, pattern of training, human resource development, employee compensation limits, and policy of retention, process evaluation and finally the promotion of personnel within the organisation. It seeks to enhance organisational performance, employee needs and societal well being The word strategy is derived from the Greek word of strategus or basically commander in chief. As per Mr. Chandler, human resource strategy is basically the basic determining long term plans of any incorporation. It is all about deciding the best course of action and necessary resources allocation for carrying out those defined organisational goals. Strategic Human resource management Strategic Human resource management could be explained as an attempt for taking decisions for Organisation intentions and the concerned people. Human resource management concerns itself with the integration or linkages between the overall strategic aims of the business, human resource strategy and its implementation. Strategic Human resource management usually utilizes the strategic actions that is important to the employee management acceptable at all levels in the business and that are used for the implementation of strategies directed towards sustainable methods.Strategic Human resource management make use of broad issues like organisational application, personnel performance, employee competence and the overall complementing resources to further the business essentials, and finally employees overall development and their strategic deployment.Strategic Human resource management places a great emphasis on strategic HR practices, flexibility, communication, organisational capabilities, coherence, empowerment, change management, participative management, organisational commitment and organisational culture to obtain a particular strategy, along with developing strategies and also to procure and overlook the required systematic change for gaining and sustaining competitive advantage. Emergence of strategic human resource management Human resource management (20th century) Strategic Human resource management (21st century) Reactive Proactive Staff function Strategic function Production oriented People oriented People as liability People as investment Resource in production process Key player in competitive advantage Isolated from Companys goals and strategy Integrated role in company goal and strategy According to Ruona and Gibson, the twenty first century strategic Human resource management lays more emphasis on the enhanced people centrality for success of the organisation, importance of whole entire systems and inbuilt solutions in the alignment which is strategic in nature with lots of impact and lastly has a tremendous capacity for change. Aim of strategic Human resource management The whole idea of strategic Human resource management is basically to help in generating the capability which is strategic in manner by making sure that the organisation has very skilled as well as dedicated and encouraging employees that are needed to achieve sustained competitive advantage. The objective of strategic Human resource management is to allow a directional sense in an environment which is turbulent in order that the organisational needs and individual needs of employees could also be matched by such level of developing and implementing the logical and feasible policies of the human resource and their programmes. The soft strategic Human resource management would need a better and bigger emphasis on the human resource outlook of people management. The hard strategic Human resource management otherwise has emphasised the overall outcome which is expected to be obtained by such investment in human resources in the interest of the business. Strategic Human resource management attempts to maintain a balance between hard and soft elements. Organisations exist to obtain an overall purpose and need to make sure that they have resources required and they also use them effectively. It needs to take into account all the considerations humane in nature and overall concept of soft strategic Human resource management and planning with working people in strategy, which takes into account the requirement and level of aspiration of the employees of the organisation. Mostly in organisations, the hard strategic Human resource management is considered first, leaving soft ones way behind. The overall idea for strategic Human resource management is the obtained advantage of an agreed basis for creative approaches to human management in the longer term. Benefits of strategic human resource Identifies and analyses the outside opportunities and threats which could be very crucial to the companys success. Creates strategic business vision for the future Supplies cut throat technology that could be used in all kinds strategic planning process Recruits, retains and motivates people Develops and retains of highly competent people Ensures that people development issues are addressed systematically Supplies required info for companys internal strengths and weakness Meets the expected norms of customers effectively Ensures better production Guarantees surplus in competent business Acquisition Perspective of strategic Human resource management Target screening It is basically the process of getting preliminary stage information of prospective companies for ready acquisition and or merger. The delicate nature of such investigations and the basic potential effect these can have on stock values could lead to either windfall or spiral out of control. During any target screening process human resource do a reconnaissance and get in touch with other teams who knows the target company. These kind of discussion usualy give enough informations required about the target companys HR policy and other practices. Planning or pre recquisition strategy During this period the human resource team usually get involved in the following types of activities: Advising senior management on retention and benefit packages Much of these senior managers interest in this information generally meant only for the purpose of financial accounting and although there would be various rationale for the recommended packages for justifying the cost to company but as per human resource standpoint these decisions are not taken in isolation. The acquiring company has to provide a source of getway between the employee segments or may have to use own plans during consolidation process Speaking to employees to understand and predict the change impact and workforce reaction The more the expectations for getting a deal done during the transaction, the bigger is the decision makers work become steadily lined up with existing beliefs and due assumptions about the take over organisation. Planning of communicating and following up with activitives which are in support of the transaction declaration Planning of key processes like selection and relocation along with placement out In case of every simple acquisition of small institutes or companies by a big conglomerate, its only the dominant company which outlines the implementation rules. Comprehensive plan for the selection of emloyee are devised by the less dominant partner but employees are not informed of any due information as the dominant companies employees are less likely to be effected. Due diligence To ensure the merger and acquisition is smooth the nest method would be to get it done through due diligence. A proper due diligence study goes a long way than just comparing the financial database. Any due diligence check list should begin with a wide range of over view and needs examination throughly for human resource functions. These are likely to be employment, training and the general benefits. Due diligence fact finding needs to be direct and appropriate during the merger and acquisition and needs discussion with representatives or cross checking records. Integration planning and execution During all transition and integration methodology HR practitioners could create the most positive impact. HR drives performance and help create a environment which is for real change and increase the level of employee satisfaction. Educating the workforce about the psychological aspects of change and transition is necessary and the employees needs to be addressed for their anxiety level and how the transition will affect the employees. The drive for employee selection and retention should begin with a specific strategy. Adopting an acquisition Perspective The concept of investment perspective does not encourage viewing human resource as variable cost of production. It views human resource as human assets and that they should be viewed as any other physical assets like plant, property, machinery etc. as high return assets to its strategic objectives. This allows organisation to determine how to best invest in people and helps in allocating current expenditures to meet long-term performance goals by considering the risk and return on possible expenditure related to procurement, training, etc. Physical assets can be cloned by competitors, but investment perspective toward human resource is critical. Human assets cant be cloned or copied and hence it has good advantage the organisation may enjoy in the market. An organisations techniques are more people oriented than in capital as the same has developed a workplace where labourers are getting replaced with workers with knowledge. Organisations that ignore to follow investment perspective of human assets may be less attractive to prospective employees. Valuation of Assets before acquisition There are overall five types of products that a organisation could leverage in order to aid in the performance as well as add value to such things. These assets are: Financial assets: This includes equity, securities and investments and account receivables. Physical assets are plant, land, equipment and raw material. Market assets include overall goodwill, market branding, and process loyalty of customer, overall product range, and distribution of such products, required essential patents, usage of trademarks and product knowledge copyrights. Operational assets include the specific practices of management, work structure and technology. Factors Influencing an Organisations acquisition Orientation There are overall 05 factors that could affect investment of a company makes in the management of human resources. These factors are as follows: Management values, Attitude towards risk, Nature of employee skills, Utilitarianism, Availability of outsourcing. 1. What legal issues does Gemma need to take into account in designing a redundancy process? Is Alans suggestion of targeting old people closer to retirement age a feasible approach? Answer: Gemma need to take into account the new terms and conditions which advises the implementation and discharging the instruction of the client recruitment and selection and she also has to manage large and small scale redundancy along with the restructuring programmes which requires to carry out staff consultations and formal staff meetings. Alans suggestion of targeting old people closer to retirement is based on fact that he wants a young and vibrant team to carry out job. It may not be feasible as knowledge of running system lies with the old heads. 2. How should Gemma Configure the HRIMS to provide useful data about the company's workforce? What sorts of workforce data reports should the system generate? Answer: HRIMS usually helps in data storing and review it as well and effectively manage the workforce. Before configuring the HRIMS, Gemma needs to understand the overall requirements, everyones opinions and concerns of the workforce. The HRIMS system should generate payroll accounting along with time reporting, workforce management which include the commencement, pink slip and finally employee exit system besides the integration and maintenance. These may also help in generating the basic employee information like the names, their address, each of the family details, their respective qualifications, rest of attributes, and the joining date. 3. What kind of HR planning process would be appropriate at this point in the company's development? Would a qualitative or quantitative approach be more effective? Why? Gemma should devise a HR planning which would finally mix both the qualitative and quantitative data about the workforce. The qualitative data would include the reports with definite observations of the workforce in the Mainly Books. These observations may include the individual workplace conduct, the daily obstacles each worker needs to overcome for augmenting the workplace performance along with the habits. While quantitative planning would help in gathering the workforce statistics in Mainly Books. The quantitative data would be more useful as it helps in finding the varied processes and enhance the employee productivity. 4. What would be the advantages and disadvantages of the company developing or outsourcing operational and administrative HR functions? What should Gemma RECOMMEND and Why? Answer: The main advantages of the out sourcing to select administrative HR functions like the payroll and the record maintenance along with the files help in reducing the business enterprise risk. Companies many a times outsource these functions with an objective to reduce the running costs. These may lead to poor quality performance when the outsource provider function improperly. Gemma in such cases needs select the firm properly for the purpose of outsource and these could be accomplished by checking all previous work records. Most outsourcing units may be located at places far from the parent firm and this may lead the organization and the employees to experience a distance sense. Gemma hence has to carefully formulate the activities that need to be outsourced. She has to speak to the store managers and the outsource provider of Mainly Books before taking a call to outsource the non-core human resource functions.