management thought 261
TRANSCRIPT
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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
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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,
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INFORMATIONSOCIAL
OBLIGATIONS
NOTIFICATION
COMPENSATION
REDPLOYMENTLAWS AND
PRACTICESOF THE
COUNTRY
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Figure-II: Problematic Issues in M & As
STRESS
RESISTANCE
DEMOTIVATION
SOCIAL DIALOGUE
LOW MORALE
CO-DETERMINATION
SOCIAL
FABRIC
IR CLIMATE
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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 )
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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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