Understanding the Case

Customer comes second, because the employees come first It is not the company which is acquired, but the BENEFITS Both the organizations having global aspirations The case of reverse acquisition

NDSS
Providing IT solutions across communications value chain and aid clients to accelerate product development life cycle Organization For the employees, by the employees and of the employees HR policies make it the most preferred company Spread across many countries India, Sweden, China, Canada, France, UK and USA

Deustche Technologies
Known as NDSS Germany Emphasis on improving the competitiveness of its customers among their rivals by accelerating their R&D and testing processes to achieve high quality product No separate HR department Provided hardware support to the IT industries

Missing Case Facts

Structure of NDSS Philosophy of the organizations Delegation of authority on acquisition Qualitative aspects of the work force International exposure (of work force) on both sides What synergy effect is sought through the acquisition Budget allocation

Assumptions
Deutsche Technologies follows the European HR practices

Why acquisition?...Strategic alliance

Objective
NDSS: Providing IT solutions across the communications value chain and hence aids clients to accelerate product development life cycle Deutsche: Improving the competitiveness of its customers among their rivals by accelerating their R&D and testing processes to achieve high quality products

Strengths/ Weaknesses

NDSS: Strength of Excellence in services, global presence and state-of-the art R&D centers While the weakness lies in the high attrition rate Deutsche: Strength of hardware design skills, global presence Weakness is the weak managerial ability

Opportunities/ Threats

For NDSS and Deutsche: Opportunities are Economies of scope and scale Threats from rising competition

Strategic Alliance
The strategic fit or the synergy effect
Objective

Strengths/ Weaknesses

Opportunities/ Threats

The strategic fit of the three components is the area of interest and that is why the two organizations decide to work coherently

Strategic fit in the acquisition

NDSS Step towards increased global presence, better recognition because acquisition of a bigger organization Deutsche Entry in the Indian market, coalition with organization of shared values, Further acquisition with a smaller partner would allow Deutsche to retain control and not loose out completely to the foreign player

Issues in acquisition
Reverse Acquisition a bigger company getting acquired by the smaller one Proper planning Execution Cost control

Planning challenges
Establishing and Managing the Global perspectives Developing uniform global standards Knowledge and Innovation dissemination Deployment and efficient allocation of resources Removal of the duplication of the activities

Model for Change Management

Acquisition (Forces) Initiating Change

When? Why? By Whom?

Change Agent (team)

Structure, technology, Processes

What?

Change Process : Unfreeze Move - Refreeze

Implementation: Intervention, Persuasion and Edict

How?

Change in organization
Source: Organisation Theory, by Stephen Robbins

Effective organisation

Execution
Defining the change agent and the change process
Change will be initiated by a team Team members from both the organizations Suggested ratio 60:40 (NDSS:NDSS Germany)

Communication to the operational level critical to successful acquisition Expatriate management

Resource or Human?
Human

Resources

Expatriate management
Indian nationals as higher level managers for NDSS Germany Emphasis more on relational and cultural skills for expatriate employees from parent company Inter-cultural competence: better stress management Training programmes for expatriate employees
Understanding code of ethics Cross cultural training: cross cultural awareness and develop ability to interact

Reverse acquisition
Management of change specifically Deutsche Technologies to NDSS Germany

Management of change
Structural change

Change
Management change Cultural change

Structural Changes
Major structural changes Strategic has to be faced by Deutsche Technologies Tactical Implementation of new systems Removal of duplicate

Operational

functions Information and authority

flow as per hierarchy

Management Changes
Managing Conflicts Line and Staff conflicts more in NDSS Germany Relocation of Managers and other resources Delegation of discretion Semi-autonomous Deutsche Both are complementary organizations Communication of change to the operational level Follow 4 Cs of communication Clear, Concise, Complete and Consistent

Cultural Changes
Difference in 2 levels of the culture
National or Country Culture
Trade Unions are more organized in Germany Greater importance to technical competence and functional expertise Rampant bureaucracy in India More tightly integrated and consistent: greater endurance to change in Germany

Organizational Culture
Lateral Informal work environment System of having buffer in the organization disciplined work force Rate of attrition Employer Employee relation more collegial and participatory in Germany

Cultural disparities
Parameters

Power Distance Individualism Masculinity

Uncertainty Avoidance Long Term Orientation

Power distance is less in Germany which means the upper echelon is more India scores low in the Individualism which NDSS in Germany Deutsche accessible emphasis is than India means more Technologies given to collective The difference behavior while in Germany 77in the 35 roles between male people stress more on and female is high and Individual achievement 48 67 Germany isavoid also more Germans try to the NDSS scores high here and is or less the same. risk and uncertainty, theymore concerned with the 56 66the plan everything very long term goals than carefully and follow the Deutsche which is in tune rules and regulations with the East and 65 West 40 differences

61

31

Source: Hofstede Model - Cultures and Organisation Values are from secondary sources on clearlycultural.com

Cultural disparity is high on certain measures which needs to be tackled

Cultural Changes
Managing the dominant culture which is of the Deutsche as Indian NDSS is more receptive Change in the mindset that Indian organizations are inferior than their global counterparts Internal marketing Communicating to the lower level of the organization Internal Marketing to the employees of the organization To be disseminated through role-plays, Stories, training sessions, cross-country exposures and symbols Subcultures needs to be preserved as it is acquisition due to complementary nature of acquisition

Global HR Systems
Standard uniform systems and procedures applicable across NDSS global HR Management Four factors for consideration
Cultural Institutional Business structure Roles and competence of HRM professionals

Global HR Systems
Better Managed Acquisition across the Borders

Global HR Systems
Form Global HR Networks
Standardize ends & Competencies

THANK YOU!