The Role Of The Human Resource Management In The Takeover Of A Company

Many concerns trouble the workforce of a company during takeovers. They begin to wonder the effect it may have on them. Will there be layoffs? In case of layoffs, what will be the compensation package? Is our current status going to be retained or made better or even worse? Which positions are going to be taken over by our new employers? They keep asking themselves these unending and unanswered questions.

“It's a shotgun wedding. In this case, however, it's the bride who's unwilling. You wonder whether the groom is interested in a long-term relationship for mutual benefit or just wants to get his hands on her assets and then dump her” says Peggy Stuart.

The effect of a takeover on morale is substantial and can be negative. People become preoccupied with lots of “unnecessary” activities,they spend so much time talking on-the-job, lots of resume copies are made to be distributed to other organizations, and others vacate their post to start searching for new jobs. Both the quality and quantity of their work begin to drop.

What does it mean to Takeover a company?
In takeovers, a company completely purchases a targetcompany including its assets and liabilities, however absorbs the existing employees of the organization being acquired. It takes different forms,takeovers can be friendly, hostile or reverse. Most often, the takeovers we experience seem to be friendly but in reality they are not.

Acquisition, is however not different from takeover.It is the purchase of an asset or the entire assets of an entire company as when Oracle acquired Peoplesoft in 2005. Friendly takeovers are supposed to be situations where the management of the target company formally and willing endorses the offer of the acquiring company with the welfare of their workforce secured. Poignantly, the protection and security of the workforce is not always assured.

When does the Human Resources (HR) Management get involved?

During a takeover, however, human resources can mean the difference between organizational success and disaster. HR also is the function most in touch with the morale or the temperament of management and the work force, and is, therefore, capable of assessing support, so that when management speaks, it's able to be representative of the company as a whole," Simshauserexplains. This without doubt is a security issue.

A study of British acquisitions found that companies that gave their post-acquisition structures and systems a clear "people shape" had better results than companies that didn't. Marks and Mirvis write, "It makes sense, therefore, to involve human resources executives from both sides in early dealings and to gather their counsel not only on HR matters, but also more broadly, on the human side of the combination. Public relations and employee communications often are relegated to human resources, as well. One of the most significant things that come out of a pre-takeover process is the information stream, and much attention need to be paid to it.The absence of an effective,transparent and proper information stream can lead to real disaster in the company during post- takeover.

Human Resources normallygetinvolved at the audit or due-diligence stage of takeovers. If the acquirer's HR department has the maturity and experience, it can have a greater positive impact on the integration phase than if HR is brought in only after the acquisition has taken place. If HR is valued by the acquiring company's management, it should be fairly obvious to them that people are going to be the greatest asset, challenge, and liability. Often, people are also the greatest cost or if not the greatest, always the second-greatest.

However,an employer involved in a takeover has certain information he must provide about the workforce to its new employers.By this,the employee's rights are protected and their future employer cannot “pick and choose” which employee they take on .In other cases the new employer cannot create “baiting traps” for employees in order to have a cause for unjustifiable dismissal. It is mandatory for the new employer to have in its possession information about the transferring employees, including:

 age
 identity
 details contained in their “statement of employment particulars”

 any collective agreements which apply to them
 disciplinary actions taken towards the employees within the last two years under the statutory dispute resolutions procedures.

 grievances raised by the employees within the last two years under the statutory dispute resolutions procedures

 grievances raised by the employees under the Labour Law

 any legal actions by the transferring employees against the transferring employer within the last two years

 any potential legal actions that the transferring employer reasonably believes the transferring employer might raise.

The provision of this information will assist the new employer to understand the rights of its new employee and their duties and obligations as new employers.Very often, on a takeover bid, control of the company passed to a new shareholder butits legal status remains the same and the employee's contractual relationship isunaltered. Their rights are also protected by legislation. Under the regulations, the new employer is obliged to take on the existing employees of the business. The terms and conditions and the employer's obligations in the contract of employment are automatically transferred to the new employer. If there is a collective agreement the new employer must continue with its terms and conditions until it expires or is replaced. The regulation also providesgeneral rights to information and consultation for employees from their employer on matters which directly affect them. The legislation requires employers to inform and consult employees on any decisions likely to lead to substantial changes in work organization or contractual relations with particular reference to acquisitions and to collective redundancies. This means that employers are required to consult with employees before major decisions are made and all these are to be done by the human resources.

The Challenge
It's easy to forget that an acquired employee did not choose to join the company. Many might have been perfectly happy with the way things were going at their old company, only to wake up one day and their world is turned upside down.

The employees are called to a company meeting out of the blue, which is rarely a good sign, and they are told that the company has just been bought. What does it all mean?No one seems to have all of the answers and when they ask their colleagues, they get different responses. All of a sudden the employees are sitting at a New Employee Orientation and it hits them that things really are different.

The major challenge here is whether the human resource management ensures due diligence in the divulgence of those very important information that concerns the employees, throughout all the processes of a takeover or they hid behind their pursuit of pleasing their new owners and also to protect their jobs? Do they really exhibit the HR ethics they claim to be encircled with?

The rights of the acquired employees are not protected and secured as promises. Instead of the transferred employees terms and conditions of employment being retained or made better after takeover,it is rather the opposite that happens.

The new employer brings on board new policies and conditions, completely eliminating the existing ones without any information to the newly acquired employees.Imposition by the employer of new contracts without employee consent may allow affected employees to treat themselves as having been dismissed, which may leave the employer exposed to statutory and contractual claims.

Notwithstanding this, many employees, particularly in the present market, are more anxious to keep their jobs than sue for a pay-off, otherwise employees may have more options than they think in a takeover or sale.

Nevertheless, employees must begin to demand for their right.This cannot be done if they do not put themselves in good standing.What this means is to acquire the right qualifications or add value to oneself, be diligent at work and meticulous in procedures, have a practical knowledge of skills acquired and be on-top of their schedules. The next thing is for employees to demand a copy of the collective bargaining agreement biding them and study it in order to acquaint themselves with its details.Now,every employee must seek to know more about what the Labour Law says with regards to general staff welfare, policies and regulations biding them. As for the Human Resources Management's attitude in takeovers of companies, it's an issue of contention, and shall we therefore adjudge that some have woefully failed in this matter? Give your personal verdict.

PRISCILLA DZIFA NORMAN
BANKER
MSc BANKING & FINANCE
Volunteer with Men's Health Foundation Ghana
[email protected]