Strategic HR Integration and Proactive Communication during M&A: A Study of Indian Bank Mergers

Abstract

Research in the past has documented the use of strategic human resources (HR) integration and proactive communication as best practices in mergers and acquisitions (M&A) to deliver the expected synergy out of a combination (merger or acquisition). The failure of majority of M&A deals has been attributed to improper handling of HR issues and lack of a thorough understanding of the merger/acquisition context by the acquiring management. This study was initiated to understand how proactive communication and strategic integration of HR issues improves the chances of deal success. Based on data collected through field interviews with managers of two bank mergers in India, it was concluded that strategic employee communication, appropriate changes in the performance management system and a compensation structure with cutting edge strategic HR practices paved the way for successful integration and merger success in one of the cases studied.