EFFECT OF MERGERS AND ACQUISITIONS ON EMPLOYEE MORALE (A CASE STUDY OF FIRST CITY MONUMENT BANK PLC, CALABAR)

ABSTRACT The study set out to examine the effect of mergers and acquisitions on employee morale using First City Monument bank, Calabar main branch as a case study. The need for the study arose from the prevalence of information in the branch that indicated low morale and dissatisfaction among the staff due to various corporate restructuring in form of mergers and acquisitions. Among problems investigated in the study are job stress, role conflicts and frustration among staff. This scenario revealed poor management of the restructuring process by the administrators. Four hypotheses were formulated and tested at 99 percent confidence interval using a linear regression analysis technique and correlation. The research design used was a case study approach. From a target population of 65 respondents, a random sample of 30 was selected using simple random sampling. Data pertaining to the study was collected using a self administered questionnaire. The findings revealed that mergers and acquisition was a positive significant predictor of staff morale in the bank. On the other hand, working environment, corporate governance policies had a significant positive effect on staff confidence, zeal to take up newer tasks, employee engagement/retention and job satisfaction. For that reason, the study concluded that merger and acquisition have a significant effect on staff morale. Basing on the findings of the study, the researcher recommended a uniform treatment (in terms of employee benefits, contracts and promotions) for both employees of the acquired firm and parent company in-order to boost productivity and avoid conflict of interest among both employees and management of the parent company and subsidiary.

CHAPTER ONEINTRODUCTION1.1 BACKGROUND TO THE STUDY The Nigerian banking industry has witnessed tremendous changes and expansion since the mid 1980s. Unfortunately the growth and expansion in the sector are not the manifestation of a sound or vibrant banking system known anywhere in the world. Most banks in Nigeria are characterized by inadequate capital base, poor services, huge rate of bankruptcy, and lack of management expertise, bad debt syndrome and greater exposure to fraud. The central Bank of Nigeria on July 6th 2004, announced the recapitalization of banking sector from N2 billion to N25 billion with effect from 1st January 2006. This was with a view to make the sector internationally competitive, sound and improves its ability to provide credit to all the productive sectors of the economy. In order to meet this obligation, banks embarked on strategies of merger and acquisition, floating of new shares and so on. At the end of the exercise, 25 new banks emerged (Olaitan 2006).

Managing and maintaining employee morale is one of the most important functions of effective HR. The cliché that a happy worker is a productive worker is a cliché for a reason. While it may be more accurate to say that an unhappy worker is an unproductive worker, every HR professional knows the value in good staff morale.  As a result of the bank recapitalization process that commenced from 2005, commercial banks over a hundred had to close shops or merge with another bank to still be in business. The effects of mergers and acquisitions in the banking industry of Nigeria on employee morale can be significant if the reorganization of the business is not handled effectively. During any merger or acquisition effort, there are at least two groups of employees involved, often coming from organizations with distinctly different cultures and styles. Learning a new culture can be challenging, but is especially so when employees are faced with uncertainty about what the future may hold and whose job is on the chopping block. Bank recapitalization which was effective from 2006 is aimed at making Nigerian banks stronger and better in-order to finance all sectors of the economy including the major drivers of the economy-Small and Medium Scale Enterprises. This effort to stabilize the banking industry of Nigeria and make it financially strong and healthy will definitely affect employee morale and productivity-either positively or negatively.

1.2 STATEMENT OF THE PROBLEM Change is often difficult for employees, especially if they were not directly involved in decisions that impact their jobs. During mergers and acquisitions, change can be especially difficult and can lead to stress which can have a negative impact on morale if not handled effectively (Iloh, 2012). Communication is critical during these times. To the extent possible organizations should strive to share as much information about what is happening and, most importantly, how the changes will affect individual employees, as they possibly can.

When two or more organizations come together, culture clash is inevitable. Rarely do two organizations have the same culture. As these groups get to know each other there will inevitably be conflict and perceived or real losses on both sides, says Pophal. Employees may fear losing their jobs or losing opportunities that they formerly had. This fear can negatively impact productivity and may even result in employees leaving the company to seek jobs elsewhere. It is important for organizations and their managers and HR staff to recognize this and to provide opportunities for employees to get to know each other, to openly address concerns, and to work together toward the creation of a new culture that will merge the best of both worlds (Leigh, 2008).

When employees are concerned about their own job security they are more likely to become competitive with others and this competitiveness can result in conflict--sometimes even violence. During mergers and acquisitions it is important for managers and HR professionals to be alert to signs of negative competition and to ensure that employees are being kept informed about impacts on their jobs and their futures with the company. While some competition is good, competition is not good when it creates tension and negative conflict in the organization (Liegh, 2008)

1.3 OBJECTIVES OF THE STUDY The main objective of this study is to examine the effects of mergers and acquisitions on employee morale in First City Monument Bank (FCMB), Calabar Main branch. Specific objectives of the study are:

  1. To examine the effect of merger and acquisition on employees’ confidence on a given task in FCMB.
  2. To appraise the effect of merger and acquisition on employees’ will to remain with current employer.
  3. To examine the effect of merger and acquisition on employees’ zeal to take on newer task.
  4. To examine the effect of merger and acquisition on employee job satisfaction with respect to new company policies, reviewed employees’ benefits and working condition.

1.4 RESEARCH QUESTIONS In-order to guide the study and achieve the research objectives stated above, the following research questions apply to the study:

  1. What effect do merger and acquisition have on employees’ confidence on a given task in FCMB?
  2. What effect do merger and acquisition have on employees’ will to remain with current employer?
  3. What effect do merger and acquisition have on employees’ zeal to take on newer task?
  4. What effect do merger and acquisition have on employee job satisfaction with respect to new company policies, reviewed employees’ benefits and working condition?

1.5 RESEARCH HYPOTHESES

  1. Ho: There is no significant relationship between merger and acquisition and employee confidence on a given task.

Hi: There is a significant relationship between merger and acquisition and employee confidence on a given task.

  1. Ho: There is no significant relationship between merger and acquisition and employee retention.

Hi: There is a significant relationship between merger and acquisition and employee retention.

  1. Ho: There is no significant relationship between merger and acquisition and employee Zeal to take up newer tasks.

Hi: There is a significant relationship between merger and acquisition and employee to take up newer tasks.

  1. Ho: There is no significant relationship between merger and acquisition and employee job satisfaction.
  2. Hi: There is a significant relationship between merger and acquisition and employee job satisfaction.

1.6 SIGNIFICANCE OF THE STUDY The study will aid organizations currently undertaking strategic changes through mergers and acquisitions to design and implement corporate governance policies that will benefit both employees in the acquired firm and that of the parent company. Various insights into how confidence, zeal, commitment and overall productivity of employees can be affected by mergers and acquisitions will be clearly highlighted in the study to further enlighten managers of various organizations on proper ways to go about merging and acquiring other firms without risking productivity of employees. Furthermore, the study will serve as guide to student researchers who may wish to explore more into the effects of mergers and acquisitions on overall performance of an organization.

1.7 SCOPE OF THE STUDY The study is delimited to First City Monument Bank Plc, Calabar main branch. All findings and recommendations from the study are based on issued questionnaires to employees of the bank. A wider scope could not be covered by the researcher due to time and financial constraints.

1.8 CONCEPTUAL FRAMEWORK

 

1.9 LIMITATION OF THE STUDY Funds were in very short supply to the researcher and the researcher could not purchase some valuable print materials needed for this project at the time they were most needed. The expenses on transportation to FCMB are so enormous because of many occasions the researcher was not attended to and would have to leave without the information required. Another constraint faced by the researcher was limited time for the completion of the project and engagement in other academic activities which occupied most of the researcher’s time. The research was faced with some restrictions in the area of the case study; this is due to bureaucratic reasons in the administrative procedures in the Organization. It was not possible to get all the necessary information that would have helped in finishing the work on stipulated time. The process of going through some records to get data was very tedious and formidable task as some materials needed are tagged “TOP SECRET”.

1.10 DEFINITION OF TERMSMerger and Acquisition (M&A): Mergers and acquisitions (M&A) are both aspects of strategic management, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.Employee: An employee is anyone who has agreed to be employed, under a contract of service, to work for some form of payment. This can include wages, salary, commission and piece rates.Employee Morale: Employee morale, in human resources, is defined as the job satisfaction, outlook, and feelings of well-being an employee has within a workplace setting. FCMB: First City Monument BankProductivity: Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it.REFERENCES Liegh, R (2008). The Effects of Mergers and Acquisition on Employee Morale. Copy obtainable at http://smallbusiness.chron.com/effects-merger-acquisition-employee-morale-3196.html Olaitan, L. (2006). An empirical evaluation of the corporate strategies of Nigerian companies. Journal of African Business, 2(2), 45-75. Iloh V. C. (2012). The Effect of Bank Consolidation on Small and Medium Scale Enterprises in Nigeria. Lagos: Longman Nigeria Plc.

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How To Write Chapter Three Of Your Research Project (Research Methodology)

  • Methodology In Research Paper


    Chapter three of the research project or the research methodology is another significant part of the research project writing. In developing the chapter three of the research project, you state the purpose of research, research method you wish to adopt, the instruments to be used, where you will collect your data, types of data collection, and how you collected it.

    This chapter explains the different methods to be used in the research project. Here you mention the procedures and strategies you will employ in the study such as research design, study design in research, research area (area of the study), the population of the study, etc. You also tell the reader your research design methods, why you chose a particular method, method of analysis, how you planned to analyze your data.

    Your methodology should be written in a simple language such that other researchers can follow the method and arrive at the same conclusion or findings.

    You can choose a survey design when you want to survey a particular location or behavior by administering instruments such as structured questionnaires, interviews, or experimental; if you intend manipulating some variables.

    The purpose of chapter three (research methodology) is to give an experienced investigator enough information to replicate the study. Some supervisors do not understand this and require students to write what is in effect, a textbook.

    A research design is used to structure the research and to show how all of the major parts of the research project, including the sample, measures, and methods of assignment, work together to address the central research questions in the study. The chapter three should begin with a paragraph reiterating the purpose of research. It is very important that before choosing design methods try and ask yourself the following questions: Will I generate enough information that will help me to solve the research problem by adopting this method?

    Method vs Methodology

    I think the most appropriate in methods versus methodology is to think in terms of their inter-connectedness and relationship between both. You should not beging thinking so much about research methods without thinking of developing a research methodology.

    Metodologia or methodology is the consideration of your research objectives and the most effective method and approach to meet those objectives. That is to say that methodology in research paper is the first step in planning a research project work.

    Design Methodology: Methodological Approach

    Example of methodology in research paper, you are attempting to identify the influence of personality on a road accident, you may wish to look at different personality types, you may also look at accident records from the FRSC, you may also wish to look at the personality of drivers that are accident victims, once you adopt this method, you are already doing a survey, and that becomes your metodologia or methodology.

    Your methodology should aim to provide you with the information to allow you to come to some conclusions about the personalities that are susceptible to a road accident or those personality types that are likely to have a road accident.

    The following subjects may or may not be in the order required by a particular institution of higher education, but all of the subjects constitute a defensible in metodologia or methodology chapter.

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