Management And Human Resource Strategies In The KazOil Mergers And Acquisitions

The Primary Cause of the Problem in the KazOil

Leadership style and communication

The primary cause of the problem in the KazOil was the disintegration of the Soviet Union in the late 1980s.  Until 1996, the owning of KazOil was Kazakh ministry of energy, and ministry protected the company from the competition. After the selling of the KazOil to the Hydrocarbon, there was an improvement in the employee engagement, proper communication channel and democratic leadership style. Thus, the Canadian style of leadership was friendly to the top management, employees and the public. The second acquisition of the KazOil to the China petrol was not easy to the employee; China leadership style resembled that of Soviet such as having a high level of bureaucracy and strict rules and policies. Since the state fully owned the company, KazOil had a highly centralized structure in administration. The leadership at KazOil business was authoritative one. The employee had the utmost respect for the authority and avoidance of uncertainties. The organization technology and operation were traditional, and they focused on short-term goals. The control in the group was ineffective even though they held a significant amount of power. The communication was poor between staff and managers. Additionally, there was no employee recognition for the outstanding performance, and so, managers did not show any development and motivation to the employee (Wilson 2015). The second acquisition of the KazOil (from Hydrocarbon to the China oil) was due to operational difficulties and market volatilities. 

Training programs for staff members and all managers; to enhance the performance of the organization. Hydrocarbon introduced the training of an employee, unlike the original KazOil where they did not value their employees. Additionally, there was introduction of the safety measure; it was one of the factors to encourage its workforce so as to improve their welfare. The corporate structure of the Hydrocarbon under Canadian management was professional according to the view of the employees (Pomfret 2005).  Participation of the Hydrocarbon to the corporate social responsibility such has social events to the general public was necessary in improving the employees morale. The training program made the KazOil under Canadian to achieve its goals in the corporate philosophy of training; building workers confidence that would improve employee job satisfaction (Pomfret 2005). Similarly, there were better procedures and policies relating to the job description, recruitment and performance appraisals. And so, the local employees felt involvement in the strategic decision-making process. Hydrocarbon did expand its units in three different locations so as to cater for regional variation in economic development, labor market dynamics and employee diversity, and education backgrounds (Ross 2012).

Training Programs for Staff Members and All Managers

 According to the people’s views, the management of the China’s petrol and state-owned enterprises in the Soviet Union had common traits characterized by set rules and practice, high level of bureaucracy and hierarchy, and distribution of the resources on the grounds (Ross 2012). The rate of employee’s turnover was high due to the changing of management style. In China control, there was a communication barrier, lack of transparency and administration team was very secretive. As one of the leaders said, if it were not for the Canadian style of leadership, acceptance of the change in China style would be easy, but workers know the professional and better way to do business.

Nurlan suggest that in 25 years, Chinese management team were less socializing which led to less motivation to the staff and subordinates Adhering to the set government regulation is necessary for the business operation. Nurlan sister-in-law states “if there is the conflict between government and company, it is good to pay formal fees for the business service to continue” (Minbaeva, Hutchings and Thomson 2007). Introduction and implementing change in management is critical since it requires engagement with the staff, and training the staff so that change can give the best results. According to the Lewin change management model, the majority of individuals tend to operate within distinct zones of safety.

Unfreezing stage: most people make an effort to resist change (Cummings, Bridgman and Brown 2016). For that reason, during the initial stage of the change, Nurlan should use motivation has a key factor to encourage workforce.

Transition stage: after the initiation of the modification, the firms go into changing step where reassurance and adequate leadership is essential for the process to be efficient and fruitful.

Refreezing stage: after the successful acceptance and implementation of the change, there is the stability of the organization. Staff members refreeze as they work under new rules and policies.

 A woman from human resources suggests that Canadian acquiring the KazOil, the resistance was little since the employees were fully engaged (Tordo et al. 2013). Similarly, there was introduction of staff requirement, training measures, and inclusive and large socials events. Additionally, the Canadian did introduce customized career planning and all employees participated in the English courses (Tastulekova 2015). Another woman from the human resource suggests, currently, under Chinese management, there is no personal improvement, no training strategies and if they act, it is because of the government requirement. However, the Nurlan’s sister in laws states that under Chinese management, there is an introduction of the insurance benefits, barely work overtime and extended maternity. Consequently, balancing of the work life flexibility is vital as it improves the employee motivation which further increases productivity (Fragouli and Akapo 2014).  In spite of the work-life flexibility, there is an increase in the employee turnover due to the poor leadership style, poor communication, distancing of the senior management and staff.

Kotter’s Step Change Model

Kotter’s step change model argues that, the workers accept the change after the managers or leaders convinces the employees the need for the modification (Cummings, Bridgman and Brown 2016). KazOil under Nurlan will increase the change urgency, build the team, create the vision for change, communicate, empower the staff through incentives, create short-term goals, persistence and make the change to be permanent(Cummings, Bridgman and Brown 2016). The importance of the models to the KazOil assist preparing and accepting change and the transition stage is easy.

KazOil under China management dictates the procedures and policies, direct and control all the operations without involving the subordinates (Fragouli and Akapo 2014).  . It shows the relationship of management with that of authoritarian leaders who build distance between themselves and employees, and control over their employee on the rules, actions, and methodologies. According to the authoritarian leaders, supervision of the employee is vital while performing their duties. It relates to the Douglas McGregor’s philosophical view of humankind: theory x which proposes that leaders should coerce and control employees.

Cultural fit  

Compatibility in the KazOil culture is important as it will bring together different culture in the mergers and acquisition process (Wilson 2015). Mergers and acquisition have a degree of the misalignment because company culture entails the assumption and beliefs shared by the team members in business which influences the part of their group life.

Outsourcing and technology decisions

Managing human resource technology and deciding which functions to outsource or which systems to replace or keep is a very high complex to undertake (Fragouli and Akapo 2014). Nurlan should avoid routine disruption of the operation as the technology integration occurs regularly.

The KazOil having a planned communication strategy is vital. Effective communication involves information in progress and nature of the integration, shared vision of a new firm, and the benefit (Fragouli and Akapo 2014). In KazOil, effective communication should be consistent, clear and up-to-date so as workers have a sense of control, increase in the coping abilities among employees and also minimize the performance integration.

Under Canadian, there was development and communication to workers a people-related strategy so as to shape the culture of the newly merged organization. Plans include the development of critical policies, guidelines, and rules to govern the behavior of employees and workplace expectations.

For KazOil Company to be successful, the managers should retain the key talents. The Nurlan should request for the private interview in advance with key individuals (Wilson 2015). Otherwise they will consider other employment options. It is because knowledgeable people with the major talents understand their professional and personal marketability.

Compatibility in the KazOil Culture

  Early replacement of employees is necessary to stabilize the new company. Delaying complicates the diverting attentions and fosters internal competition (Wilson 2015). The ideal human resources should assess the potentials, skills, motivations and capability of workers in the mergers and acquisition. And so, significant challenges is that of who to retain, who to terminate and who to redeploy.

Human resource has duties to link the employee benefits into a program that fit the culture of a newly formed company, or discard the plans and start afresh. However, the employee benefits programs takes time to accomplish and a complex undertaking. 

Compensation strategies and employee benefits program

The senior management team at KazOil Company can opt for a special arrangement such as special retirement provision or stock option as result of high-profile nature of the new positions (Collins and White 2013). Human resources from two organizations can come up with the payment plans programs that fit into a new group. Additionally, the newly merged companies, human resources can discard the originals plans and create programs that meet current direction and goals.  Moreover, KazOil human resources can link the unlike employees benefits into a program that fits the newly formed entity.  Conversely, HR can discard the original plan and start from the beginning. The motivation of the employee can improve if there are changes in the benefits coverage.

Employee motivation

Employee motivation serves as encouragement to actions which comprises both intrinsic and extrinsic factors. The natural factors are personal desire to do work. The motivation of employee can affect the aspects of work including intensity, direction, and duration. The intensity means how much effort person put into practice (Renwick, Redman and Maguire 2013). Direction implies that individuals have opportunities to select the way job will progress.  Duration defines the persistence of the employee at work.  Motivation theory comprises the process and cognitive theory. Cognitive theory correlates to the Maslow’s hierarchy of needs which show the behaviors of an employee will focus on the lower demand satisfaction before the self-actualization. The assumption is that if there are no satisfactions in the needs, the employee will change behaviors and it will cause poor work performance (Renwick, Redman and Maguire 2013). So, during the mergers and acquisition of the KazOil, employee motivation was necessary. Lack of proper integration, it lead to employee seek employer resembling Canadian management style. China oil acquiring KazOil created uncertainties which further caused frustration, confusion, anger, stress and thus negatives emotion caused KazOil employee to leave and join other companies. Hence, Nurlan should create organization commitment and trust in the remaining staff, since motivation in an organization is vital to success. Additionally, Nurlan has to manage employee problems accurately, efficiently and proactively.

Managing Human Resource Technology

Summary

For leaders to makes mergers and acquisition work appropriately and successfully, it is not about putting two companies together but also integrating individuals in two companies with differing attitudes, mindsets, and cultures. When making mergers, the managers should not only concentrate on the financial aspects but the people issues and cultural concerns for effective post-acquisition integration (Shin, Taylor and Seo 2012). Employee motivation, workplace identity, compensation programs and communication has a positive impact on the social status. It is important to assess organization culture at the area of each firm, build trust and loyalty between the merger companies and within existing team (Shin, Taylor and Seo 2012). In the process of acquiring KazOil, China oil has issues about the human resources management. For that reason, Nurlan should avoid conflict between the senior management and subordinates to makes the merge process successful. Informing every employee entails information flow and openness of communication. Nurlan should systematically gather information and feedback, communicate in all direction, providing the ways for dialogue in small groups setting regarding anxieties, hopes, and fears. In addition, he should deal with rumors quickly and openly without secret meeting as witnessed in the China management style.

References

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Tastulekova, A., 2015. Socio-Economic Effects of National IPO Program in Kazakhstan.

Tordo, S., Warner, M., Manzano, O. and Anouti, Y., 2013. Local content policies in the oil and gas sector. World Bank Publications.

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