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Issue Date: November 2007

People, not numbers, determine the success of mergers and acquisitions

15 November 2007

People play a crucial role in determining the success or failure of mergers and acquisitions in the world of commerce. So claims Vicki Shaw, CEO at the Centre for Conscious Leadership (CCL), who suggests that the human resource factor must be taken more seriously by decision makers.
CCL is a South African networked consulting organisation specialising in leadership learning and transformation. Consultants provide comprehensive leadership development services based on the combination of business acumen and strategic expertise with the science of organisational psychology.
Shaw argues that in the case of a merger or acquisition the focus is usually placed on legal or financial issues, and the human resource element is simply not considered a priority.
“This level of commercial interaction is heavily dependent on a strategic match with another entity and is usually motivated by the opportunity to increase profit share. Failure to ensure outright success, despite adherence to sound principles, is because decision makers overlook the significance of people in the equation,” adds Shaw.
A decline in the level of success in mergers and acquisitions has forced companies to consider the possibility that a strategic match is not the main element in determining the suitability of potential partners.
“A positive, successful match is reliant upon the exploitation of core areas of expertise that are common to both organisations and reside in the intellectual and system capabilities of the business,” Shaw continues. “In essence it is not the organisations that come together in a merge, it is people. If the majority of employees do not embrace the vision behind the development, then it is unlikely to work out.”
Consultants at CCL agree that the inability to manage the process of integrating two previously separate and often different work forces and organisational cultures presents a major leadership challenge. This can result in anything from poor morale, employee stress and increased absence from work to high staff turnover and low productivity levels.
Shaw points out that the impact of an unmanaged scenario can lead to the emergence of a counter culture within an organisation.
“This can undermine the best management intentions,” she says. “It is important to remember that a gap between what leaders say in the name of corporate culture and what people actually experience on the job. There is a practical importance attached to maintaining employees’ trust and contract fulfillment.”
According to Shaw the management of HR has long-term implications for both employee and employer because it is integral to the core performance of business.
“Each employee represents actual or potential return on investment, which strengthens the company and thus should be viewed as the basis for competitive advantage.  It is the capability and commitment of its employees that will distinguish an organisation for the rest and therefore the management of the employee relationship is crucial,” she says.

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