Effect of Merger and Acquisition on Employee Morale in the Banking Industry
CHAPTER ONE
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:
- To examine the effect of merger and acquisition on employees’ confidence on a given task in FCMB.
- To appraise the effect of merger and acquisition on employees’ will to remain with current employer.
- To examine the effect of merger and acquisition on employees’ zeal to take on newer task.
To examine the effect of merger and acquisition on employee job satisfaction with respect to new company policies, reviewed employees’ benefits and working condition.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
In today’s globalize economy, mergers and acquisitions (M&A) are being increasingly used world over for improving competitiveness of companies through gaining greater market share, broadening the portfolio to reduce business risk, for entering new markets and geographies, and capitalizing on economies of scale among other (Kemal, 2011). The reasoning behind any corporate merger is that two companies are better than one because they increase shareholder value over and above that of the two separate firms (Sharma, 2009). Merger is the combination of two or more entities by purchase acquisition whereby the identity of one of the entities remain while the others are being dissolved (Fatima & Shehzad, 2014). The term “acquisition” is used to refer to any takeover by one company of the share capital of another in exchange of cash, ordinary shares, or loan stock (Halpern, 1983). M&A have played a critical role in the success of many modern organizations. Their role in boosting the size of start-ups and increasing their market capitalization allow them to compete with much larger and well established companies (Badreldin & Kalhoefer, 2009). Other benefits and goals of M&A include market penetration, vertical expansion to control supply and distribution sources, market entry, identifying asset potential and economics of scale (Eccles, Kersten & Wilson, 2001). During the past decades, the insurance industry has experienced a wave of mergers and acquisitions. Traditionally, the insurance industry has been known for its high-cost distribution system and lack of price competition, but insurers are increasingly faced with more intensive competition from non-traditional sources such as banks, mutual funds, and investment firms. The increased competition has narrowed profit margins and motivated insurers to seek ways to reduce costs. Technological advances in sales, pricing, underwriting, and policyholder services have forced insurers to become more innovative; and the relatively high fixed costs of the new systems may have affected the minimum efficient scale in the industry. These developments suggest that financial synergies and potential efficiency gains may provide a major motivation for the recent mergers and acquisitions in the insurance industry, enhancing the efficiency of the target firm and/or the combined post-merger entity (Poposki, 2007).
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought examine the effect of merger and acquisition on employee moral Nigerian banks
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to examine the effect of merger and acquisition on employee moral in the banking industry.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of merger and acquisitions on employee moral in banks in Nigeria.
Summary
Mergers and Acquisitions in the insurance industry is increasing globally as shareholders seek alternative ways to boost revenue growth, build economies of scale and ultimately increase profitability. In the Nigerian insurance industry a number of factors have influenced M&A decisions; these include the changes in regulation, technology and distribution. Statutory demands for a stronger capital base and solvency margins will see mergers and acquisition as the only viable strategic option to Nigerian banks who want to remain competitive and profitable in the long– run.
Conclusion
From the study findings, the study concludes that employee pay and remuneration affect employee performance in the merged organization. With this regard, wages and benefits, allowances/bonuses, as well as terms of employment and performance based pay affect the employee performance in the current merger setting. The study concludes that mergers affect the sense of ownership and belonging among the employees in the Bank hence their performance. The study established that employee contributions, employee composition, shareholder wealth and merger satisfaction and communication affect employee performance in the Bank. The study also concludes that employees understood the procedures, policies, and responsibilities that are part of their job in the merged bank setting and job security affects the employee performance in the Bank. It was made clear that same job satisfaction, job skills and traits, employee retention and organizational commitment affects employee performance. The study finally deduces that chain of command affects the employees’ performance in the Bank. It was also ascertained that personal relationship, task conflicts, coordination, workloads, cultural compatibility, management support, working conditions, employees’
Recommendations
From the findings and conclusions, pay and remuneration is a major factor of mergers that affect the employee performance in ECB. The management of the Bank should also check the quantity of work and compare with the salary given to the employees. Employees are highly motivated by monetary value which in turn affects their performance. The management should therefore increase the pay of employees for better performance. Promotions of the qualified employees should also be put into consideration. Performance appraisal exercise should be taken seriously in organizations to check the performance of employees hence take the necessary actions towards the strengths and weaknesses of employees in the merger setting. This study recommends that bank increase formal and informal training programs to their staff so as to enhance their sense of ownership and hence performance through mergers and acquisitions. In this regard, communication should be enhanced and more structured approach to the process should be established. It will also enable them acquire relevant knowledge and skills that lead to increased efficiency of the staff working at the Bank. This will in turn affect the performance of commercial banks in Nigeria.
Reference
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