Employee turnover decisions following a corporate acquisition in South Africa .
Date
2014-09-04
Authors
Deverneuil, Neville Asquith Winston.
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Abstract
ABSTRACT
In an ever growing and emerging economy, acquisitions are often seen as facilitated
transactions for the strategic alignment of organisations that require sustainability,
market growth and competitive advantage. An acquisition can be a somewhat
challenging and lengthy process, from the initial bidding or offering through to the
integration of the two organisations. Even though the acquisition may appear to make
eminent sense from a financial and strategic perspective, somehow the two
organisations fail to integrate fully. Even worse, in many cases the individuals from the
acquired organisation fail to integrate or feel integrated into the new organisation.
These individuals often have the skills, knowledge and experience required to plan
and execute the integration in great detail, resolve issues promptly, redesign
processes correctly, or adapt systems to the new organisation’s needs. During the
acquisition transaction, a lot of pressure is placed on the executive management team
to deliver profitable results as well as maintain the structural integrity of the
organisation. Once into the acquisition process itself, numerous urgent operational
decisions often distract senior management from resolving people-related issues.
The significance of this study fills a research gap by identifying the factors that result in
skilled employees leaving the organisation post an event, which ultimately affects the
loss of knowledge and skills. Often the individuals who leave are key role-players in
the operational framework and have the knowledge, experience and skills that directly
impact the performance of the organisation. This study aims to identify the exit
behaviour factors and addressing them in the pre and post acquisition processes. The
research study highlights the importance of intellectual capital management and the
human element within the acquisition transaction and warns managers against
focusing too closely on the transactional or financial side of the event rather than
focusing on the developmental and employee aspects of the two organisations. The
research study assists managers during the planning stages of an acquisition to
ensure that communication and organisational development supports the financial
objectives of the event. This study follows a qualitative research methodology
approach to reach the objectives and aims to fully understand the actions and experiences that people had to endure through the acquisition event. The data for this research study was collected through pre-arranged interactive interviewing, using an open-ended questioning technique to obtain the required outcomes.
From the data provided by the interviews conducted, it can be affirmed that there are seven driving factors that contributed to the employees’ turnover decision. These factors are: communication, trust, length of service, roles and responsibilities, culture and structure fit, productivity and processes, as well as emotional factors. Within an acquisition transaction all participants, employees and organisations involved, felt the impact of the strategic decisions and changes that were implemented. The management team needs to be cognisant of the degree of impact these changes would have on all parties involved and should carefully structure their integration approaches in order to increase the chances of success. An all-encompassing approach to integration needs to include a combination of economic factors, such as profitability, performance management and value creation for stakeholders, as well as non-economic factors such as communication strategy, cultural assimilation and intellectual capital management. Employee attrition rates during acquisitions directly influence the performance, profitability and return on investment due to the knowledge, skills and experience that are lost. In order to ensure and secure value creation from the acquisition (as well as return on investment) an organisation will need to minimise the attrition rate and assess key skills required for business functionalities.
Organisations involved in the acquisition should view their employees as tangible assets, rather than just an integration function which requires completion. People are the organisation and responsible for the success of the organisation.
Description
MBA 2012
Keywords
Labor turnover, Human capital,Consolidation and merger of corporations.