Strategic management and hrm in mergers

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It is a known fact that any bank in today's environment has to face more challenges and competitions ever than before. Therefore banks are using different management philosophies, tools and methods to face these challenges. Strategic Human Resource Management (HRM hereafter) is one of those management philosophies which help banks in a competitive world. To understand the role of Strategic HRM it is necessary to understand the concept of HRM first. According to Price (2004), the philosophy of people management based on the belief that human resources are uniquely important to a sustained business success. People management and its related issues have been debated for over 100 years under different names but basic concept of HRM can be traced back in 1960's. In 1960 and 70s people managers used to emphasis the relationship between employers and employees. In fact, with the improvement of education and skill the concept of HRM developed rapidly according to the changing needs of businesses. Therefore, in the mid of 1980's HRM became an important part of banking strategies, as a result a new field of business management emerged which was named as Strategic HRM.

From Strategic HRM perspective to changing the ways of improving or restructuring banks, different method, tools and polices are adopted by the banks, for example flattened hierarchies, decentralized decision making, training and refresher courses and most importantly in the case of mergers and acquisitions when Strategic HRM act as knowledge and performance agent to achieve the objectives of mergers and acquisitions. Gloet (2006) asserts that there is another point to keep in perceptive that what ever the method or tool adopted by banks, the SHRM should be introduced at the time of strategy planning rather than in the middle. It will help the banks to allocate resources properly and recruit the right people or skills at right time and at the right place.

From the last few years 'time' has become a key strategic resource. The challenge of the future is to help people adapt to the change. Globalization and Technology advancement makes people think differently as the requirements and needs of consumers are changed as well. The significant issues to face these challenges are, how to think systematically and strategically about aspects of managing the organization's human assets, and what really needs to be done to implement these policies and to achieve competitive advantages and improve the performance. The integration or alignment of strategic management with HR helps banks to take decisions about people with decisions about the results an organization is trying to obtain.

Under these new challenges of rapidly changing environment and globalization, the banking development and reform is consider to be as both professional field of social actions and an area of scientific inquires and innovations. Among recent development in this area of reforming and development of bank there are several significant changes need to be noticed in order to understand the key issue and role of Strategic Human Resource Management (SHRM) innovations.

Strategic HRM is becoming very popular among new techniques of doing effective banking. Today, human resources are seen as "the available talents and energies of people who are available to an organization as potential contributors to the creation and realization of the organization's mission, vision, strategy, goals and objectives" which helps banks in order to improve the business performance" (Jackson and Schuler, 2000). On the other hand Narasimha (2000) states that "Strategic HRM take a different colour when we view them as contributing to organizational knowledge stocks". In fact this new idea of Strategic HRM as knowledge agent appears to place the traditional role of HR into an entirely new footing.


The key reason to choose this topic is to research, analysis, and focusing those areas of banking development in which SHRM can play a crucial role and why some banks are facing problem especially when banks make alliance, merges or acquire some other banks. Then what should have to be done or planed by their executives and employee in order to check that, are they taking the right steps or not. We need to spotlight on new approaches of SHRM implementation and there perfect execution that helps them not only to achieve the success but also to maintain their success against their rival companies. Also we need to emphasis the Knowledge and performance as new tools of Strategic HRM that effect banks at the time of mergers and acquisitions. It does require an effort and deep involvement from both strategic and HRM point of view. There is another area to identify that is performance management; it is an integrated process of defining, assessing and refining employee work behaviours and outcomes. Organizations with well develop performance management process often have an upper hand on those which haven't got this capability.

In an emerging world of new techniques and strategies for businesses we need to maintain quality of service as well. We can attain it by inculcating the right philosophy and principles in our staff. Training programmers are thus very important. It is a challenge to create passion for work in people, besides a good salary, it is necessary to give fancy designations, career paths and empower to take decisions; as a result it will lead in better productivity and its help a lot to increase the performance of the banks.

People managers are involved in dealing with the consequences of re-organization, including closure and redundancies. In a more positive way, they are concerned with growth and strategic alliances. Some of the problems they face include relocation, changing roles and retraining for new skills. More difficult issues come from attempts at cultural change or behavioural transformations. These are notoriously expensive and unsuccessful but are sometimes inevitable and can hold the key to future success. The key factor is to attract the right talent, because there is a dearth of trained personnel.

The parameters of judging talent are different for various banks according to different cultures. HR policies represent the culture or environment of bank. They provide the structure according to which the bank has to achieve its objectives. The correct elaboration of policies can motivate staff towards the development of a bank because they feel more valued and secured, and they tend to keep company loyalty.


The major aim this dissertation is to find out the future preferences of the banks, how banks improve the performance and productivity using these measures, how to improve and maintain the competitiveness by adopting integration of Strategic management with Human resource as knowledge and performance agent during and after M&As, the usefulness of this integration and detail review of its impact on banking missions.

Among most of HRM practices, there are mainly two dimensions i.e. functional HRM practices and strategic HRM practices. Functional HRM relates to the operation issues of banks while Strategic HRM practices linked with company level progress and performance (Armstrong, 2006). This framework of this new dimension of Strategic HRM will focus on strategy and planning for human resource requirements, defined over a period of time for which the personnel managers have always been accused of having difficulties in understanding and implementing strategy especially when the mergers and acquisitions take place. The integration of Strategic HRM tends to focus on numbers and also attitudes, behaviour and commitment in line with harder matching models of HRM. More positively, the integration of Strategic Management and Human Resource will be aimed at improving banks competitiveness by increasing its knowledge and performance.

To satisfy the purpose of research and to get the better understanding of these factors following objectives have been set for the research.

To investigate the factor behind the need of M&A and involvement of Strategic HRM to increase the performance of the banks.

To evaluate how Strategic HRM is an effective tool to enhance knowledge and performance during and after M&As

To understand how strategic HRM can help banks to achieve M&A's objectives and sustainability of competitive advantage.

To assess future and importance of M&As, Strategic HRM in banking sector.

The following research question is framed in the light of above aim and objectives:

What is the importance of integration of strategic management and human resource management in the wake of mergers and acquisitions?


Chapter 1 provides an overview about the chosen subject for dissertation and also background of the topic. The discussion is focus on the concept of HRM and its development with the passage of time and with the emerging needs of banking environments. The concept of integration of business strategy with HRM and use of Strategic HRM as an effective tool for the success of M& As also a part if discussion. At the end aim or purpose along with the objective of research has been discussed.

Chapter 2 presents the theoretical framework that explains different theories and research regarding the concept of Strategic HRM as knowledge and performance agent for M&As. First, the discussion provides detail introduction to the literature and the rest of the chapter provides brief detail and comparisons of different models and approaches of strategic HRM.

Chapter 3 deals with data collection and analyzing methods in order to find answers to our research questions, and thereby fulfilling the purpose of the research. Chapter starts with the introduction of research methods, discusses different research philosophies and research approaches and strategies. It's continuing by describing appropriate research design and how data collection was carried out.

Chapter 4 This chapter deals with data finding and its analysis. Data received from respondents including mangers interviews and companies i.e. RBS, Lloyds TSB and HSBC, Halifax.

Chapter 5 In this chapter, an attempt has been made to conclude the best possible result of the research dissertation. Hypotheses results have been discussed in order to achieve the objective of research dissertation. At the end research objectives have been restated for the better understanding of the conclusion.