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HR’s Role In A Strategic Acquisition Add in library

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Question:

Prepare a Business Report that addresses the human resource issues raised in the case study as provided on the Moodle course site.

 

Answer:

Introduction:

1.1 Purpose:

This business report talks about the role of Human Resource in strategic acquisition of the company.  The function of human resource is often limited to work like administration, payroll management, staffing and looking after the wellbeing of the employees.  But Human Resource should not merely be limited to administrative job.  The HR managers should make an effort to raise the function of HR from administrative to strategic level.  Mergers and Acquisitions are very important strategic acts of an organization.  When an acquisition takes places in a company, the HR managers should take the change as a chance to exhibit the role that HR can play during the acquisition.  The scope of Human Resource is quite vast than how it is being used in most of the companies.

Background:

The HR Manager of a retail bookseller called Wordsmiths is Gemma. The bookseller is situated in Queensland.  Recently the company has merged with another bookseller c alled Mainly Books..  Gemma wished HR to get involved in the strategic decisions of the company as well apart from the administrative and staffing jobs.

Gemma had come across many challenges while trying to understand the process of acquisition. She had penned down some of the issues:

1. The process of abolition of staffs who work in the Mainly Book stores as she felt abolition is required

2. No presence of Information Management System of HR in Mainly Bookstore. The necessity to include the information system.
 
3. Issues associated with HR are dealt differently by both the companies. Need to have a HR Management System that can suffice to the needs of the both the companies.
 
 

2.0 HR’s Functions in a Merger:

During the process of acquisition, HR may come across many issues or challenges. The first and foremost challenge that the HR need to address is cutting down the number of staffs in the Mainly Books. Based on the thorough analysis done by the HR team, it has been revealed that Mainly Books has employed around 225 staffs in their organization, most of the employees being employed on a full time basis.  Further it was found that there is an issue of presence of more staffs than what is required in the organization.  This issue also disturbs the balance between full timers and part timers.  Over few years, the financial condition of the bookstore is unsteady and poor. Recruitment of excess people can be a reason for the same.  Gemma studies the overall employment status of Mainly Books and comes to a conclusion that there is a strong need of cutting down the number of employees in the store. The number of employees can either be cut down or full timers can be asked to become part timers.  She found that around 80 full time positions are of no such use and can easily be cut down.

2.1 Downsizing of Employees:

In order to curtail the cost, the companies often cut down on the number of employees.  The decision to cut down on the number of staffs is one of the most important decisions mostly taken by the companies in order to control the cost. The CEO of the Wordsmiths, Mr. Alan thinks Gemma should take care of some of the issues while cutting down on the number of employees.  He thinks first and foremost Gemma should decide the right number of staffs who needs to be downsized. In addition, how many staffs could be changed to a part timer from a full time position.  According to him people who have attained their retirement age should most likely be abolished instead of youngsters who are more energetic and feels more motivated to work.  Additionally Gemma should also take care of the legal issues she may face while forming a process of abolition.

2.2. Process of Abolition:

While abolishing manpower, the following issues should be taken care of :

1. First and foremost, it is always wise to lay down a formal abolition procedure in order to avoid claims in the future. A list of employees should be made from which employees should be picked up for abolition.

2. The selection process should be objective and same for all the employees whose names are mentioned in the list.
 
3. Making employees aware about the abolition process that might commence at a future date.
 
4. Alternative ways of employment should be suggested to the employees who are considered to be abolished.
 
5. Proper time should be given to the employees who are considered to be abolished so that they can find proper employment for themselves.
 
6. Employee abolishment should be proper and justified.
 
7. Proper notice period with proper payment of wages should be done.
 
 

2.3. Age of Abolition:

According to the  CEO, Gemma should try to abolish employees who will be retiring soon instead of employees who are young, energetic and have lot to learn.  It will be less painful for the employees who have attained their retirement age than youngsters.  Gemma should take into account in determining the age of abolition:

Most of the employees who have attained their retirement age would like to go for an early retirement but there are many pros and cons for the same.

1. If the employee works until his retirement age, he would be entitled to get the whole of his pension while if he is abolished before his normal retirement age, he would receive a lesser amount.

2. An old employee is an asset for the company. If an old employee is released, the company might be at a loss in the long run.
 
3. It might be a feasible approach but the HR should be aware of the employee whom the company is abolishing and also the contributions made by the employee for the company.
 
4. The employee should be provided with proper redundancy pay and he should not be deprived of any of the benefits.
 

Introduction of HRIMS:

HRIMS stands for Human Resource Information Management System.   Data or information or information can be maintained with the help of this system. This is an electronically managed system.  Huge data can be managed with the help of this system. A database (data management) can be obtained with the help of this system.  An integral part of DSS (Decision support system) is HRIMS.  An effective way of maintaining all information and data can be obtained with the help of this system.

HRIMS & its significance:

Mr. Alan wanted Gemma to include all information which is related to work in the system of Human Resource Management System.  There was a system existing already in the organization. This system was maintained by the HR professionals of Wordsmiths for their employees. Alan wanted Gemma to include Mainly Books data related to staff and workforce in the same system. Additionally, she was asked to do configuration of the system so that the system can give sufficient data so that a proper manpower planning system can be developed.  This would entirely be a new concept that would help to oversee the trends of manpower and take care of issues before they turn into big problems.

Configuration of HRIMS and its maintenance:

HRIMS is an information management system.  This system is utilized by a) storage of all information related to workforce b) proper management of the information which is stored in the organization. Gemma should configure such a HRIMS system which can provide information about the entire workforce and the entire company with the access of a simple application.  The system should be made very simple and user friendly but organized so that information about employees can be obtained at one go.  All the records about the workforce and management should be kept in such a way so that it should be accessible to all the HR professionals.  This system should help the HR manager to find and look at the profile of the employees from the database which is stored in this system.  In this system, there should be also options to add and update in the databases of the employees. Also there should be an option to delete the data of the employee if the employee has left the company.  With the help of the leave management system, the leaves of the employees can be maintained efficiently.   Other facilities are leave requests from the employees can be managed.

The leaves that the employees take can be properly taken care of.  The staffs on the other hand can view the leaves taken till date and how many leaves do they have in store.  They can access this through this system from anywhere and anytime.  The system should generate different kinds of reports related to workforce like employee information, payroll management, attendance report, leave management report, enrollment reports.

 

HR Planning Process:

Alan instructed Gemma to restructure the entire HR planning process. He asked her to select the right process which would be applicable at  this stage of the company.  He thinks HR can be beneficial for the company and play a more strategic role than looking after the administrative issues of the company. He wanted Gemma to find detailed options for the same.

4.1 Through proper HR planning process, the organization can assess and engage staffs in a better and efficient manner. It also proves to be very effective in providing the best manpower whenever there is a requirement.  Right staffing is possible through efficient HR planning process.  It is a process Gemma should adopt in the very beginning and also it is a never ending process.  Gemma should go for a process which helps in assessing the right selection of staff at the right time and at the right place.  In selecting the best process, Gemma should take care of the following points:

1. Proper forecasting in terms of the requirement of manpower in the future. In order to obtain the desired result, the HR should forecast the requirement of the staffs in the organization.  With the help of the current scenario of the company and proper analysis, the HR can estimate the requirement of manpower in the future.

2. Another important part of planning is supply. Based on the present staffing and present scenario of the company, the supply forecasting can be done.  It gives importance to the availability of manpower in the future in terms of the inside and outside sources. The inside sources are promotion, job transfer while the outside sources are offering jobs to freshers who can perform well if they are recruited in the organization.
 
3. The next significant part of planning is bringing the demand and supply together. In other words the demand and supply should match. We  can say it is to bring the demand of manpower and supply of manpower in such a balanced position so that it attains an equilibrium position. It means if there is any shortage or any excess of staffing, both can be managed.
 
4. The next plan in the execution plan. After considering the demand and supply of manpower , the next plan is execution plan. In order to carry out the planning process effectively and efficiently,  there are some actions which need to be followed.  The activities or actions are selection of the employee, placement and training of the employee, and proper recruitment.
 

5.0 Advantages and Disadvantages when Work is outsourced:

There are some advantages and disadvantages of the company is the administrative work is outsourced .  They are as follows:

Advantages of Outsourcing:

1. If the administrative work of HR is outsourced, it would help in the reduction of the cost which would be helpful for the company in the long run
 
2. If day to day administrative work is outsourced, the workload of the HR will be removed and it can devote more time to strategic level work.
 
3. It can play higher role and contribute more to the
 
4. If outsourced, the work can be done with done by experts which will enhance the quality of the work.
 
5. The activities of HR can be streamlined and burden can be lessened.
 
6. HR can work with more flexibility.
 
 

5.2   Disadvantages of Outsourcing:

When the work is outsourced, the company can face some challenges like

  1. The cost of the company might be affected unexpectedly.
  2. The levels of services will be reduced.
  3. When the work is outsourced, the outsourced vendor might not be able to give the service on time.
  4. The company may face issues from the vendors

5.3 Recommendation:

Gemma should recommend on the outsourcing function. According to her, the HR department is already overload with heavy work.  Taking additional work will reduce the efficiency of the HR professionals. Moreover, if the administrative work is outsourced or given to managers of the store to look after, then the HR could perform at a higher level and contribute to the company.  HR’s role is higher than simply looking after payroll management and day to day administrative work.  If the day to day work is looked after by outside vendors, then the HR team can take care of different issues in the organization.

6.0 Conclusion:

In  conclusion, we can say that the functions of a human resource department is merely not taking care of the day to day administrative issues of the organization.  It should be kept in mind that HR’s role is much higher than this. HR  should take active part in the strategic decision making as well. At the strategic level, HR should be involved actively.  First and foremost, if an acquisition takes place in the organization, HR should involve itself in the merge. Also HR should find out whether there is any requirement of downsizing or not. If there is any requirement on downsizing on the number of employees, HR should take the right decision as to which group of employees should be downsized. Abolishing the employees at the right time is an important decision that HR has to take.  The organization should also adopt HRIMS through which information can be maintained in an efficient and prudent manner.  While outsourcing the administrative work,  the advantages and disadvantages of the organization should be kept in mind by the HR.

 

Recommendation:

It is recommended that:

  • HR should involve itself at a strategic level rather than administrative work
  • Proper abolishment needs to take place in the organization.
  • Proper HR planning process needs to be followed.
  • HRIMS should be adopted to ensure efficiency.
  • Proper outsourcing of the work should take place.
OR

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