Question

MERGERS AND ACQUISITION

DEUTSCHE BANK AND BANKERS TRUST

Deutsche Bank was in the process of strategic transformation from a German bank to Global organisation but lacks sufficient present in the USA. Ed acquired Bankers Trust to address this and was particularly interested in the investment Bank Alex Brown acquired by Bankers Trust 2 years earlier.The success of the position has been largely attributed to the pre-integration period or courting phase. Here during the due diligence period the period of time between announcing and closing the m&a deal, Can any pendant cultural assessment exercise was commissioned by Deutsche Bank senior management. The cross organisational perceptions of employees revealed that:

1.Deutsche Bank employees did not feel the acquisition of Bankers Trust will enhance their business.

2.The integration of Alex brown and Bankers Trust had not been managed effectively causing internal conflict and a loss of identity among Alex Brown employees.

3. Bankers Trust felt that Deutsche Bank typified the traits of bureaucracy hierarchy and slow decision making that are associated with German companies.

This finding led senior management to:

• Enhance employee communication to close what was perceived to be a validity information gap by sharing the Rationale behind the acquisition.
• Name the merged company in the USA. The Deutsche Bank Alex Brown Investment Bank to Reinforced the brand identity that was one of the prime moves behind the acquisition in the first place (This led to the perception among Alex Brown employees that they had been rescued from Bankers Trust by Deutsche Bank)
• Start challenging the prevailing at the Deutsche Bank working values and embracing alternative ones.

During the integration phase: the marriage a number of HR initiatives were introduced to facilitates organizational integration:

• The establishment of an integration team comprising key executives, charged with making the tough integration decisions, one of which was the decision to ‘strip out’ those parts of Bankers Trust that could be integrated into the new business.
• Redundancy packages incorporating incentives for ‘redundant’ Bankers Trust employees to work through until the acquisition process was completed;
• Incentive scheme to encourage keep Banker Trust staff only to commit to the new organisation in order to avoid damaging employee turnover.

BRITISH PETROLEUM AND AMOCO

The merger between two large British and US Petroleum Companies has been hailed as a success by its managers because it was achieved faster and created greater synergy than forecast.As with Deutsche Bank, The management of the pre-merger phase was seen as crucial to the success. This involved the creation of an integration team who use the due diligence period to assess the potential synergies that could be produced by combining head offices and merging operating divisions.

Managing the post-merger “marriage phase” revolved around five areas:

1. Integrating areas of duplication where continuing the marriage analogy, partners analysed and dealt with duplication of assets brought into the marriage and work from current patterns of behaviour to develop and pursue desired behaviours.
2. Appointing into managerial roles in a way that creates opportunity for employees from both constituent companies. Here, for example the top 500 appointments in the new company were source 60% from BP and 40% from Amoco directly in line with thier respective share of the business.
3. Integrating systems and processes on the basis of what was considered the best practice across the constituent companies. hear integrating HR processes such as job grading and remuneration management were particularly problematic not because of any technical complexity but because of strong emotional attachments of employees to HR heritage
4. bill building new corporate culture regular meetings of the top managers were used to explain the operating philosophy of BP and to encourage socialisation and the breakdown of barriers between BP and Amoco managers.
5. regular monitoring of employee attitudes as the merger unfolded so that managerial action could be directed towards influencing their hearts and minds and obtaining full commitment to the new company.

VOLVO AND FORD

This merger between a large Swedish organisation and Huge Anglo-Saxon Corporation had to confront many cultural differences between the two. employees perceived Volvo as operating Within decentralized and participated management philosophy where teamwork and devolved decision-making were the accepted norm and where personal credibility was derived from expertise not position in the organisation hierarchy. these characteristics were reflected in the management of Industrial relation where Union Representatives and management work closely together to improve business performance. In contrast, Ford what perceived as highly structured in hierarchical, with status differential between blue and white collar workers and with a more confrontational industrial relation climate. For Volvo employees, the transitions was also more marked as they moved from a position where a Volvo represented 51% of the previous AB Volvo group to where it represented only 8% of Ford’s total business.

Structural reorganisation was a key outcome of the mergers. 2 major divisions were created. The first brought the premium products under one roof (Jaguar, Land Rover, Aston Martin and Volvo)- The Premium Automotive Group. The second Ford cars covers the more traditional mass market product offerings.

The due diligence period focus on exploring the potential for financial synergies cultural issues were not explored at this time but immediately after the merger was finalize an integration team comprising 18 matched pairs of Ford and Volvo executives was formed. They were task to work together on an equal basis to establish further synergise in specified areas such as marketing, purchasing and research. The integration team was seen as an important vehicle for overcoming cultural differences.

Case study questions

If you had been responsible for the HRP dimension of each of the three mergers situations which do you think was handled effectively? and why?

Please provide very detail and comprehensive answer.

Answer 1

Progressively general points identifying with HRP in the three merger circumstances are canvassed in our response to question four beneath. Here, we focus more on point by point operational HRP issues emerging from the case situations. We have just given short, visual cue reactions to give instances of the kind of HRP rehearses we would have supported.

Deutsche Bank/Bankers Trust

1. Given the test to existing Deutsche Bank working qualities, build up another corporate culture for the combined organization.

2. Make an interpretation of this social outline into those general representative qualities and practices (maybe utilizing a competency structure) thought to be important to accomplish long haul merger and corporate business achievement.

3. Utilize these qualities and practices as the operational rules when settling on HR choices as for choice for repetition, moves, advancements, human asset improvement (HRD), reward allotment and so forth.

4. Create correspondence channels/activities to cover the 'marriage' period of merger what's more, the more extended term union stage.

5. Consider the way to deal with worker association in key regions, for example, 'reconciliation group'

participation and improvement of new working qualities just as a more extensive thought of the worker relations system to be embraced. 6. Distinguish further key HRP issues and create fitting reactions. Aside from correspondence and representative inclusion recognized over, these might incorporate, for instance, overseeing survivors, HR frameworks and procedures, for example, work evaluating and compensation, HRD methodologies for cultural assimilation and association structures to encourage the rising corporate culture

BP/Amoco

1. An unmistakable HRP center in the 'seeking' stage to set up what will be the reasonable HR issues that should be tended to as a component of the merger procedure (fundamental beliefs, mentalities,

skills; structures; change the executives draws near; worker relations procedures and so forth.).

2. Make progressively unequivocal the nature and extent of worker inclusion as for the

'incorporation group', improvement of center practices, advancement of new corporate culture, the examination of 'best practice' and so forth.

3. Huge interest in correspondence to keep representatives educated and occupied with the merger procedure (and past).

4. Challenge the evident quantity based way to deal with director determination and supplant with execution as well as competency-driven methodology.

5. Work through key authoritative structures and evaluate the HRP outcomes of any modified structures.

6. Plan how to deal with the aftermath from any: rebuilding; practical defence,

especially regarding scaling back/repetition; and execution the board.

Volvo/Ford

Here we would have done pretty much everything in an unexpected way. As far as the data are accessible we would surely have needed to work through the HRP ramifications of distinguished social contrasts among Volvo and Ford and the major auxiliary redesign just as making unequivocal the HR dispatch of the reconciliation group in the event that it is to satisfy its job as 'a significant vehicle for beating social contrasts'. All the more for the most part we would have given dynamic thought to all different focuses raised above against the Deutsche Bank/Bankers Trust and BP/Amoco cases.