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ervisors could start acting friendlier towards employees or any form of strict supervision and punishment can be abandoned.
The continuous layoffs create a resistance to change in employees as many aspects of the company changes when massive layoffs occur. To overcome the resistance to change, HP could help employees find logic in why these massive layoffs have occurred. Employees will still have security issues, but once they have all the reasons for change and there is no ambiguity, the environment would be more relaxed and any unnerving rumours floating around in the grapevine would be abolished. This could reduce dissatisfaction of the employees slightly.
A risky merger (with Compaq) that “would create a bloated, vulnerable company anchored on the manufacture of commodity products at little or no profit.”

‘Business mergers’ occur when two firms combine together to form a new firm. Many reasons are associated with mergers – the most common ones including potential Economies of Scale, increased market share, and so on. But what is less regarded by higher management levels in organizations is the impact on mergers on the overall workforce, and the deteriorating affects a merger can have on remaining labour. This report will address the human resource issues emerging from the merger of Compaq with Hewlett Packard (HP).

There are multiple causes for negativity in the workforce after an M&A, some including increased centralization in the organization’s structure and loss of organizational culture. Centralization occurs when decision-making power is centered at one point in the company – normally towards the higher levels of hierarchy (senior managers). This cuts off communication to lower levels of the organization, which can decrease the amount of communication flowing through the chain of command in the business and hence contribute to increased uncertainty in the workforce (Kusstatscher,2005 ).

After this, once a merger takes place there tends to be a loss of previously accepted culture from the prior-merged firm. Employees who identified more so with the business’s previous culture will likely become more isolated and secluded upon the merger – where there can be a new culture imposed on them due to the presence of another business. This can trigger a ‘loss of identity’ for employees, which may alter their perception of the business that they work in, and will likely also increase the amount of uncertainty that they experience within the merged business.

Another major effect of an uncoordinated merger includes employee stress, contributed by concerns of job security due to potential layoffs after the merger. These redundancies occur because merging companies do not wish to duplicate job roles; hence by making specific job roles redundant they can rationalize costs and utilize the minimal amount of workers required in each department. This was the case between the merger of HP and Compaq – which reported a job cut of approximately 15000 (Foo and Menon,2001) people, triggering increased stress levels amongst staff as to whether they would retain their job in the merger process or not. Employee stress thus tends to lower overall moral and decrease productivity in the long run due to frustration over job security, as one employee expressed from HP’s Singapore branch: “either way, we’re done for” iii( Foo & Menon,2001)

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