Abstract
Introduction
Despite the numerous interest of mergers and acquisitions (M&As) of most public sector organizations in developing countries, a significant body of literature suggests that the performance of these merged and acquired firms consistently fails to live up to expectations Panford (2001). Numerous studies have suggested that human resources (HR) and employment relations issues are poorly handled in M&As (Buono & Bowditch, 1989; Cartwright & Cooper, 1996; Marks & Mirvis, 2001). Accordingly, Cartwright and Schoenberg (2006) suggest that inappropriate decision making, negotiation, and integration processes can lead to inferior outcomes of the M&A process and these can be traced to HR inefficiencies. Similarly, Søderberg and Vaara (2003) argue that cross-border M&As “frequently fail to deliver the synergistic or other benefits strived for, lead to human resource and cultural problems, result in power plays, and often produce problematic consequences for various internal and external stakeholders” (p. 11). Rees and Edwards (2009), however, defend HR managers by insisting that HR in one party to the merger may find itself outside the dominant coalition of course, while the function as a whole may be marginalized during the M&A process (Rees & Edwards, 2009). Hence, there is a need to compare the sort of impact the strategic intent of the deal and integration has on the roles of HR managers (Antila & Kakkonen, 2008). Consequently, the context of this study looks at the influence of indigenous HR managers in the M&A process.
From the 1990s to date, Ghana has witnessed a surge in M&As of many of her public companies. According to the Divestiture Implementation Committee of Ghana (DIC; 2004), the government of Ghana (GOG) in 1988 took a decision to diversify its interest in 350 state-owned companies. This decision was informed by institutional reforms from the Breton woods, and the need to make these state-owned companies self-reliant and viable. It is also during this period that the government transformed the country from a socialist-orientated economy to a free market economy, which has remained till date (Debrah, 2002). This privatization effort resulted in the merging and acquisition of state-owned enterprises of a total of 351 as at December 31, 2005 (DIC, 2004).
Moreover, Ghana’s Investment Code of 1985 is one of the liberalization policies that encouraged more foreign companies to invest in Ghana by lowering the required initial investment capital for foreign investors especially in the case of joint ventures from US$60,000 to US$10,000 (Boateng & Glaister, 1999). Policy change in Ghana has since shown a progressive shift in favor of foreign direct investment (FDI; Boateng, 2004). For example, from 1985 to 1994, Ghana’s investment legislation made it easier for prospective foreign investors to invest in the country by placing a lower equity capital requirement on them. To further maximize Ghana’s competitive position with regard to FDI inflow, the Ghana Investment Promotion Centre (GIPC) developed a 5-year (2003-2008) strategic plan to improve the investment climate and to achieve enhanced levels of FDI through partnerships as well as targeting overseas investment promotion initiatives (GOG, 2003). In 2003, the GOG again attempted to increase FDI inflows in the form of more M&As by formulating the Coordinated Programme for Economic and Social Development (CPESD), the Ghana Poverty Reduction Strategy (GPRS), and the National Medium Term Private Sector Development Strategy (NMTPSDS; GOG, 2003). All these courses of action were meant to enhance privatization by off-loading the public companies into private management through M&As.
However, in most cases, these M&As have either failed or not worked well as expected. According to Panford (2001), most of these M&As have impacted negatively on Ghana’s labor relations and image in the global world. For example, in 2009 alone, more than 1,500 Ghanaian workers lost their jobs as a result of the takeover of Ghana Telecom by Vodafone International in 2008 (“VODAFONE SENDS 950 HOME,” 2009). The recent Vodafone deal is one of many joint venture/merger deals that have been fraught with HR problems. This led to serious industrial unrest and litigations against the government and the acquiring company (Vodafon-U.K.; “TUC SLAMS VODAFONE LAY-OFFS,” 2009).
With these assertions in mind, this study aims to assess the extent to which current HR managers in developing economies engage management practices that are needed for effective implementation of peaceful and successful mergers and postmergers integration. Using the case of Ghana as context of a developing country, this article attempts to fill the gap and weakness of the public sector HR literature that has been dominated by Anglo-Saxon perspective in much of the research (Clark, Gospel, & Montgomery, 1999). It is believed that HR has always played multiple roles in employee advocacy and management conscience, but the last decade has witnessed the advocacy of new roles—the most popular of which promotes HR as a business partner (Ulrich, 1996). Although the business partner role is important, it carries potentially problematic implications because it focuses HR on being part of the team supporting the business strategy (Ulrich, 1996). This study seeks to find out the exact role HR in developing economies advocates during international M&As of public enterprises because many of the M&As, particularly in Ghana, have been confronted with industrial unrest (Panford, 2001). In addition, the study seeks to respond to Antila and Kakkonen’s (2008) challenge that it would be very important to study international M&A processes from beginning to end and analyze in depth how HR managers behave in these processes.
Research Objectives
This study aims to highlight the functions of Ghanaian HR managers in public enterprises when these enterprises have been acquired or divested to foreign multinational companies. It specifically aims to
find out the exact role HR in developing economies advocates during international M&As of public enterprises using Ghanaian firms as case studies.
assess the exact role of indigenous HR managers during M&As.
investigate the frustrations of HR managers during M&As of public enterprises.
identify some of the courses of industrial relations problems during M&As of public enterprises in Ghana.
Research Questions
Based on the preceding objectives, the following research questions would be answered in the study:
Significance of the Study
Arguably, this work is the first of its kind in Ghana, and to the best of our knowledge in Sub-Saharan Africa. The study thus contributes greatly to the paucity of HR literature in developing countries. The problems of M&As of public firms, particularly those in developing countries from the point of view of HR and industrial relations, would be highlighted by the various HR managers in this study hence contributing to both practice and theory. In addition, the important role of indigenous HR managers spelt out by the study would benefit strong multinational companies that acquire weak public firms in developing countries.
Literature Review
M&As
Over the past few decades, organizational M&As have been extensively studied by scholars because of their past performance of consistent failure to live up to expectations, and these failures have among other things been largely attributed to HR and human relations problems (Cartwright & Cooper, 1996; Marks & Mirvis, 2001). Evidence from research shows that numerous problems of cultural clashes, confusion, and internal disruptions occur when two organizations are merged (Epstein, 2005), leading to a decline in employee and customer satisfaction and a significant decline in profitability. Similarly, Boxall and Purcell (2003) confirm that difficulties in achieving organizational fit during M&As begin at the implementation stages of the coming together of the two firms.
Motives for M&As
There are various motives which may lead one company to acquire another or merge with another. These motives may include market access, expansion, diversification, distribution network, enhancement of existing competitive advantages or gaining new sustainable competitive advantages, acquisition of undervalued assets to increase shareholder value, response to revolutionary change in the industry, and/or acquisition of knowledge of other businesses, firms, and industries (Deiser, 1994; Krüger & Müller-Stewens, 1994; Lorange, 1994; United Nations Conference on Trade and Development [UNCTAD], 2000, 2004). In the case of Brazil, a survey showed that most acquisitions in the country were motivated by reasons such as market share, brand, and market entry (Barros, 2003)
Marks and Mirvis (2001) observe that the merger of separate entities into a new firm or the acquisition of one firm by another has become a regular component of the managerial repertoire. Many motives prompt executives to acquire or merge with another organization. Perhaps a combination can help a company pursue a strategy that would otherwise be too costly, risky, or technologically advanced to achieve independently. Other deals are opportunistic, as when a troubled competitor seeks a savior. Still other acquisitions or mergers can be defensive moves to protect market share in a declining or consolidating industry. The overarching reason for combining with another organization is that the union will provide for the attainment of strategic goals more quickly and inexpensively than if the company acted on its own.
HR Managers and the M&A Process
A research survey revealed that most HR managers felt they did not have enough knowledge of M&As processes to be able to contribute value to discussions about M&As (Antila & Kakkonen, 2008). This has created a vicious cycle in which HR managers do not take part in the due diligence processes. Barros (2003) adds that even in situations where HR is involved in the due process, it is occasional. The absence of HR in the process means they cannot effectively exercise one of the crucial roles of human resource management (HRM) area, namely, to help the transfer of strategic capabilities, organizational learning, and organizational change processes. This behavior would definitely not help in the value-creation process, that is, to the performance of the acquiring company (Tanure & Gonzalez-Duarte, 2007).
Value creation in M&As depends on the successful management of people-related issues, and this creates an avenue for HRM to effectively become a strategic partner (Haspeslagh & Jemison, 1991). However, there are two conditions that are necessary for this to happen. First, HR managers should take part in the process from its earliest phase (i.e., from the due diligence period). Second, HR Managers should play a more prominent role only if they formulate people management policies that are intrinsically consistent with the determining reason for the acquisition and integration strategy chosen (Bjo¨rkman & Søderberg, 2003). It has been argued that the challenge of M&As is the management of people and the HR function and HR managers are constantly encouraged to play a more “strategic” role in organizational change processes. (Antila, 2005; Bjo¨rkman & Søderberg, 2003).
Faulkner, Pitkethly, and Child (2002) posit that HRM policies have significant effect on acquiring a firm’s ability to get the best results in M&As. Though, the importance of HR issues in M&As is widely recognized, only few studies have actually looked at the roles played by HR in these processes. Tanure and Gonzalez-Duarte (2007) contend that during processes of radical change, such as acquisitions, top management of the acquiring company has a critical role of establishing an understanding that people constitute, in fact, a key asset of the company thereby opening avenues for HR Managers to assume a strategic role within companies. The practical implications are that even though the HR managers should seek to undertake a more active and strategic role in M&As by contributing effectively to the performance of the organization, their actions are shaped by the consistency between discourse and practice of chief executive officers regarding the importance of people within organizations (Tanure & Gonzalez-Duarte, 2007). Any disparity between this discourse and practice is likely to affect the role played by HR Managers within organizations.
Jeris, Johnson, and Anthony (2002) observe that HR is not involved in the initial decision making of M&A although postdeal HR initiatives are identified as crucial success factors. This assertion is supported by Bjo¨rkman and Søderberg’s (2003) work, which reveals typical problems in organizing and managing HR issues and illustrates how the HR function is not easily given an important role in these processes. Similarly, a study by Antila (2006) describes how the HR Manager plays a strong administrative and employee-related role within the M&A process, and if the HR manager is involved from the beginning and precombination stage of the process, he or she also plays a strategic role throughout.
In a study by Barros (2003), almost 63% of M&As were said to have failed due to problems related to the management of people. HRM is not normally included in the due diligence process because, in general, companies focus on the analysis of quantitative, hard aspects of the business (Barros, 2003). The involvement of the HR department in the due diligence process only occurred occasionally. Thus, even though one of the most important roles of HRM is to support organizational change processes, whether radical, such as M&As, or evolutionary, HR managers rarely take part in these processes. One reason that could explain the low participation of HRM in the M&As processes is the perception of this function within companies. A study by Tanure (2005) revealed that, although HR managers self-assessed themselves as a strategic partner, their fellow executives, mainly from the finance and accounting areas, do not share this view. This difference is due to the fact that some functional areas do not perceive the true contribution of HRM to the performance of the organization.
Ulrich (1997) says HR professionals play a strategic partner role when they have the ability to translate business strategy into action. This facilitating role allows the HR manager to become part of the business team. To achieve this, the HR managers must be able to ask appropriate questions and contribute to business decisions. Consequently, the HR manager must develop business acumen, a customer orientation, and an awareness of the competition to be able to link business strategy to HR policies and practices.
Research Methodology and Procedure
This study is exploratory and attempts to bring out the development of HR role in the complex issues of M&As in a developing context. To achieve this, qualitative examination and analysis of evidences gathered from HR managers in each of the study organizations was considered to be the most appropriate research approach. By this, we adopted a purposive sampling approach to enable us do a more thorough investigation by focusing on the key HR managers in the affected M&A companies (Babbie, 1995).
With the help and direction from the GIPC, we selected the key organizations that were in a better position to provide data for the study. As our study focuses on HR role, we contacted only the HR managers of the sample organizations. Even though this approach may be opened to biases, for this particular study we felt that only the HR managers could offer us the necessary information as the focus of the study is on them. We used semistructured interview questions following a review of the literature. The semistructured interview approach was selected because it works well in research projects dealing with managers, bureaucrats, and elite members of a community who have little time to spare (Bernard, 2000). All our interviews were conducted in a face-to-face manner with each of the managers at different times. The face-to-face interview enabled the interviewers the flexibility and opportunity to probe or ask questions of clarification and follow new leads (Burns, 2000). In all, 10 HR managers from 10 different companies that had undergone M&A processes were interviewed. Each interview lasted approximately 35 to 51 min, which was handwritten. (In fact, the initial plan was to use a recording machine, but almost all the managers refused their voices to be tape-recorded, and we had no option but to agree to their terms.) Therefore, both researchers wrote the narratives of each HR manager and retranscribed later by comparing notes in our free time. All interviews took place in the respective offices of the HR managers, based on appointment.
Interviewees’ views and experiences on the subject matter were used to determine the nature and composition of relevant categories (Locke, 2001). The data were systematically and intensively analyzed by constantly comparing the notes, and then sorting them according to themes (Gillham, 2000). In line with social science research, we have assigned numbers from 1 to 10 to the sampled companies and alphabets from A to J to each respondent or interviewee. This is to provide anonymity to both companies and people interviewed. See Tables 1 and 2 for detailed description of the study sample.
Characteristics of Sampled Respondents.
Characteristics of Sampled Firms.
Privacy, Confidentiality, and Anonymity
From the beginning of the survey, all HR managers of the participating organizations were made aware of the research as we contacted them for permission to engage them in the research project. We had to agree with their terms based on what is supposed to be done and what will not be done with regard to their information. We also agreed on identifying only their roles/titles and the organizations but not their names. This is in line with social science research ethics.
Data Coding
Data were coded based on typical content analysis procedure (Bryman & Bell, 2007), and this involved identifying and recording some passages of the interviewees’ texts, which generated similar meanings. Thus, we noted for patterns and themes based on the categories extrapolated from the interviews. We made sure that these patterns or themes that we grouped together were reasonably aligned to our categories by using single or multiple dimensions (Miles & Huberman, 1994) of the themes from each interviewer.
To establish that our data was reliable and valid for this work, we used the “confirmability” approach (Miles & Huberman, 1994) by cross-verifying from each the notes we made. We also compared the data to check for consistency and accuracy in the application of the data coding procedure by highlighting on the differences and variations across individual cases, and key factors that might affect the phenomena coded (Gibbs, 2007). Therefore, our data transcriptions were checked and rechecked many times to eliminate obvious mistakes in the coding process. Thus, reliability and validity of the data for this study were given maximum consideration.
Data Analysis
In Qualitative data analysis, the researchers are required to look for general statements of participants on the relationships among categories of data (Marshall & Rossman, 1999). Consequently, we analyzed the detailed account of the interviewees on the role of HR managers during M&A in Ghana. Thus, significant expressions from each interview were extracted manually and organized into meaningful clusters of themes (see Table 3.) Similarities and differences between respondents’ expressions were noted. Findings from the data analysis of the interviewees were combined into a thorough description of the objectives of the study from the point of views of the interviewees that guaranteed a credible interpretation of their interactions.
Themes Emanating From the Study.
Results of Findings
Analysis of the data began with carefully reading through the transcripts. The responses yielded seven interrelated categories and were organized based on the literature review. These are presented in Table 2.
Tenure of Service
The respondents were the respective HR managers of the companies before and after the M&A process. Their working experiences varied from 5 to 16 years with their relevant companies. All HR managers were native Ghanaians, and were still acting as HR managers even after the M&A processes.
HR Manager’s Involvement in the M&A
Respondents were asked on the extent to which they were involved in the M&A processes and to describe the specific roles they played during the entire process of the M&A. From the responses, there were mixed feelings about the lack of involvement of the HR manager in the process. The views of the managers expressed depended on whether the M&A was International or local. The interviewees believed that when the M&A was in greater proportion acquired by a large international company, the local HR manager had little role to perform in the process. They asserted that there were few opportunities for some HR managers to play a role in the process; although most of them had been informed about the planned M&A, they were not invited to play a major role. Concerning this, Respondent B remarked that The bigger company acquiring the smaller company does all the due diligence using its own consultants or transaction advisors. The local HR manager has little to say. When they need the local HR to give advice on staff, you are then called, but this is after the deal.
Respondent J observed that In fact, this deal was done by the government of Ghana through its own consultants and the acquiring firms. HR’s role was in the implementation and getting employees psyched up to accept the deal. The only individuals from the acquired company involved in the merger negotiations were the Board members and the Chief Executive Officer.
Respondent A noted that In all times during this process, you come to think at one point in time that you are more or less a stooge than a senior manager who is part of the management team. This is because you have not contributed your own decision into the process apart from implementing others’ decisions. And these people, I don’t think are more knowledgeable than I am, but the fact is that as a poor man you either take it or leave it.
Communication
On the role of communication, the HR managers had a lot to do in the process of the M&A. Although the responses were varied based on the efficiency of the communication role, they all seem to have been involved in communicating the M&A process to employees. In sum, all HR managers played an effective role as communicators. The respondents affirmed that they did a lot of communication before and after the M&A process. All their responses ranged from “sensitizing workers about the coming change,” “letting employees know how the benefits of the merger outweighs its disadvantages and defusing any form of fear among employees,” and letting employees know that the end result is to improve productivity, efficiency, and a better service to the customer. Respondent E testified that I held branch meetings with our staff to let them know the implications of this M&A, the opportunities and threats it posed and how they could maximize this opportunity. I visited each branch twice prior to the exercise.
Respondent H said, HR was tasked to communicate the M&A process especially what was to be done to affected staff as well as the need for the merger. Communication was initially through e-mails, then staff durbars and then the use of the company bulletin. The durbars were held every two weeks and after two months, affected staff were written to as part of the communication process.
Respondent B explained that Sufficient information is passed to the trade union on the modalities of M&A process since employees rather believe what the union heads say. Then durbars are held to dispel any negative rumor.
With regard to the frequency of information given to employees, Respondent G stated that One needs to be tactful in passing information about the process to the employees, because the information already is considered a bad news. Therefore frequency of it can create despair in the workers, and this will affect productivity. Some may be looking for the next job, others may even begin to steal company property. So the HR manager has to be up to the task.
Challenges of Integration
All the interviewees responded in the affirmative that they did encounter challenges in their efforts to integrate the two companies. The challenges identified included culture incompatibility, performance management systems, adopting an entirely new work process, the problem of power play with the dominant company strategically putting its personnel in key positions of influence in the new company.
As Respondent I succinctly puts it, Yes, there are obvious challenges—staff fears, concerns and resistance. However, through systematic and periodic education we are addressing these fears and concerns. It is very difficult as you can see from the faces and attitudes of the both affected and unaffected workers. At times you sympathize yourself because most of the affected staff believe that you the HR manager cause their removal.
A manufacturing company’s experience was expressed in the words of Respondent H as follows: Yes, challenges such as retaining and motivating remaining staff; problems in the integration of culture, designing an acceptable Compensation/severance package for those who were leaving which we dealt with through reorientation, active participation in rebranding exercise and training.
The issue of cultural differences apparently becomes the overriding challenge faced by most of the HR managers following the merger or acquisition of their companies. The HR manager of a Bank who is still working hard to deal with the problem of organizational culture puts it this way: Yes, there is the problem of different organizational cultures that must be merged. This is not achieved easily. It is really difficult, in fact, currently we are still working hard in training our staff to work with the new culture we have to adopt. I guess this may take a while to achieve.
A second problem of integration is the difference in organizational structure. Discussion from the interviewees showed that it is HR’s role now as the merger inevitably demands a restructuring to suite the acquiring company’s strategies. They all emphasized that series of training programs were organized to educate employees on the acquiring company’s ways of doing things, their values, and dealing with the problems posed by the need to reconfigure the structure on the new company. Respondent F stressed that HR has to reassign people into new jobs, from one department to another, they have to be retrained in the new skills required to do the job. The acquiring firm wants its staff mostly expatriates to take key positions and to protect their investment, but the local staff feel differently, and in some cases antagonistic. HR at this point is helpless. What do we do? The only thing to do is to ensure people are treated fairly.
A follow-up question was “How were the challenges dealt with?” The views of the managers demonstrated that training was the sure way of dealing with the challenges of integration. They also mentioned communication strategies to explain to employees and other stakeholders why there was the need for the merger. Respondent A said, We organized orientation and reorientation for both local and expatriate staff to appreciate the need for a shift in culture and also realign behaviors and attitudes to meet the new corporate strategy. As regards the acquiring company getting its people into key positions, it was management decision for which HR has nothing much to do.
Changes Brought on by the M&A
This theme sought to find out some of the key changes the M&A brought on board. The specific objective is to glean the specific changes introduced and subsequently what the HR managers did to ensure that people were prepared to work for the new company formed as a result of the M&A. The data indicate the following types of change were obvious: technological change, structural and cultural changes, a change in strategy as well as people focused-changes that seek to change attitudes, behaviors, and the approach to work. Some of the managers explained that these changes were necessary to accommodate the new organizational strategic direction and that some of the changes were very drastic along all facets of the organization. Respondent C said, There was an introduction of new technology, new policies and systems, work procedures, the structure of the organization also changed, hence certain positions and layers were eliminated. In fact, there was change in technology, structure and culture. So you as the HR must ensure that both old and new staff adjusts to these changes.
In terms of change, it seems all the 10 companies have gone through or experienced the same type or similar forms of change.
Dealing With Terminated and Surviving Staff
Under this theme, the interview questions sought to know from the HR Managers whether they faced any resistance in their company’s attempt to embark on the M&A, the roles they played in dealing with terminated and surviving workers. Interestingly, most of the HR managers across the companies here in Ghana did not experience any major resistance; those who experienced resistances say they dealt with it earlier enough to prevent it showing up for public discussion. For example, Respondent J had this to say: I anticipated the resistance and used massive education, communication and information to address it; we provided education on how affected staff could upgrade themselves in order to secure employments elsewhere or to set up small businesses.
Respondent E also remarked that We faced a lot of resistance but we managed it through dialogue and education and eventually scaled up our compensation package for those made redundant. They were all given different skills training and advice on how to invest their redundancy package.
Whereas some of the managers believed that their M&A process avoided resistance from employees due to long-time negotiations with both national and local unions leaders, some said the peaceful process was a result of some staff just wanting to take their monies and leave for new ventures because we were already facing financial challenges.
Compensation
The various HR Managers interviewed were virtually on common grounds with regard to the factors they considered in designing a severance package for terminated workers. They all reported that their inputs were sought in designing the severance packages for employees who were to leave. The HR Managers said it was not a difficult task as things were spelt out in the collective agreement. Some of these packages were predetermined, factors such as length of service, the affected worker’s current pay, the company’s financial strength, the number of people leaving, and so forth, were taken into consideration. However, most of the managers said the difficulty regarding compensation was in respect of designing a common compensation scheme for the new company especially when it involves bringing people who were paid on different compensation schemes. The difficulty was in the companies with a number of expatriates staff—“The challenge of synchronizing pay tunes of expatriate workers and local employees” retorted one of the HR managers of a multinational firm.
Similarly, Respondent F explained that A new compensation scheme was designed altogether that places each worker on a specific salary range. For instance, a worker cannot be made worse off. If a new job evaluation rates a worker to be worth GH¢ 3,000 instead of GH¢ 5,000 he or she earns previously, the GH¢ 5000 would be made personal to him but new people coming on board will receive the GH¢ 3,000. For expatriates, they are paid back home while here in Ghana, we pay them living allowances and take care of their accommodation and transportation including all other expenses endorsed by the company.
Discussion of Findings
Findings from this work show that HR Managers in Ghana are partly involved in the planning and the preparation of the M&A of their individual companies. However, their role at this stage is mostly limited to the provision of HR audits of their respective companies when demanded which makes them more or less caretaker managers than certified HR managers of an organization. The HR managers also provide limited counsel on the need for their companies to put in place mechanisms to deal with redundancies and anticipated resistance or difficulties even before they occur. This is because of the custodian nature of their role as HR managers of the respective firms. This finding is very contrary to Bjo¨rkman and Søderberg’s (2003) assertion that first, HR managers should take part in the process from its earliest phase (i.e., from the due diligence period). Second, HR Managers will play a more prominent role only if they formulate people management policies that are intrinsically consistent with the determining reason for the acquisition and integration strategy chosen. What our findings suggest rather is an HR manager who seems more of a figure head and employees’ consult, and not one that has the clout in the formulation of employee decision at the strategic level. What is more disturbing is that the acquiring firms that are mostly strong multinational companies from the West see these indigenous HR managers as stewards instead of partners in decision making. Thus, the HR managers basically take instructions and are not allowed to finalize any policy formulation that may be valuable to employee relations. This is consistent with Jeris et al.’s (2002) observation that HR is not involved in initial decision making of the M&A process. The implication of this finding supports the numerous HR problems leading to industrial unrest in developing countries during and particularly after M&A. As local HR managers who apparently know the terrain of employees’ needs are not involved and also because employees’ welfare and demands are not adequately catered for, employees resort to agitations during the M&A process.
Also, findings from the study show that HR managers in Ghana during M&A are engaged in the following activities: communication, compensation, dealing with integration, and taking care of terminated and extant group of staff tasks. Data from the interviews illustrate that HR managers play a preponderant role in the above functions. This means that top executives and partners of the M&A process acknowledge the important role of HR to ordinary employees. Thus, the HR manager during and after these processes is an interface between the company executives and employees, coordinating and implementing all the employee activities but not as an originator of these policies that he or she implements. The HR managers believe that because, in most cases, the acquiring companies come from the West, they (Western companies) have always predesigned what they want to do and do not now want to learn what they can do. After all, they (acquiring companies) are investing with their money and the HR manager either takes instructions or may decide to leave along with the terminated employees. This affirmation is contrary to Ulrich’s (1996) claim that HR managers as professionals and strategic partners must be able to ask appropriate questions and contribute to business decisions of the company. This paints a gloomy picture for the HR in developing countries during M&As. If HR is only considered as liaison between workers and company executives, and has no power to formulate tough decisions on people management, then at best he or she can be described as a custodian of personnel data in the company. In such cases, HR is neither an employee champion nor an administrative expert, but a figure head who serves as a liaison between employees and management.
The narratives of the HR managers also show the critical place communication plays in the M&A process. All HR managers interviewed clearly recounted how communication became a key route to the success of the M&A process they went through. Their narratives demonstrate how they used effective communication to assuage the bad side of the M&A process especially on redundancy of employees, compensation, and treating the differences in cultures of the organization and people. Hence, the place of effective communication in an organizational setting is indispensable (Abugre, 2012), and HR managers need to equip themselves with the ability to effectively interact with employees during the M&A process.
An important aspect of the findings of this study is the challenges of integration and cultural incompatibility of the initial encounter of employees in the new company. The HR managers all see culture incompatibility as the most critical challenge they have to deal with. Other challenges faced include performance management systems, adopting an entirely new work process, the problem of power play with the dominant company strategically putting its personnel in key positions of influence, and practices, managerial styles, and structures to a large extent being determined by the new organizational culture. Each organization has a different set of beliefs and value systems, which may clash owing to the M&A activity. The exposure to a new culture during the M&A process is definitely a major setback to the employees. The employees not only need to abandon their previous culture, values, and beliefs but also have to accept an entirely different culture. This exposure challenges the old organizational value system and practices and can lead to stress among the employees. Thus, this research advocates the empowerment of HR managers in developing context to be partners in the initial commencement of M&As in order that issues affecting marginalized groups can be addressed properly.
Conclusion
Our aim in this study was to find out the precise role HR managers play during the merging and acquiring of public companies in Ghana. The results indicated that Ghanaian HR managers engage in various roles in making sure that the M&A is successful. The varying tasks of these HR managers in the course of the M&A are based on getting employees stable before and after the process. However, our study shows that almost all the HR managers have a very limited role in the planning of the M&A. The results indicate that the HR managers are rather very effective during the implementation stage, as they have to make sure all employees are satisfied with the deal. Thus, we believe that HR acts more as an implementer than a planner or a strategic partner whose input should be central to the M&A process (Ulrich, 1997). Two major reasons for this is that almost all the acquiring companies are foreign, and mainly from the west. The companies come in with a predesigned arrangements where the local HR inputs are not deemed required. Second, some of the M&A deals are effected and planned at the governmental level where the GOG has its own transaction partners who deal directly with the acquiring partners, and sometimes with the participation of only the board members. This undeniably disregards the importance of the HR manager relegating him or her to only an effective implementer. Notwithstanding the HR’s restricted role, HR managers in Ghana are very effective in functioning as communicators, helping to successfully integrate personnel, dealing with compensation and severance packages, helping terminated or affected employees to readjust, and dealing with cultural incompatibilities.
The findings above have both theoretical and practical significance to public administration and organizational studies. Theoretically, the study underscores some significant findings with regard to the role of HR managers in developing countries, and particularly during M&As in Africa. Governments in developing countries must take a critical look at the capabilities of their HR to solve the constant problems and failures of M&As resulting from ill-planning. The article also contributes significantly to the overall M&A literature and HR issues of Africa.
Limitations and Future Research of the Study
This work certainly has a limitation. Even though the main aim of the study is to find out the role of the HR managers in M&As, a mixture of data collected from the affected staffs who are not HR managers of the various companies could throw more light on the work of HR managers. Nevertheless, as an exploratory work, we believe the study has contributed greatly to theory. Particularly, the use of a qualitative approach provided rich and detailed information about the role of HR managers in M&As in developing countries. Future research could triangulate data from both employees and HR managers.