Mergers and acquisitions have turned into the most successful techniques for development of organizations. This case study highlights the importance of employee motivation while managing an acquisition and its integration, the most important factors for motivation being directly correlated with the organizational structure, management style and human resource. There are some very important factors, besides the financial aspects, that must be considered in planning the post-acquisition phase. Our case study is about the recent acquisition in the advertising industry.Recently Corporation A was acquired by Corporation B.
Corporation B is an Indian marketing communications company which offersadvertising,digital,public relations,strategic design, rural marketing and video content. In fact, most brands managed by B have gone on to become market leaders in their respective categories. Based out of Mumbai and Hyderabad, Corporation A was a full-service advertising agency providing 360° marketing communication solutions. Corporation A partnered with young companies that aspire to grow their brand and are looking for strategic advice and direction.In June 2016 Corporation B acquired corporation A.
The managers of corporation B believe that there is a positive relationship between employee motivation and organizational effectiveness, so they always strive to retain the best employees acknowledging their important role and influence in organizational success. Post- acquisition, managers are finding it difficult to motivate employees to work towards helping the organization to achieve its goal as well as to achieve their personal goal. In order to analyze the motivational issues faced by employees of the company, we onducted a survey to measure employees’ current satisfaction with the work environment and incentives.The survey was conducted by personal interviews over phone or Skype with the employees who were part of the corporation A working at Hyderabad and Mumbai branches. Method The research is qualitative and covers both the managerial and employees’ approach to assess certain changes in employees’ motivation level in the post-acquisition phase.
Primary data is sourced from face to face interviews of respondents and narrated in empirical findings.Analysis and conclusion derived based on motivational theories. The interviews asked the respondents to respond to each statement in terms of their own experiences. The interviews were more like a conversation and interviewees kept on switching to related information while responding to a question. Interviews were completed considering the ease of respondents at their convenient time.
We have interlinked the interviews’ information with relevant literature to develop finding of the research. Following table lists the information of employees who participated in the survey: Table 1: List of InterviewsThe qualitative data has helped us understand why employees’ motivation is affected by certain post-acquisition adaptation by correlating acquired data with content and by processing motivation theories. Our questions were aimed at understanding the employee-manager relationship in both the organizations, the impact of acquisition on employees’ professional and personal lives and the factors hampering employee motivation. The responses that we received from both the organizations helped us to understand few things that could have made the post-acquisition phase a smoother one.Analysis In this section, we have discussed the application of motivation theories and empirical data to the impact of an acquisition on employee motivation and how an effective management can ensure a productive transition.
There is always a lot of uncertainty associated with an acquisition which needs to be tackled strategically and judiciously. New management, diversity in work culture, totally new workplace could be some of the issues that contribute to this uncertainty. People getting merged always carry insecurity, discomfort and feel like refugees being looked down upon.Though physiological needs such as salary were taken care of by Corporation B, job security was one of the major concerns for Corporation A. When asked about post-acquisition-related activities and events that have elicited positive or negative reactions from the employees, most of the employees replied that they were expecting some “Employee Mixers” to get to know each other.
On the contrary, employees were directly divided into teams and were assigned duties immediately. Another employee thought that there had been a shift from being a small cohesive like-minded family to a bigger company with compartments.These events generated a lack of belonging for employees. Another major factor hampering employee motivation was the difference in availability and approachability pertaining to new clientele. The earlier corporation had flexible business terms as well as flexible costing strategies to maximize profits, which has totally changed now.
Innovative ways to maximize profits are not allowed in the new formal structure. Smaller clients cannot be taken up and especially in the smaller markets, this is a big problem.These scenarios collectively triggered loss of intrinsic motivation. We further analyzed how significant was this acquisition for an employee’s career.
The CEO of Corporation A, initially thought the acquisition to be positive as they were now part of a bigger multinational company with brand image and reputation. However, later he found the acquisition to be negative since he had to take a smaller role and was pushed down in the hierarchy by 3 good levels - now he is one of the SVPs of the new corporation.He further added that earlier he was reporting to the board, but now his role had been marginalized to some extent and so is the entrepreneurial zeal and spirit. Also, the teams now have become larger, the equation is not quite equalitarian and the flat structure has become laddered one with multiple managers and cross-reporting at places. In scenarios like these, employee esteem is compromised. Moreover, at times the capable ones tend to be aggressive in defense, which further causes more problems in team motivation.
Further, we tried to understand the impact of the acquisition on employees' professional and personal lives. With the new office timings, employees started getting less time to spend with their families and for their interests or hobbies, which is not a good sign. Especially, in the creative field, such self-enrichment is essential. Earlier, employees did end up working quite a few Saturdays willingly but now that it’s compulsory, everyone dreads it. This has had an impact on employees’ personal lives and on their professional ones by causing a lack of self- actualization.Though all the people now attend office on Saturdays, their motivation is hampered and productivity is compromised.
Employees limit themselves to what is needed instead of going out of the way to exceed management expectations. New management has brought in new systems and support teams to handle technical problems which is a better scenario than before. However, Corporation A employees perceive the new systems as a waste of time due to all the compliance activities and procedures to be followed along with it.As per Maslow’s theory of hierarchy, all the above observations lead to a clear indication that employees are failing to attain own needs at all the levels except physiological level, which signifies the lack of motivation.
Hence, employees are not open to any new ideas or concepts, which is not the case when they have a positive attitude towards their work. Our next question was aimed to understand how did the selected employees manage pressure during post-acquisition implementation period. A senior management employee informed that new management had an induction where they nominated function-wise people whom employees could approach.However, considering the limitations of the number of times an employee could approach them there was some insecurity and discomfort. Hence, employees would approach the senior management of corporation A for emotional and professional support. In this case, the goal of corporation A was to be well informed about the whole scenario at the workplace.
However, the main priority of Corporation B was to fulfill business needs and maintain profits. This difference in the goals of the two merged corporations led to a loss of acceptance and commitment among the employees of both the corporations.
