Academic journal article SAM Advanced Management Journal

Post-Merger Influences of Human Resource Practices and Organizational Leadership on Employee Perceptions and Extra-Role Behaviors

Academic journal article SAM Advanced Management Journal

Post-Merger Influences of Human Resource Practices and Organizational Leadership on Employee Perceptions and Extra-Role Behaviors

Article excerpt

Unless managed well, mergers and acquisitions can lead to anxiety, stress, and negative behaviors for employees of the companies involved. About one-third of all employees will face a merger during their careers. Augmenting previous research that has tended to focus on the pre-merger period, this study analyzes post-merger attitudes in relation to HR practices and organizational leadership and communication. "Social-exchange " theory forms the basis for some hypotheses testing the close relationships between employees 'positive and negative perceptions of management and the merger in question. Not surprisingly, organizations benefit from good communication from management and HR practices perceived as "fair."


Mergers and acquisitions have increased over the past few decades as a way for organizations to try to improve their strategic position and performance (Andrade, Marks, and Stafford, 2001; Daly, Pouder, and Kabanoff, 2004) as well as enter new markets, share (development) costs, and hedge against environmental uncertainties (Hemineriks and Duysters, 2007). Research on mergers and acquisitions has tended to focus on economic or financial outcomes (King, Dalton, Daily, and Covin, 2004), while the impact of mergers and acquisitions on employees have received less attention. This is surprising, since an estimated one-third of employees will face a merger or acquisition at some point in their careers (Hubbard, 1999). Mergers and acquisitions have been found to have negative effects on employees such as increased stress, anxiety, turnover, and layoffs (Amoit, Terry, Jimmieson, and Callan, 2006; Marmenout, 2010; Rafferty and Restubog, 2010). "Change has become the organizational norm" (Child, 2005) and therefore, examining ways organizations can help employees function effectively during and after a merger is increasingly important.

Human resource practices can help reduce employee uncertainty and anxiety after a merger, which may allow employees to perform at a high level (Napier, 1989; Weber and Tarba, 2010). While a positive relationship between human resource practices and performance has been established in previous research (e.g., Huselid, 1995; Takeuchi, Lepak, Wang, and Takeuchi, 2007), it is less clear if this positive relationship will continue following a merger. From a social exchange perspective (Sun, Aryee, and Law, 2007; Nishii, Lepak, and Schneider, 2008), when human resource practices are viewed as supportive, employees may have more favorable perceptions of the merger.

Organizational leadership and communication can also help mitigate the harmful effects of mergers on employees (e.g., Amiot, 2006; Marmenout, 2010; Rafferty et al., 2010; Weber and Tarba, 2010). For example, when leadership provides information about the merger (Schweiger and DeNisis), is supportive and visible (Fugate, Kinick, and Scheck, 2002; Houghton, Anand, and Neck, 2003) and interacts with employees (Marks, 1997) during the merger process, employee uncertainty, stress, and anxiety are reduced. Reduced uncertainty may lead to more favorable perceptions of the merger (Appelbaum, Gandell, Shapiro, Belisle, and Hoeven, 2000; Schweiger and DeNisis, 1991). Based on social exchange theory, organizational leadership and communication about the merger can be viewed as a form of interactional fairness by employees (Seo and Hill, 2005). Therefore, organizational leadership and communication may encourage employees to view the merger more favorably and lead them to exhibit increased inrole and extra-role performance.

With this study we contribute to previous research by examining the lesser-studied attitudes and behaviors of employees following a merger. We examine ways in which organizations can illicit positive responses and behaviors.

Mergers and Their Influence on People

Mergers may have harmful effects on employees, including their behavior, performance, well-being, stress, commitment, satisfaction, and identification (e. …

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