Page 233 - DMGT548_GLOBAL_HRM

Global HRM

Notes 12.5.1 HRM Issues in Cross-border M&A

Following are the cross-border HRM issues which may arise in M&A:
1. Employee recruitment is a major issue in the cross-border deal. It include issues like rapid
wage increase, staff turnover rate is high, poaching of the staff due to shortage I labour
markets for the skilled workers and talented staff.
2. Reward system as there may be wage disparity between skilled and unskilled labour.
Complex reward packages because if the social benefits, difficulty in introducing the pay
differentials for the workers of similar status.

3. Difficulty in employee retention because of the shortage of the well-trained local staff
which is now overcome by the control on the compensation and motivational techniques.
4. Management employee relations as the right to join trade unions, trade unions not
adversarial and help to facilitate the operations by arranging courses and cultural activities.
5. Most important is the cross-cultural training and development programmes designing
for the managers and the skilled staff to get the insight for the working of the objectives.

M&A’s are the intensive activities that require the involvement of HR since the beginning. The
key areas for the HR involvement are effective communication, cultural alignment, and change
management plan, developing the staff model and developing the reward strategy for the new
organisation. If not handled well, M&A can lead to the failures and wastage of the valuable
resources. Issues which need to be addressed pertaining to the inadequate human capital
assessment, identifying the key members of the management and bestowing the special attention
to them. It is important to clearly communicate with all the employees about the merger and its
implications on them due to the change in the management.

Issues like defining the specifications for the key roles and responsibilities, designing the adequate
compensation and benefit strategies and managing the conflicts among managers also needs to
be addressed. Managing the people in the international context is one of the biggest challenges
which the companies and HR has to bear during the cross-border deals. Retention of the leadership
and key talent, organisational restructuring, alignment of the compensation and benefit plans
to ensure a cultural fit needs to be addressed in the first go without bearing a second thought in
the mind by HR and corporates.

So, HR can add value to the M&A cycle in following ways:

12.5.2 Role Prior to Deal-(Pre-deal)

HR can support in following ways:
1. Help to identify issues/planning due diligence.

2. Plan due diligence for people/organisation cultural fit.
3. Help to educate the “deal” team.
4. Help to develop acquisition guidelines.
5. Due diligence.
6. Estimate people-related transaction costs.

7. Estimate people-related ongoing costs.
8. Identify/assess cultural differences.

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