In an era where the economy is fast shrinking due to globalization of industries--and at the same time corporation entities have been feeling the crunch of intense competition and a need to survive—corporate mergers have become a rule to sustain growth and at the same time to keep companies neck on the surface in the sea of fierce competition. From America to Asia big companies are joining forces by merging and ascertaining their position in the global economy.
And once a corporate is actualized, what is put in jeopardy is the human resource. Employees feel much of the burden over the security of their tenure. They become fidgety. They fear the spreading rumors about what will happen to them and their benefits once the merger is push through. Merger comes about human drama of trauma and uncertainty: the effects of mergers start from the morale of employees, their productivity and certainly to their relationship to the companies they work in.
Human resource is a basic foundation of a corporation. Corporate entities cannot basically function without the existence of employees with which to support what it caters to the market whether services or goods. Human capital is something companies and corporations cannot do without, because without them companies and corporations alike cannot function. Human capital remains to be the primary asset of companies- an obvious manifestation of this is the extent to which these companies invest on human capital development.
Employees are the ones that receive the strongest blows in a merger. They are the ones that get distracted and vulnerable the most during this event. This becomes more difficult for them if that merger is a hostile one. The merger puts them in uncertainties about whether or not they fit into the new company. They are uncertain as to how the changes will benefit them or bring doom to their tenure of office. If these sentiments are not given attention, the productivity and performance of the merging companies will definitely be compromised.
Moreover, just a rumor of a merger can send employees shaking and queasy over their tenure and security in the company they work in. Employees from the smallest to the biggest corporations are preys for this strategic maneuver. Nobody is safe anymore. In addition, employees fear a merger because it is almost synonymous with downsizing. With two companies merging, there will be a redundant of employee’s function and therefore once the ink is dry on the contract for a merger, employees are now queasy over who among their ranks will be forced to go.
Acquisitions often fail because the business focuses on the financial aspects of the organisation rather than the people. Schuler and Jackson, (2001) support this argument by stating that acquisitions often fail because companies have difficulty integrating the cultures. It is stated that the focus is normally on financial and legal issues and seldom focused on human resource concerns. (Cartwright and Cooper, 1992).
Issues concerning tenure of office, productivity and morale, also come into question since most mergers are followed by downsizing. Employees end up having low morale, find themselves twiddling their thumb dealing with their own needs, and worrying more on possible job cuts rather than giving their full attention to their work. In other words, their existence in the new merged company titters in limbo because employees worry too much about their interest.
In case of a hostile takeover, the human issues of the merger must be addressed. Employees who will be laid off and retained in the new company must be identified as soon as possible. Questions on wages and benefits of all employees as well as the new roles of those who will be working in the newly formed company must be given attention. Not doing so may result to pervasive lost of productivity of those who will be retained.
Management consultancy experts agree that if job cuts are inevitable during mergers, the least that managers of the acquiring firm can do is to address the insecurities felt by the employees. In doing so, according, to Olson (2000), acquiring managers will be able to start their tenure in the newly formed company with the trust and respect of the remaining staff. This will lessen the devastating impact of mergers to outgoing employees.
Although mergers have enormous potential effects for the company and can be debated as a corporate move to stay competitive and beneficial to the general health of the company, the human resource aspect of the company is usually left behind. In these times of mergers, the interests of the employees must be protected, as well as their assets in the company they put their loyalty to for such a long time.
With this comes the significant role of labor unions in protecting workers. In order to win real economic justice, greater power for working people must be built first, because without power there is no justice, and to win that power, workers must be organized. The amount of justice workers receive is directly related to the amount of power they have.
Every time a corporation lays off workers the value of its stock rises and its executive officers reap rich rewards. Meanwhile laid-off workers and their communities pay the price. On average, workers lose over $100,000 of their lifetime earnings when they are laid off (Labor Party, 2004). Moreover, numerous studies show that unemployed workers and their families experience increased rates of disease and social problems like suicide and domestic violence.
Communities also suffer from the declining incomes and increasing social problems caused by layoffs. This burden on the communities averages about $25,000 per laid-off worker. Unions must act to prevent this grim scenario from happening to laid-off employees. Nothing will change until Corporate America is forced to pay for some of the damage caused by mergers.
In handling layoffs due to mergers, labor unions and the companies should come up with a package that empowers and provide security to employees. One example is a package that permits employees threatened with layoff to bump into temporary jobs while maintaining their status in the bargaining unit. This arrangement allows employees to maintain a holding pattern while awaiting job openings for which they wish to apply.
The most critical challenge facing the labor movement today is how to most effectively organize millions of unorganized workers into a family of unions. The gains they make at the bargaining table, the impact they have in the electoral and legislative processes, and therefore, the measure of social and economic justice they achieve, is inextricably linked to their ability to mobilize millions of organized members in the struggle for economic justice.
Fighting the evil caused by mergers means organizing campaigns, committing collective energies, resources and personal determination, and building union density and power. Organizing is the hardest job in a union, but it is also the most basic to the core values of unionists.
References
Cartwright, S. And Cooper, C. L. (1992). Mergers and acquisitions: The human factor. Oxford, UK: Butterworth-Heinemann
Labor Party (2004). A call for economic justice: The Labor Party’s program. Accessed 7 May, 2004 from.
Schuler, R. S. and Jackson, S. E. (2001). HR issues and activities in mergers and acquisitions. European Management Journal. Accessed 7 May, 2004 from .
And once a corporate is actualized, what is put in jeopardy is the human resource. Employees feel much of the burden over the security of their tenure. They become fidgety. They fear the spreading rumors about what will happen to them and their benefits once the merger is push through. Merger comes about human drama of trauma and uncertainty: the effects of mergers start from the morale of employees, their productivity and certainly to their relationship to the companies they work in.
Human resource is a basic foundation of a corporation. Corporate entities cannot basically function without the existence of employees with which to support what it caters to the market whether services or goods. Human capital is something companies and corporations cannot do without, because without them companies and corporations alike cannot function. Human capital remains to be the primary asset of companies- an obvious manifestation of this is the extent to which these companies invest on human capital development.
Employees are the ones that receive the strongest blows in a merger. They are the ones that get distracted and vulnerable the most during this event. This becomes more difficult for them if that merger is a hostile one. The merger puts them in uncertainties about whether or not they fit into the new company. They are uncertain as to how the changes will benefit them or bring doom to their tenure of office. If these sentiments are not given attention, the productivity and performance of the merging companies will definitely be compromised.
Moreover, just a rumor of a merger can send employees shaking and queasy over their tenure and security in the company they work in. Employees from the smallest to the biggest corporations are preys for this strategic maneuver. Nobody is safe anymore. In addition, employees fear a merger because it is almost synonymous with downsizing. With two companies merging, there will be a redundant of employee’s function and therefore once the ink is dry on the contract for a merger, employees are now queasy over who among their ranks will be forced to go.
Acquisitions often fail because the business focuses on the financial aspects of the organisation rather than the people. Schuler and Jackson, (2001) support this argument by stating that acquisitions often fail because companies have difficulty integrating the cultures. It is stated that the focus is normally on financial and legal issues and seldom focused on human resource concerns. (Cartwright and Cooper, 1992).
Issues concerning tenure of office, productivity and morale, also come into question since most mergers are followed by downsizing. Employees end up having low morale, find themselves twiddling their thumb dealing with their own needs, and worrying more on possible job cuts rather than giving their full attention to their work. In other words, their existence in the new merged company titters in limbo because employees worry too much about their interest.
In case of a hostile takeover, the human issues of the merger must be addressed. Employees who will be laid off and retained in the new company must be identified as soon as possible. Questions on wages and benefits of all employees as well as the new roles of those who will be working in the newly formed company must be given attention. Not doing so may result to pervasive lost of productivity of those who will be retained.
Management consultancy experts agree that if job cuts are inevitable during mergers, the least that managers of the acquiring firm can do is to address the insecurities felt by the employees. In doing so, according, to Olson (2000), acquiring managers will be able to start their tenure in the newly formed company with the trust and respect of the remaining staff. This will lessen the devastating impact of mergers to outgoing employees.
Although mergers have enormous potential effects for the company and can be debated as a corporate move to stay competitive and beneficial to the general health of the company, the human resource aspect of the company is usually left behind. In these times of mergers, the interests of the employees must be protected, as well as their assets in the company they put their loyalty to for such a long time.
With this comes the significant role of labor unions in protecting workers. In order to win real economic justice, greater power for working people must be built first, because without power there is no justice, and to win that power, workers must be organized. The amount of justice workers receive is directly related to the amount of power they have.
Every time a corporation lays off workers the value of its stock rises and its executive officers reap rich rewards. Meanwhile laid-off workers and their communities pay the price. On average, workers lose over $100,000 of their lifetime earnings when they are laid off (Labor Party, 2004). Moreover, numerous studies show that unemployed workers and their families experience increased rates of disease and social problems like suicide and domestic violence.
Communities also suffer from the declining incomes and increasing social problems caused by layoffs. This burden on the communities averages about $25,000 per laid-off worker. Unions must act to prevent this grim scenario from happening to laid-off employees. Nothing will change until Corporate America is forced to pay for some of the damage caused by mergers.
In handling layoffs due to mergers, labor unions and the companies should come up with a package that empowers and provide security to employees. One example is a package that permits employees threatened with layoff to bump into temporary jobs while maintaining their status in the bargaining unit. This arrangement allows employees to maintain a holding pattern while awaiting job openings for which they wish to apply.
The most critical challenge facing the labor movement today is how to most effectively organize millions of unorganized workers into a family of unions. The gains they make at the bargaining table, the impact they have in the electoral and legislative processes, and therefore, the measure of social and economic justice they achieve, is inextricably linked to their ability to mobilize millions of organized members in the struggle for economic justice.
Fighting the evil caused by mergers means organizing campaigns, committing collective energies, resources and personal determination, and building union density and power. Organizing is the hardest job in a union, but it is also the most basic to the core values of unionists.
References
Cartwright, S. And Cooper, C. L. (1992). Mergers and acquisitions: The human factor. Oxford, UK: Butterworth-Heinemann
Labor Party (2004). A call for economic justice: The Labor Party’s program. Accessed 7 May, 2004 from
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