Cultural and institutional differences may impact HR integration in Mergers and Acquisitions

Cultural and institutional differences may impact HR integration in Mergers and Acquisitions (M&A’s) and in International joint ventures (IJVs) in a varied amount of ways. One way is there being unfavorable conditions when it comes to behaviors in politics and the legal environment of labor markets. The participating organizations might have two different hiring and firing process. In addition, new organizations may have issues when determining a new organizations structure. That will be able to support and cope with the cultures of both organizations. Furthermore, during organizational consolidation and restructuring of the existing workforce, HR can face challenges in the decision-making process of employee eliminations and new hires and new role assignment. All participating organizations may clash on the position which may need to be eliminated.
The local language skills, as well as sensitivity towards cultural differences, may impact the Mergers and Acquisitions as well. As one manager from one organization might have better management skill but another from another organization might have better local language skill set which may help the team to understand and cope with the new environment easily. In this situation, HR integration may be affected and it may be hard to determine the best fit. A better manager or average manager with better local cultural and language skill set. Also, HR integration may also get impacted due to communication and policy structures when there are cultural and institutional differences in International Joint Ventures. Lastly, there may be conflict between two companies because they may be following different sets of rules and or guidelines in regards to HR policies and procedures.

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