What the failed Snapdeal-Flipkart merger teaches us: Deal with human capital first
While companies across India and abroad follow best practices at the workplaces based on the industry standards, there is a dissimilarity in the implementation.
After the merger between Snapdeal and rival e-commerce giant Flipkart fell through, the biggest shock was felt by the employees. Moneycontrol reported that Snapdeal employees cried foul over the termination of merger talks with Flipkart and have also written to the PMO on this matter.
Whenever two companies come forward for a merger, the biggest impact is faced by the employees of the respective companies. Subramanyam S, CEO of Ascent HR said that during a reorganization, workforce distribution and alignment, apart from reporting or location, can also change.
If it is one Indian company merging with another, not only will there be a change in the reporting structure, the compensation structures including the basic salary, benefits as well as bonuses and variable pay, will also change.
Subramanyam adds that in the case of a Indian company merging with a multinational corporation, there is a definite change in the workplace culture.
“Since the law does not stipulate any norms for dealing with human resources during a merger activity, they are often the last on the minds of the two companies,” he explained.
Indian companies have a much different way of dealing with clients and delivery metrics than MNC counterparts. In cases where a merger happens, employees are hardly given any time to adjust to the new surroundings. For instance, if a smaller merger happens with a large company, it is much more difficult for employees to adjust to the new surroundings.
Subramanyam added that especially if it is a startup where there no structural functions and employees have an informal way of functioning, in the new environment they may find it a challenge to adapt. “It is imperative that not only are they given a sense of what the new workplace will be, some exceptions should also be made for the first few days,” he added.
While companies across India and abroad follow best practices at the workplaces based on the industry standards, he said that there is a dissimilarity in the implementation.
“A reduction in force is casual in America, but not in India. Culturally, there are best practices in multinational corporations. But, contextual handling is a necessity,” he said.
With trade unionism coming back into the country with the recent IT job crisis, it is also crucial for companies to ensure that employee rights are taken care of, so that they do not end up filing complaints against workplace practices and policies.Especially when two companies merge, some roles do get redundant. To enable a smoother exit of employees, it is also important that the notice period and related pay related promises are honoured.