Human aspects of strategy implementation• • • • • • Behavioral issues in strategy implementation Matching culture with strategy Human side of M &A Leadership, power & politics Employee morale Personal values &business ethics Behavioral issues in strategy implementation • It is vital to bear in mind that organizational change is not an intellectual process concerned with the design of ever-morecomplex and elegant organization structures. It is to do with the human side of enterprise and is essentially about changing people’s attitudes, feelings and – above all else – their behaviour. The behavioural of the employees affect the success of the organization. Strategic implementation requires support, discipline, motivation and hard work from all manager and employees Influence Tactics: The organizational leaders have to successfully implement the strategies and achieve the objectives. Therefore the leader has to change the behaviour of superiors, peers or subordinates. For this they must develop and communicate the vision of the future and motivate organizational members to move into that direction. Power: it is the potential ability to influence the behaviour of others. Leaders often use their power to influence others and implement strategy. Formal authority that comes through leaders position in the organization (He cannot use the power to influence customers and government officials) the leaders have to exercise something more than that of the formal authority (Expertise, charisma, reward power, information power, legitimate power, coercive power) beliefs. To change the corporate culture involves persuading people to abandon many of their existing beliefs and values. self managed work groups eliminating whole levels of management in organization and aggressive use of automation are some of the ways to empower people at various places. Firms culture must be appropriate and support their firm. and the behaviours that stem from them. how it does things and what it considers important. and to adopt new ones . behaviours that help its members understand what the organization stands for. Leadership Style and Culture Change: Culture is the set of values. Empowerment as a way of Influencing Behaviour: The top executives have to empower lower level employees. Training. The culture should have some value in it . In order that the business system function successfully the organization has to avoid certain unethical practices and the organization has to bound by legal laws and government rules and regulations . Values and Culture: Value is something that has worth and importance to an individual. Ethics and Strategy: Ethics are contemporary standards and a principle or conducts that govern the action and behviour of individuals within the organization. This value keeps the every one from the top management down to factory persons on the factory floor pulling in the same direction. People should have shared values. but its strength can be minimized by careful advance Top management tends to see change in its strategic context. when and by what means? Whatmanagement style is to be used? . Rank-and-file employees are most likely to be aware of its impact on important aspects of their working lives. Managing Resistance to Change: To change is almost always unavoidable. which involves thinking about such issues as: Who will be affected by the proposed changes. both directly and indirectly? From their point of view. what aspects of their working lives will be affected? Who should communicate information about change. Some resistance planning. Managing Conflict: Conflict is a process in which an effort is purposefully made by one person or unit to block another that results in frustrating the attainment of the others goals or the furthering of his interests. The organization has to resolve the conflicts. bonuses etc. Linking Performance and Pay to Strategies: In order to implement the strategies effectively the organization has to align salary increases. more closely to support the long term objectives of the organization . merit pay. promotions.. Matching culture with strategy . Leadership: Creating a vision and direction for the organization and mobilizing people to accomplish them. Strategy: Establishing the fundamental focus for action that the organization must take in order to provide significant added value to customers. .Organizational effectiveness results from the alignment of three main components: Culture: How we do things around here in order to succeed. strategy culture leadership . s Own Sake • Efficiency • Autonomy and Individual Freedom • . Divided We Fall Harmony • People Interaction Complementary Pragmatism Control Systematize • Objectivity • Order • Stability Standardization • Utility • Realism Discipline • Cultivation Growth and Development • Commitment • Growth Commitment and Dedication • Involvement Creativity Purpose • Let Things Evolve • Subjectivity • Values are Paramount • Meaningfulness Fulfillment Competence Professionalism • Pursuit of Excellence • Continuous Improvement • Competition for It.The Four Core Cultures Collaboration Diversity • Involvement United We Stand. . If you understand what the business is about.• Culture is important because it limits or enables strategy. It determines conditions for internal effectiveness and drives effective performance. and sets internal ways of life and patterns for internal relationships.The most important thing that leaders can do is create and manage culture. . you are likely to understand the core culture. The most important culture driver is the nature of the business. It provides consistency. order and structure. higher-order purposes Superiority One of a kind • Create market niche Extremely unique • Unmatched product / service • Excellence • Constant innovation • Operational excellence Product leadership • Reinvention . value.The Four Core Strategies Synergy Certainty Close partnership • High Dependability • Efficiency customization Total solution • Interaction with Customer High personalization Codevelopment Enrichment Fuller realization of potential Growth of Customer • Raising of human spirit • Further realization of ideals. The Four Core Leadership Participative Team Builder • Coach • Close Partner With Customers • Integrator • Push for Consensus •Conflict Manager • Amiable •Pragmatist Integrator: Ensures Utilization of Diversity Epicenter: People Process Motive: Affiliation Goal attainment: Unique customer Directive Authoritative • Conservative • Driver Firm and Assertive • Definitive • Realist Structurer: Builds Systems Epicenter: System Motive: Power Goal attainment: Organizational system Charismatic Cultivator • Catalyst • People Steward Idealist • Commitment Builder Expressive • Idealist Developer: Appeals to Higherlevel Vision Epicenter: Values Motive: Self-actualization Goal attainment: Value-centered Standard Setter Conceptual Visionary • Challenger of Others • Spurs Competition • Tough Taskmaster • Stretcher of People Analyst Exceller: Drives Constant Improvement Epicenter: Concepts Motive: Achievement Goal attainment: Conceptual . Human Side of Mergers and Acquisitions . there is complete amalgamation of the assets and liabilities as well as shareholders’ interests and businesses of the merging companies.Types of Business Combination • Merger or Amalgamation – Merger or amalgamation may take two forms: • Absorption is a combination of two or more companies into an existing company. • Consolidation is a combination of two or more companies into a new company. . – In merger. A supplier and company. E. – Vertical merger it is a merger that includes two or more stages of production/distribution that are usually separate. – Conglomerate merger it is a merger in which the firms engaged of totally different unrelated activities combine together. . a leather supplier and a shoemaker.• Forms of Merger: – Horizontal merger it is a merger when two or more firms dealing in the similar lines of activity combine together.g.. Acquisition • Acquisition may be defined as an act of acquiring effective control over assets or management of a company by another company without any combination of businesses or companies. . the company with the lesser number of share is called subsidiary company. • Parties in the Acquisition a) Holding company – it is a company that holds more than half of the nominal value of the equity capital of another company. When an acquisition is a ‘forced’ or ‘unwilling’ acquisition. b) Subsidiary company. Both the companies maintain separate forms of accounts. or controls the composition of its Board of Directors. it is called a takeover. .Types of Business Combination • Takeover – The term takeover is understood to connote hostility. The lack of communication erodes trust & loyalty. product line & operational decision. resulting in increased job insecurity & workplace stress. The ILO reports states that a full two third of merger fail to achieve their objective.• Most merger activity is fairly well planned relative to financial. the human element of merger & acquisition is often ignored. largely because of the inability to merge cultural & other human factors. ILO found that neglecting human resource activities in merger & acquisition results in a much higher risk of failure. . HR’s role in merger/acquisition Pre-deal Due diligence Integration planning Developing communication strategies implementation Managing employees communications Identifying people Estimating related issues employee related costs Assessing individual’s fit with new needs Assessing ‘cultural fit’ between organization Educating top management on HR aspects of Estimating Designing talent Aligning rewards employees related retention program with saving organizational needs Assessing cultural Planning for issues as potential overcoming challenges resistance Monitoring the new culture & employees dynamics . during which time the parties meet & disclose all information relevant to the merger. • Integration planning or pre merger activity just prior to the formal launch • Fourth stage is actual implementation .• Pre-deal.selection of the target organisation • Due diligence. Role of HR in Mergers and Acquisition • 1. 4. Understand the Org. Conduct common understanding programmes with the executive level employees of the company which you are going to takeover. 5. Clear assessment of Manpower to be done 6. Employee’s dissatisfaction to be avoided 3. Negotiate and make the Union Leaders understand about the entire issue and their future positions after M&A. Structure/Salary Structure and try to reduce the parity between the two companies. Due diligence should be very clear 2. . 10. Understand all the legal cases pending with the acquiring company and take full accreditation of the cases to take next steps 8.• 7. Proper Audit with re to Fixed and Tangible asset to be done and accordingly value to be determined. 9. Information to sent to all the bodies as per statute. Proper retrenchment policy to be implemented for excess staff . the management of the human side of change is the real key to maximizing the value of a deal. More specifically. But executives who have been through the merger process now recognize that in today’s economy. and operational elements of mergers and acquisitions. people issues in just the integration phase of mergers and acquisitions include: .• The Human Side of M&A Activity Plenty of attention is paid to the legal. The management of the human side of M&A activity. People issues occur at several phases or stages of M&A activity. based upon the failure rates of M&As. appears to be a somewhat neglected focus of the top management’s attention. financial. however. (2) Communications. (3) Retention of key managers. and (4) Integration of corporate cultures. .1) Retention of key talent. and • (3) Solidification and advancement. . • (2) Combination and integration of the partners.HR issues in three Stage Models of Mergers and Acquisitions • The three stages: • (1) Pre-combination. Pre-Combination • Identifying reasons for the M & A Forming M & A team/leader Searching for potential partners Selecting a partner Planning for managing the process of the M and/or A Planning to learn from the process . Combination and Integration • Selecting the integration manager Designing/implementing teams Creating the new structure/strategies/ leadership Retaining key employees Motivating the employees Managing the change process Communicating to and involving stakeholders Deciding on the HR policies and practice . Solidification and Assessment • Solidifying leadership and staffing Assessing the new strategies and structures Assessing the new culture Assessing the new HRM policies and practices Assessing the concerns of stakeholders Learning from the process . Developing key strategies for a company’s M&A activities 2. Managing the learning processes .Role of the HR Department in M&A activity 1. Managing the soft due diligence activity 3. Providing input into managing the process of change 4. Overseeing the communications 6. Advising top management on the merged company’s new organizational structure 5. Identifying and embracing new roles for the HR leader 9.7.Re-casting the HR department itself 8. Identifying and developing new competencies . It is of utmost importance to involve HR Professionals in Mergers and Acquisitions discussions as it has an impact on key people issues. By doing so they will achieve a much better outcome and increase the chance that the overall deal is a total success. Companies involved in these transactions have the opportunity to adopt a different approach including the increased involvement of HR professionals. Creativity.Conclusion • Merger and Acquisitions success entirely depends on the people who drive the Business. As Mergers and Acquisitions activity continues to step up globally. . and Innovation. their ability to Execute. Personal values & business ethics . “when I went to Japan 15 years ago. We didn’t make any money. We did that.BUSINESS ETHICS • Head of Merck once said. I was told by Japanese business people that it was Merck that brought medicine after world war 2 to eliminate TB which was eating up their society.” . A basic problem • Ethical course of action is not always clear to a company’s manager. • Managers are answerable toward investors & shareholders. • If company spend all money on charitable projects that lost money they’ll claim that company is not justified in investing their money and hence act unethically . “ . • In short “To provide enough knowledge and understanding that can make their ethical course of action clear. and understanding of implication of these concepts in ethical problems encountered in business.Purpose of course • To provide a deeper knowledge of nature of ethical principles & concepts. serving as a guide to moral behavior” OR “The discipline that examines one’s moral standards or moral standards of society” Business Ethics can be defined as.Ethics: define as. “An application of general ethical ideas to business behavior is Business Ethics” . “A conception of right & wrong conduct. • “Honesty is good” . or good & evil • Sources include family.Morality • Standards that an individual or a group has about what is right & wrong. society etc. • Moral Norms: general rules or statements • “Always tell the truth” • Moral Values: Statements describing objects or features of objects that have worth. Role of Ethics in Business • Thompson & Strickland (1995): “A strong corporate culture founded on ethical principles and sound values is a vital driving force behind continued strategic success.” . Arguments For & Against Business Ethics . Objections to Bringing Ethics into Business • Perfectly Competitive Free Markets • Interest of firm • Ethics means obey the law . • If neither admits that the two of them robbed the store.PRISONER’S DILEMMA • ASSUMPTIONS • Police commissioner tells each prisoner separately. they will both be kept in jail for 1 year. . each will get 2 years in jail. one who keeps quiet will get 3 years in jail while the other one will go free. • If both prisoners confess to robbing the store. • If one keeps quiet while the other confesses. cooperate or do not cooperate. • If both parties cooperate both gain • If both parties do not cooperate neither will gain • Any 1 cooperate 1 who does not will gain .Prisoner’s Dilemma: Summary • A situation that gives 2 choices to both parties.e. i. Why Ethical Problems Occur in Business . Reasons • Personal Gain & Selfish interest • Competitive Pressure on Profits • Business Goals Vs Personal Values • Cross-Cultural Contradictions . 5 VIEWS OF BUSINESS ETHICS • Business is business • Act consistently with the law • Good ethics means good business • Conventional morality • Universal morality .