Management Thought 261

7/28/2019 Management Thought 261

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MERGERS AND ACQUISITIONSIN BANKING SECTOR-A STUDY

FROM HR PERSPECTIVE


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METHODOLOGY

Conceptual Paper, Secondary Sources

Different countries of the world Issues and activities of HR in Banks

Basic statistical tools

Build better future Tentative models


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Mergers & Acquisitions

Economic reforms, restructuring

Expansion and diversification

Core competencies, fillip after 1994 takeover codeformulated

United States in 1890-1904 (first phase)

end of the World War-II (2nd phase)

India 1180 proposal involving 2400 companies during1976-1986


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1995 USA electric power industry

Banking sector mergers valued at -$37.2 billion

Deregulation, competition, mid-sized industriesstrategy to avoid being acquired

For achieving efficiency, cost effectiveness Dynamics, visionary and component & quality

improving

Merger-two/ more companies combine to onecompany

Amalgamation of assets, liabilitiesshareholders interest, businesses of the

companies


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Merger-absorption, consolidation

To overcome slow growth & low profitability

To enhance retail loan portfolio, reducing NPAs

Improving performance

Reviving sick condition of the financial institutions

e.g. merging of HDFC & Times Bank,

Centurion Bank & Bank of Punjab, ICICI & B.Madura,

Oriental Bank of Commerce & GTB Bank Roy (2003)-public and private sector merging

M & As growth worldwide @42% a year (UNCTAD,2000)

Developed countries import role in sell and buy


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Jacques Altaliin next twenty years no more than four/ five

global firms and millions of small temporary firms Public Sector Banks shed over 90,000 jobs For enhancing

productivity at a lower cost

Anytime, Any where Banking system, customers desire ness,

M & As failstaff hostility, Integration failure( ILO )

Failuredifferences in culture, Depersonalization in financial relationship

Scandinavian countries more degree of flexibility for M & As

Customer attitude not positive for giving personal details ininternets

Sharp reduction of no. of branches Even employees are reluctant to friendly takeovers

HR DIMENSION OF M & As


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Cultural differences creating disappointment

UKs Morgan Grentell Group acquiring

Germanys Deutsches Bank

Loss of jobs

USA: Chemical Bank &Chase Manhattan Bankeliminated 12000 jobs

HUMAN FACTOR IS NEGLECTED

Loss of talented resources

-South Africa, Scandinavian

countries, South East Asian

coutries.


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indicators

1994 1995 1996 1997 1998 1999

employees 58920 61073 60137 57082 52760 48955

Emp./bank

3467 3411 3172 2467 2200 2006

Emp/bankunt

17 18 19 23 24 24

Popula

tion/bank unit

2981 3029 3252 4177 4639 5134

Table: HR of Czech Republic Bank


10/2010

Australia, Tunisia, European countries HRissues not considered importantly

1990 London recorded less than 10000

Practices in different countries like WesternEurope, United Kingdom, United States,

Canada, Japan and Australia. CHALLENGES

Indian Banking Scenario: M & A is a burden

Integration of diverse backgrounds a difficult task

Managing HR in different phases of M & AsCope with changing environment,

Competency building,


11/2011

INFORMATIONSOCIAL

OBLIGATIONS

NOTIFICATION

COMPENSATION

REDPLOYMENTLAWS AND

PRACTICESOF THE

COUNTRY


12/2012

Figure-II: Problematic Issues in M & As

STRESS

RESISTANCE

DEMOTIVATION

SOCIAL DIALOGUE

LOW MORALE

CO-DETERMINATION

SOCIAL

FABRIC

IR CLIMATE


13/2013

Figure-III: HR Activities in M & As

PRE-M & A PHASE

M & APHASE

POST-M & A PHASE

INVOLVEMENT

INFORMATIONSHARING

INTEREST OF

STAKE HOLDERS

CONFIDENCEBUILDING

FEAR

PSYCHOSIS

POSITIVE

OUTCOME

CHANGE

MANAGEMENT

TRAINING &

DEVELOPMENT

RESKILLING &CULTURAL

INTEGRATION

APPRAISAL

SYSTEM

REDEPLOYMENT

FINANCIAL

NECESSITIESSOCIAL

RESPONSIBILITIES

( PRE-COMBINATIONCOMBINATIONSOLIDIFICATION )


14/2014

Figure-IV: Impact of M & As

Mergers

&

Acquisitions

SECTORAL EMPLOYMENT

Decline in permanentEmployment

Job insecurity

Job instability

Non-standard forms

Of work

Branch Closure Staff Retrenchment

Employment Mobility and

Turnover high

Loss of Quality of service

ESSENTIAL

Commitment

Competent

Cooperate

Cost Savings( Reduce operating

costs, increase

income-cost ratios )

Skill up gradation

( obsolete, general

trend)Corporate

Restructuring

Career and

Succession plans

Indirect

Unorganized

Employment

Small

and

Medium sized

enterprises


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SUGGESTIONS:

Greater care for Human Resources

Regulatory framework by Govt. should emphasize the

HR Interest of both the banking industries should be taken

Communication, training & development activities

Involve Trade Unions in decision making process

Talent retention strategy Recruit specialist officers

Performance linked incentive


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VISION

Where the vision is for one year, cultivate flowers;

Where the vision is for five years, cultivate trees;Where the vision is eternity, cultivate people.

This is no time for ease and comfort,

it is the time to dare and endure.

Winston Churchill


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Technology

Finance

Human Resource

SUCCESS


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Task oriented

People

oriented

Country club

Management

ImpoverishedManagement

Team

management

TaskManagement

MIDDLE

OF

THE

ROAD

MGT.

(9,1

(9,9)

(1,1)

(1,9)


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conclusion:

Leadership Development

-Front line managers with HR skills

Win-win situation Telling, selling, delegating,

participative: requisite skills

Upanishad: sahana Bhabatu,sahanabhunaktu,sahabiryam karababahe, tejaswinam aditmastu ma vid

Visa vahe, om santih, om santih, om santih.

THANK YOU ALL.


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Documents

Management Thought 261