SUBMITTED BY: RAJVIR KAUR

F1002707

MBA JAN 2010

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INTRODUCTION

Barclays plc is an organisation which provides banking services globally (in Europe, USA,
Africa and Asia) more than 300 years. Acquisition of Lehman Brothers organisation is one of
the major decisions for Barclays’ management. Lots of issues are agreed upon when the deal
between both parties was signed. Barclays’ signed the deal for $1.75 billion for the core
operations of Lehman’s in US. An organisation is not known by its buildings, its location but
actually by the people (human resources) who set the strategies, goals, objectives and the
culture over the time. So when there is a question of merger and acquisition of two
organisations then we are talking about the two different cultures which are going to
collaborate. Managing human resources of different organisation is not an easy task. Lots of
issues may be raised in this collaboration. The same situation is in the Barclays plc, who is
facing the issues in managing human resources.

ISSUES IN HUMAN RESOURCE MANAGEMENT

HRM in cross cultural context

Multi-cultural workforce is becoming very popular in these days in MNCs ( Multinational

companies). As in this case study different nation-based companies (Barclays plc UK based
and Lehman brothers US based) are collaborated. In multi culture environment, people from
different countries, of different religions comes into contact with each other. It is
responsibility of the HR department of Barclays plc to Introduce people of both parties with
each other and make the people of acquired(Lehman brothers) organisation to accept the
norms, values and beliefs of acquiring firm(Barclays plc) and to do efforts in achieving the
ultimate goal of organisation because in this age of globalisation there is a need for the cross-
cultural intelligence and to attract the diverse talent over the seas to get competitive
advantage. Because, for the managers, managing people at domestic level is totally different
from managing people at international level. The more they will come into contact with
diverse group of people the more they will know about different aspects of personalities of
different people. It will sharp the managerial skills of managers. It is not an easy task for HR
department. Cross-cultural differences are the cause of failed negotiations and interactions,
resulting in losses to the firms. The strategic role of HRM in strengthening and sustaining
corporate growth has assumed greatest significance, the world over.

Human resource planning

It refers to links/manage the personnel to the organisation’s goals, objectives and plans and
takes decision regarding budgetary resources. Its main objective is to get right number of
people, with right kind of skills at right time in right job.

Employee Engagement

Products and process alone can’t help organizations to sustain loyal customers (Mullins L).
They also need highly-motivated, dedicated, committed and involved employees who are
very passionate about their work and feel as a part of their organization. So, organisation
needs the “engaged employees”. But, getting an employee to be engaged requires a lot of

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effort and skill on the part of HR managers and calls for a different HR philosophy in the
organization.

Employee will be committed to the organisation only when they will be highly motivated and
satisfied. To get engaged, the employees should be satisfied from their job structure, because
only then happy employee can be the productive employee. Job satisfaction is a so
complex and crucial task, which has different meaning for different people, because they
have different priorities of needs and wants. Job satisfaction has a direct relation with
performance and motivation.

Job satisfaction level can be influenced by different factors such as individual (education,
personality), social(relationship with co workers, opportunities to interact) cultural(values,
beliefs), organisational(leadership style, personnel policies, procedures) and environmental
( social, economic, government influences) factors.

Here, in the case of acquisition of Lehman brothers, STRESS is a main factor that will cause
problems in attaining job satisfaction and will have adverse effects on the employees of
Lehman brothers who are going to the company which is completely new to them. Stress is a
but obvious feeling in this kind of situation. Manage the stress is very crucial task for the HR
department of Barclays. So HR department will face challenges in following ways to manage
stress.

Job design: by creating or providing the jobs to new employees according to their skills and
talent what they had been used to in their previous organisation. So that, they can feel like at
their own previous organisation. It can be accomplished through job rotation, job enrichment
and job redesign.

Management/leadership style: any organisation’s culture is influenced by the way of

managing people. Here, in the case of Barclays, where new people are coming, rather than
accepting the bureaucracy or autocratic approach company should practise the democratic
way of leadership. In this approach employee will be allowed to make suggestions before the
final decision. By having this approach they will think that they have their identity. They are
important to the organisation and ultimately they will feel as a part of organisation.

Communication:-Informal apart from the formal network of communication. There should

be a informal way of communication for the employees So that they can interact with their
new colleagues and become familiar with the culture of new organisation.

It will bring out the core competencies of employees that would give the competitive
advantage. An acquisition/merger deal will be successful only when the employees will be
satisfied from their jobs and which will give the loyal and motivated workers to organisation.

HR Function & Performance Management

Except multi-cultural context and employee engagement there is another aspect which
provide challenges for HRM is performance management. It includes the recruitment,
training and performance appraisal issues. For this, they need to examine relevant issues such
as training and development, performance appraisal, Selection and recruitment of employees

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is an important and major responsibility of the human resource department. All these activity
are related to the betterment of employees. Through these activities right person is chosen for
right job at right place which gives the benefits to both organisation and employee as well.

Recruitment
Recruitment is a way by which a more qualified and suitable person is selected for the job
vacancy. Here, the HR department of Barclays plc is challenged to select the more desirable,
talented and skilful persons for the jobs. It is a two way process by which employer and
employee come into contact with each other in a formal way. Besides from this challenging
face of forming process, there is a positive effect of this procedure is that Barclays can get the
cream of the Lehman brothers. Different methods are available for the recruitment process
such as questionnaires, face to face interviews, aptitude tests. But it is the responsibility of
HR department that what method is use to when? It is a procedure of forming phase which is
most difficult phase for managers.

Training and Development

After recruitment process, training is the next step to polish the abilities of selected ones. it is
not only essential for new ones but also for the currently employed people so that they can
cope with latest trends and techniques. All employees undergo specific training programmes
that help in maximizing their potential. In these days training is becoming inevitable part of
every organisation. Here training will be the crucial task for the HR department of Barclays
because in the induction process employee will understand the policies and job structure of
their jobs. it will induce the new ideas and new skills in employees so that they can feel easy
enough to get intimate in new organisation. In training the trainer act as a change agent who
make trainees to get familiar with new organisation. It is a continuous process so it prove as a
most difficult task for the department. The main aim of training is:

 To maximize the confidence and motivation level of employees.

 Give the feeling of personal satisfaction and achievement.
 Improve the quality and skills of staff.

All these factors contribute in achieving the HR ultimate goal to let the new employees to be
a part of organisation.

Select a person, being as a change agent, is an another issue in HRM because he/she serve as
a middleman between employees and organisation.

 He assesses the need of training for individual and channelize the training program
towards the ultimate goal of organisation.
 Design the training program.
 Main aim to encourage group participation because it is a task of most importance for
Barclays plc.
 He conveys the messages from top management to employees and vice-versa.
 He makes sure that the new learned skills are whether being applied or not.
 On the base of current performance appraisal, he decides the further need of training.

Performance Appraisal and reward system

Performance appraisal is a process of assessing the performance of an employee in terms of

what is expected from them. After the selection recruitment and training tasks this is the next

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step, on the basis of which the management decides what duties and responsibilities should
be given to, promotions, level of supervision and termination. This is the phase where the
actual performance of employees is evaluated. So it is the responsibility of HRM, to pass the
accurate and correct information to the management without any bias so that they can take
the corrective measures. The main issues that have to be faced by HRM in performance
appraisal task are as follows:

 Recognise and identify an individual’s strengths and weaknesses so that strengths of a

person can be utilised more effectively and what can be done to overcome the
weaknesses.
 Recognise the problems which are causing an employee to give him/her full efforts.
It provides preliminary information for human resource planning as well. So it acts as
an input for the human resource department. On the basis of which they make their decisions
such as strategies, objectives in future for long terms.

The task of creating a performance appraisal method and reward system is a duty of HRM
which should be aligned to the objectives and training and development program.
Performance should be measured to the defined standards. Who will use the appraisal method
and who will be appraised by this method? All these things will be decided by the HRM.
Feedback from this method acts as a booster for the employees. Because of that they come to
know their strengths and weaknesses. And try to do better to get reward from the
organisation. Everyone in organisation try to do something to get reward not necessarily in
the form of monetary reward such as bonuses and incentives but also such as recognition in
front of all by giving certificates, medals or by praising for doing something good. So these
kind of rewards do a lot to motivate employees.
In the situation like in Barclays the reward system is very necessary to communicate within
the new organisation so that employees can get influenced by reward system of Barclays.
Deciding the reward system according to the responsibilities and jobs done is not an easy
task. Because of, ultimately, it acts as a powerful motivational factor for future growth.

These employee engagement and Performance management issue of HRM, if handled

properly, it leads to the higher motivation level and outstanding performance of employees
which decreases the turnover, absenteeism, lack of morale of employees.

Culture , change and conflict these three are very much interrelated to each other.

Culture

Most of the deals are failed because of the failure to cope with each other organisation’s
culture, when actually two companies come into contact with each other. As discussed in the
case study, more than 30 percent of staff has left the company. This is the adverse
consequence of cultural mismatch. Culture is known by the values, beliefs and customary
way of doing things (Richard black). For the Successful mergers, productive and motivated
people are required who have a shared vision and values according to the present culture and
a clear understanding of short-and long-term goals.

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The organizational culture plays an important role during mergers and acquisitions, because
the organizational practices, leadership styles are determined by the organizational culture.
Each organization has a different set of beliefs and values (Mullins L). As already mentioned
in the case study that culture of both organisations is very much different from each other
which may be first and foremost reason for the clash of the M&A activity. Whenever a
person comes to exposure to a new culture, he/she goes through a psychological state known
as ‘culture shock’ (Richard Black). The employees of non- dominant culture need to leave
their own culture, and have to accept the new values, beliefs, managerial style of dominant
culture. In this acquisition Barclays have to face culture challenges as the most of the staff of
Lehman Brothers has left Barclays and some of them did not join the organisation. It is clear
that they were not willing to adapt the values, beliefs, leadership style and practices of new
culture. It was a challenge for Barclay’s management to make new employees willing to
accept new culture. Dissimilar cultures produce stress on the minds of employees and
because of that they feel not comfortable and a kind of hostility produces in them. That
ultimately effects the commitment, engagement and motivation level of employee towards
the organisation. In the case of merger people of non-dominating company can feel like loss
of their identity and on the other hand dominating culture can feel like superior one. So it
create an ‘us’ versus ‘them’ situation. In this kind of situation company cannot do efforts
achieving the goals and objectives of its and the merger cannot survive for long time.. This is
the same situation in Barclay’s merger.

there is another issue of culture when two organisations are merged that is when new
employee join the new organisation, it can cause the employees to divert from their paths and
make them less productive and let them towards the issues of job security, career paths, fear
of the working with new unknown employees and most importantly the security of job(in the
case of case study).because in the merger and acquisition activity, duplication of departments
is but obvious. So to manage the staff, management can downsize the manpower. So security
of job is main issue for the new ones.

After that this activity raises question about their career and opportunities. The Jobs may be
redesigned. Employees can get a very different job profile that may have impact upon their
performance.

Culture is a determinant of employee’s motivation, performance and attitude. More the

employee is motivated, more the culture is healthy. One culture can be dominant between
two cultures only when the employees of culture are highly motivated. Motivation is a key
factor to be dealt with for any organisation. If the employee is not accepting the culture of
new organisation, it means he/she is not motivated properly and he/she cannot do job
effectively and efficiently. So rest of things are worthless as whole meaning of organisation
depend upon just one factor of motivation.

Culture can be a competitive advantage (Litwin and Stringer). But to get a competitive
advantage culture should be flexible enough so that it can adjust according to new strategic
demands of organisation. As the Barclays, has taken the decision of acquisition, its culture
should be flexible enough to adjust the new entrants.

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Management and leadership style of any organisation reflects through its culture and vice-
versa.as discussed above leadership style is a major factor in influencing the new employees,
so after merger/acquisition, management should think about their style of management so that
it can cope up with new environment.

By changing some of values, beliefs and ideas we can change culture to adjust in new
environment. Ultimately change in the leadership style. It is not an easy task. but if the
Barclays has taken decision of merger then it should be ready before hand to adopt the
changes in culture and leadership style. The employees of dominant culture may raise an
issue that why should we change our culture or leadership style. So to adjust both parties in a
one culture is very much difficult. It can be proven as good and bad as well, Because some
of the employees may look forward for the cultural changes but some of them may get
demotivated. Because in the change of their routine work.

Change

Nothing is constant except change (Senior B). Every activity in an organisation whether it is a
merger/acquisition or sale activity, is causing some change. Change can have both positive as
well as negative effect depending upon how well the change is communicated. Change
Merger of Barclays and Lehman brothers was a huge change for both organisations. It has
created a new environment to work for both organisation’s employees. . During this merger,
new strategies, policies and procedures are formed. Barclays has its own culture and Lehman
was having its own culture. As we know that organisation is not just a building or location
but it is a collection of people. Change should not be imposed on people but it should involve
people (senior B). Whenever a person is asked to do something new, he/she should be
prepared mentally as well as physically beforehand for that change.

To prepare the employees to face change is a very crucial task. it is a responsibility of

management and executives to prepare the employees to adopt change as early as possible
such as in pre acquisition period. Otherwise it would be difficult for them to grasp the sudden
change. It can be done via oral communication, training programs and counselling. Same is
here, in the case of Barclays, where change was not managed/ communicated properly. Result
of that was the employees of Lehman were not happy and they left and some of them did not
join. Because it is a human nature that any person want to do jobs in a manner in which they
had been used to. Different persons react differently to change because of personal factor
such as education, nature, qualification, perception, age and gender).to influence the personal
factor of a person is not an easy task. When leaders or managers are planning to manage
change, there are following key principles that need to be kept in mind:

Different people react differently to change

Every person has its own preferences and perceptions. Some people like change i.e. they
always look forward to do something new. It is easy to manage them. But some people like
the stability i.e. they are hard to influence and they like things in the way they have always
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been. So to change the perceptions of this kind of people is not an easy task. In these
situations, person can experience the strong dissatisfaction, stress, negative attitude towards
other person’s preferences and resistance.

Everyone has own needs and priorities

Some people prefer jobs because they like the salary or bonus packages i.e. they just want to
earn money but some people like the jobs because they prefer the self actualisation and social
identification in front of all and they like the reward system of organisation. So, by designing
the jobs in a better way through job redesign, job enrichment and job rotation management
can handle change effectively.

Expectations Should Be Managed Realistically

There is a relation between expectations and reality. This relationship is very important. As in
the case of acquisition or merger when employees shifted from one organisation to another
one, they expect a good treatment from the new management and employees as well, better
job opportunities and reward system. But in reality management cannot make every happy at
the same time. So it should communicate the changes in the pre acquisition period that what
could be done realistically. Before the employees could expect that is not achievable.

At last the most important thing that the organisation will have to be dealt with is FEAR.
Shutting down of Lehman brothers and then merger with Barclays, these both activities have
created a sense of fear such as downsizing, employment relation, job security in the minds of
Lehman staff. To cope up with this fear factor is really a tough task.

To manage the change the management should do the following tasks:-

 It should inspire the people and should talk about the objectives, goals, values and
beliefs of organisation.
 It should create communication network for face to face interaction so that new ideas,
policies, and procedures can be conveyed easily without any hesitation. Remove the
obstacles if any in the way of communication because it is the only way by which
people can be made to accept changes.
 Make change inevitable by promotion, rewards, recruitments and change agents.

Conflicts

Conflict is a situation when two or more than two people have disagreement upon different
ideas or beliefs. An organisation itself is a collection of people from different backgrounds.
Here if we take the example of given case study then occurrences of conflicts is but natural
because not only two different cultures of two different companies are merging but also many
subcultures are also merged. There will be different sets of beliefs, values and ideas.
According to human nature everyone will try to do things in his/her own way. Starting with

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small disputes, conflicts may reach to higher level and can be reason for separation.
Ultimately that will affect the organisation.

As the culture of both organisations is entirely different so both of them can have different
values, perspectives, ideas, procedures to solve problems, strategies, objectives and goals.

There are following type of conflicts that may rise among people of Barclays and Lehman
brothers are given as follows:-

Conflicts with the boss

Whenever you encounter a conflict with your boss, remember that boss has wider perspective
and more experience than you so listen to him.

Whenever you have a idea or views then present in the form of suggestions. Do not raise
question on his/her authority.

Carefully evaluate the bad effects of the decision on you and organisation.

Conflicts with the colleagues/peers

Whenever you have a conflict with your colleagues then use the proper communication. You
and your colleagues may have different point of view. It can be because they did not
understand your view or you have not communicated it properly. So try to start a discussion
to sort out the problem.

Secondly by using cooperation policy we can sort out the conflicts. Rather than imposing
your views try to understand other person’s as well. If any problem occurs always be ready to
help them.

Conflicts with the subordinates

Now you are in a situation where you have got authority. In this case if any conflict occurs
then use following ways:-

 Allow freedom to everybody to express their own views and listen carefully.
 By identifying positive minded people we can sort out conflicts upto a great level. let
them to find out the reasons and help them skilfully whenever required.
 Your subordinates are not having broad vision like you. So always try to
communicate, discuss with them about your vision through training and counselling.
So that, in future, if you take any decision they can understand on which basis you
have taken this decision.

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Dilemmas for the Barclays PLC stakeholders

All these changes in an organisation, ultimately, affect the stakeholders of company. They are
the owner of company. So whatever the decision is taken, ultimately affects them. Here, for
the stakeholders of Barclays, it is difficult situation to choose from what to do and what to
not. It is a situation like one party is changing the rule of game. The other party may or may
not like these changes. For example, They might not like the new leadership style of
management, new strategies, policies or procedures So to make them happy, management
should do efforts so that they can digest changes easily. They should present the advantages
of Merger/acquisition in front of them.

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References:

1. Mullins L, (2004) Management and Organisational Behaviour, 6th edition, Pearson

Education.
2. www.Businessdictionary.com.
3. Senior B, Swailes S, (2005) Organisational change, 3rd Edition, Prentice Hall.

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