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Mergers and acquisitions (M&A) are vital strategies in contemporary business management; these strategies are aimed at rejuvenating companies and businesses whose fortunes are declining. M&A is also used by corporations to gain strategic advantages as a measure to cope with changes in the business environment. The topic is pivotal, as it equips the business management students with the necessary information on the processes of M&A, the role of respective managements, and the preparedness by all of the stakeholders. Over the last couple of years, the issue of M&A received considerable attention from different quarters. In essence, understanding the concept of M&A is essential in understanding how organizations adapt to various kinds of changes that take place after a merger or an acquisition. Arguably, M&A is accompanied by changes in organizational culture and these can result in traumatic experiences for business members. In extreme cases, M&A can be met with resistance which by extension may lead to failures (Nitin & Sharmila, 2012). This makes the subject of organizational change in post-merger/acquisition organizations important because it helps managers and/or leaders to better understand how the organization is fairing and the best strategies to apply in an effort to ensure sustainability.

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Leadership

Leadership within an organization is one of the vital areas because it determines the direction that a company is going to take. For the excellent performance to be realized, every organization should have pragmatic and visionary leaders (Bhaskar, Bhal, & Mishra, 2012).The best leaders recruit the best talents available in the market and remunerate them. Reputable organizations are known to hire managers and directors who have excellent track records in their field of expertise. They are known to head hunt CEOS who have a reputation for turning around major corporations around the world. Such organizations go to such lengths, as they are aware of the fact that average managers can only achieve lackluster performance in M&A and, probably, reduce growth in new organizations. In this line of argument, good leaders are able to steer their organizations towards success, following a merger or an acquisition. Professional leaders are able to apply strategies that help to guide their followers towards the achievement of long-term organizational goals. According to Lupina-Wegener, Drzensky, Ullrich, and van Dick (2013), this situation is especially prevalent in subordinate organizations, where members find it hard to identify themselves with the new organizations. In their study, which was based on a survey, the authors sought to study organizational identification for dominant and subordinate organizations. They note that leaders from subordinate organizations should understand that members who were highly enthusiastic and identified with pre-merger organization might find it difficult to develop a sense of continuity with the new organization (Bansal, 2016). The involvement of low and midlevel managers in identifying the best organizational practices is crucial in ensuring that the projected continuity is achieved. Further, leaders, as change agents, should ensure that they communicate with employees effectively by emphasizing on future utility (Lupina-Wegener et al., 2013). It is important to note that the authors conducted their study based on a single merger which implies that their findings may not be a true representative of the entire population.

Transformational leadership approaches are necessary strategies, as they endeavor to provide services to customers and to meet the expectations of stakeholders. During registration of transformational leadership approaches, leaders and managers exert a lot of influence on individuals, and less on the groups or the teams. Arguably, most leaders downplay or ignore the importance of organizational members when making M&A deals. When the concerns and interests of the employees are not put into consideration, the merger or acquisition may fail to achieve the expected outcomes. A study that was based on field intervals, involving banks in India, Bhaskar et al. (2012) explains the importance of human resources in ensuring the success of a merger or an acquisition. In the study, the authors reinstate the importance of good leadership in ensuring that the desired outcomes will be achieved. A multitude of human resource issues, including retention of talent, reward and salary structure, work redistribution following lay-offs, integration of teams, power balance between the partners and redesigning of performance appraisal structure determines the level of success in M&A (Bhaskar et al., 2012). For example, the loss of decisive talent in post-merger/acquisition organization is seen as a significant contributor towards the failure of these organizations. Despite some efforts made by the leaders of the acquiring organization, some employees end up leaving because of a merger or an acquisition. This significantly increases the workload for the remaining members. On its part, the harmonization of reward and salary structure also needs to be attained if the post-M&A organization is to become successful.

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Strategic Planning

Strategic planning is another practice that successful organizations adhere to during M&A. To achieve excellence in performance, it is important for organizations to get their long and short-term goals right. Successful organizations are keen to come up with goals that are measurable within the given time frames (Castellaneta, 2016). Proper planning is a major requirement in order to achieve the set goals of the business. In most cases, organizations set goals in reference to their operations, whereas smart companies are open to free inventions and innovations that could lead to achievement of their goals. It is possible for companies to fall into mergers if those moves accelerate the goals’ achievement. It is important to note that in the absence of strategic planning, even organizations that have superior capabilities cannot achieve performance advantage. In this context, strategic planning helps organizations to align their goals and interests of their managers to encompass the potential of top management to retain a part of performance gains. According to Castellaneta (2016), the degree of interest alignment in this case determines the level of an organization’s potential performance. It is assumed that as the management team gets increased incentives to maintain organizational goals, the more is the likelihood that they will make decisions, which leverage the capabilities of the organization in an effort to raise economic performance. This, on the one hand, presents one side of the coin; on the other hand, alignment of individual interests also affects the level to which the firm develops new capabilities from both internal and external sources. Taken together, one can claim that the alignment of interests has an impact on the development and use of organizational capabilities in three major ways: how current capabilities are utilized; how new capabilities are developed from internal sources; how new capabilities are developed from external sources (Castellaneta, 2016). In the end, leveraging the capabilities of the organization and establishing new ones increases the chances that the firm’s competitive advantage will remain sustainable.

Involvement in Decision Making

The leaders encourage workers to come up with new strategies that can lead to attainment of the set goals. Leaders also provide the workers with appropriate resources that are needed to enhance the exploration (Bansal, 2016). Whereas the organizations recognize the importance of teamwork, leaders understand the need to influence individuals, so that improvements in performance are made at a personal level, so that ultimately the individuals can affect various teams and hence improve productivity. The leaders recognize strengths of each employee and identify the areas that such employees should be influenced for improvement. This is also reiterated by Bhaskar et al. (2012), who argue that leaders need to empower their followers to contribute in the decision making process, as a way of increasing motivation and helping them remain committed to the organization’s long-term goals. Employees constitute the larger percentage of stakeholders in any organization. By empowering employees to participate in decision making, leaders help in encouraging favorable perceptions, which, in turn, significantly contribute towards their trust among them, as well as increasing performance after the merger. Failure to reach such expectations often leads to cynical, intense and emotional responses which result into disillusionment and distrust within the organization. In this line of argument, trust can be argued to be a significant behavioral aspect, in relation to post-merger integration process. Still, there is almost no literature that explains how trust contributes to the success of post-merger organizations. Notably, however, is the fact that it helps in dealing with grievances at the onset in an effort to address feelings of injustice, inequality and lack of empathy by the management team (Yalabik, 2013). Further, managers are required to develop strategies for integrating human resource practices and culture, grievance handling, conflict resolution, uncertainty and feelings of insecurity that are following a merger. These factors play an important role in nurturing trust among stakeholders. In addition to trust, research has also pointed towards the need for information exchange and open communication during post-merger integration process.

Employees who know that their commitment to the organization will be rewarded put a lot of efforts in the exploration of new ideas. Such workers are innovative and creative, in order to be rewarded for their hard work. By using management by exception style, the organizational leadership ensures that only significant deviations from the planned budgets are brought to the attention of the management (Yalabik, 2013). By adopting the style of leadership, managers are satisfied that the company operations continue, as initially planned, with each deviation of the budget reported to the team leader, depending on the amounts involved. Managing a merger or an acquisition, like with other organizations, involves managing employees, as well as their relationships with the new organization. Research studies indicate that M&A are detrimental for this class of stakeholders and are often associated with low job satisfaction, high employee turnover and increased cases of discrimination and conflict (Bhaskar et al., 2012). In addition, M&A have been linked to low commitment and organizational identification. Job insecurity presents a huge threat to the employees during a merger. Even in the absence of a direct threat, M&A have been shown to have a direct effect on the well-being of employees. In essence, employees show lower commitment, increased cases of dysfunctional behaviors and increased cases of depression (Yalabik, 2013). These effects can be reflected on the welfare of local communities, especially when the public sector is involved. Commitment to organizational goals, as well as organizational identification helps to reduce employees’ turnover behaviors and enhance job satisfaction. In case when commitment is dependent on the reward structure, employees will be motivated to work towards the achievement of organization’s long-term goals.

Communication

The technical innovation strategy involves the introduction of goods and services that are clearly superior to the products existing on the market. The rationale is to enable the products to penetrate the market due to quality. Consumers would like to be associated with superior quality goods. Similarly, communicating with internal stakeholders is essential for ensuring the success of post-merger organizations (Chakravorty, 2013). One of the challenges that post-merger organizations face is addressing the level of uncertainty that comes with change. In order to remove this uncertainty, the human resource department must come up with a communication strategy by assuming a proactive stance. Communication in this sense is a key tool in change implementation, especially where two organizational cultures are merging (Elstak, Bhatt, van Riel, Pratt, & Berens, 2014). With this in mind, the management is required to furnish organizational stakeholders with all the available information, as a way of clarifying on critical issues and eliminating uncertainty. In this regard, continuous communication through channels, such as emails, press conferences and newsletters. In addition, an organization may make use of interactive meetings to help address questions and concerns from employees (Zupan & Kaše, 2015). Such meetings are also important, as they facilitate interactions with superiors and co-workers at an informal level.

The use of different channels, so that all digital and traditional communication practices are exercised, is encouraged during post-merger integration process. Maintaining continuous communication helps in creating a healthy exchange of organizational culture. This also helps in building trust between the two groups with the aim of enhancing cooperation. This may be attained with the help of an acculturation system. Such a system promotes regular dialogue, shared knowledge, in relation to similarities and differences in organizational norms, expectations and values (Chakravorty, 2013). Moreover, an acculturation system helps in enhancing shared goals, reaching agreements and establishing ways of dealing with unconformity and conflicts. It is also the role of HR department to establish and implement a comprehensive intercultural training program for employees and to assess and tackle any areas that may lead to intercultural differences during and after the process of merging (Bing & Wingrove, 2012). This also entails establishing mutual intercultural frameworks to guide the merger synergy, in addition to offering training in functional areas, such as sales and marketing commerce, safety and health (Giessner, Horton, & Humborstad, 2016). For example, some organizations arrange for retreats, where employees of the merged organizations can meet and exchange ideas or share knowledge and training methodologies with each session that lasts for a few days. All these can only be achieved by establishing the right method of communication and strategizing.

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Cultural Integration

In post-merger organizations, the culture of the other organization is often viewed as an external influence and is subject to resistance. It is typical for the acquiring organization to view itself as the winner and the acquired organization as the loser. In such situations, employees quickly start to keep scores with those from the acquiring company, trying to impose changes. In case the feelings of employees are not integrated properly, the post-merger/acquisition organization may find itself in an awkward situation. In essence, cultural incompatibility has been identified as one of the challenges facing post-merger organizations and has a direct effect on economic performance of the new entity (Elstak et al., 2014; Nitin & Sharmila, 2012). Combining companies should appreciate the importance of their cultures in determining their future success or failure. The two cultures are autonomous and culture incompatibility may prove to be inevitable. To address this challenge, the post-merger organization may perform a culture audit to identify and deal with culture trance. By definition, a culture trance occurs when two merging organizations view the world their biased cultural filters. Creating an environment that is based on mutual respect and understanding how other cultures view the world is a key to developing human resources in post-merger organizations (Edwards & Edwards, 2016). A culture audit is a simple, effective and quick tool that is helpful in identifying the areas of similarity and differences in two cultures. The audit provides data that can improve the ability of the post-merger organization to tap into the strengths of the two pre-merger organizations. A successful integration of the two cultures can only be attained when their differences can be retained without creating considerable conflict.

Recommendations and Conclusion

Organizations that aim to succeed set the goals that are worthy to be achieved and within a specific duration of time. The strategy requires planning in an endeavor to align the purposes of the outlet with current activities. Whereas companies’ plans are based on their functions, successful organizations are open to invention and innovation of useful ideas that lead them to achieve their goals and objectives (Gutmann, 2013). It is not uncommon for an enterprise to get into merger if such move would speed up the achievements of objectives. This calls for strong leadership and leaders who are sensitive to differences in cultures of the two organizations. Such leaders must be able to identify the strengths and weaknesses of the two organizations and be able to harness them for the betterment of the new organization (King & Schriber, 2016). It is important to note that M&A are often characterized by competition for senior management positions. To fill these positions, a transparent process should be employed to recruit the right candidates and to compensate other employees in a bid to retain talent (Bansal, 2016). Good leaders in this regard are able to align people with the long-term goals of organizations, engage in active goal-setting, lead by motivation, set the general direction of the organization and emphasize on creative process. They are also able to improve on communication in a bid to separate rumors and speculation from the truth. Employees’ perceptions, especially in relation to the fairness of the compensation structure, are an important element to consider even before the actual merger. Any feeling of unfairness or inequality will definitely lead the employees to question the validity and credibility of the merger. This will also have a negative effect on job satisfaction and motivation (Tuch, 2016). It is imperative that effective harmonization of the compensation structure should be achieved to maintain or enhance commitment to the organizational goals.

In conclusion, most organizations plan with regard to their operations, however, the best companies are always open to challenges that could increase their revenues. It is not uncommon for an enterprise to get into a merger if such a move would speed up the achievements of the set objectives. M&A are vital components in the business world. On the one hand, the changing business environment will always compel some organizations to sell businesses, as they explore other ventures. On the other hand, others are on expansion path and, hence, have the resources to buy, as others merge to gain a strategic advantage. Mergers enable weak companies to gain a footing and, hence, shield them from collapsing. However, M&A pose a huge threat to the human resources as the employees will always resist attempt by the management to introduce necessary changes. The missing link in M&A is effective education and psychological enlightenment, so that the employees are well prepared to handle the changes. Most failures in post-merger organizations occur as a result of failed communication and incompatibility of the two organizational cultures. Lack of commitment and job insecurity also contributes towards low economic performance. In addressing these issues, it is imperative for the post-merger organization to establish a strategic plan that will guide the post-merger integration process. Further, maintaining a continuous open communication helps in clarifying issues with all the stakeholders and in ensuring that the direction of the new organization is well understood. Good leadership skills are essential in achieving these milestones. In this context, good leaders try to identify the similarities and differences in the cultures of the two organizations and try to enhance them for the benefit of the new firm. Still, it is important to align the needs of the new organization to fit with the individuals’ interests of all stakeholders and promote commitment and organizational identification.