UK Employment Law\ Employer \ Company Mergers
Company Mergers.
A merger occurs when two company boards decide to combine to create a new larger organisation. This can be achieved for a number of reasons. Some firms will want to work with competing ones in order to strengthen their position in the marketplace. Therefore, you may expect two computer retailers to merge. It is also possible that a computer retailer may wish to merge with a company that builds hardware. This type of merger would secure the retailer’s supply and pricing.
A merger may be either friendly or hostile, depending on whether both the companies’ boards willingly partake in the process. Sometimes the negotiations take place under a heavy cloak of confidentiality, restricting the flow of information. This is more often in the case of a hostile approach, but there are also rules on what can be revealed if one, or both, is listed on the stock market.
Effect on workforce
A merger can cause great concern within the workforce of both companies because of fears over job security. Staff worry about whether their positions might be made redundant as part of the merger process. It is usual for merged companies to look at ways of saving on overheads by combining two departments into one. This could mean that, not only would just one chief executive be needed, but also that there would be cuts further down too.
Counteracting human problems.
Because of these concerns, Human Resource managers must identify ways to reduce the human affect. They should carefully look at the potential problems in the early stages, then they should devise a plan to counteract them.
HR managers should also control the workforce expectations too. Some members of staff could see such an opportunity as a chance for career progression, thereby putting them in direct conflict with fellow workers.
Public Relations
The timing of buying a company should be managed so that information about the deal is not revealed at a sensitive time. This allows the team managing the merger to plan when members of staff are told details and when the wider world is told. So, in effect, this can be seen as a communications challenge for both the control of internal and external information. The Public Relations manager should be at the heart of the planning process to make sure there are no leaks – and if there are – how to deal with them.
Resistance
The former organisations that are in the process of merging can often present a range of hindrances to effectively involving employees. HR managers should consider:
- how far employees will be involved with the culture of the organisation;
- the level of commitment from management (eg: supervisors);
- how employees are currently dealt with;
- what level of trust is there between staff and supervisors;
- whether policies for employee involvement are appropriate for the organisation;
- where the workforce is deployed.
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