Problem Solution: Interclean, Inc.

Problem Solution: InterClean, Inc.

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Problem Solution: InterClean, Inc.

Human resources are an integral part of an organization. An organization cannot survive without human resource policies and procedures. "Human resource activities in a company must directly support business strategy - and the satisfaction of customer needs" (Walker, 2002, p.59). For most companies that enter a global market, human resources play a huge role in the companies' success by updating policies to accommodate the new cultures. It is becoming more difficult in today's global environment to be competitive without growing and expanding rapidly through deals that result in mergers or acquisitions. This is the reason that when mergers and acquisitions occur, the human resource department has to rapidly realign the company's structure and policies to accommodate, reflect and uphold the organizational strategy of the newly merged company. "It is not enough for the human resource function to be responsive to management, "customer-oriented", or even aligned as partners with management. The function is an integral part of management - leading and implementing needed change" (Walker, 2002, p.59). Human resource management should take into account not only the organizational strategies but also the cultural differences, take advantage of recruiting and selection alternatives, evaluate current training and development programs, and conduct a gap analysis of employee skills and corporate needs.

Situation Analysis

InterClean, Inc. is an industrial cleaning and sanitation company. In order to stay competitive and successful in the eight billion dollar industry, the company needs to offer more than just the best products to their clients. As the industry evolves, clients are more interested in solutions and full service offerings to meet their needs and new, more stringent, regulation requirements for environmental safety. Therefore, the company is planning to move from the current product-based model to a solution and services-based model. InterClean, Inc. has acquired EnviroTech, Inc., a company which pioneered the service-based market. With this acquisition, InterClean, Inc. will achieve domestic market dominance in the sanitation industry and with EnviroTech's service expertise the company will develop and provide a full spectrum of cleaning services and solutions to their clients. To achieve these goals InterClean, Inc.'s human resource department has to develop a strategy to align the organizational structure to the company's strategy by training the current staff, hiring new staff, rewriting company HR policies and integrating EnviroTech's staff seamlessly into InterClean's organization.

Issue Identification

During an acquisition a company can face many issues. In order for InterClean to successfully implement changes, the top leaders along with Human Resources leaders need to identify and mitigate these issues.

The most obvious issue that InterClean is currently facing is that employees have low moral. The employees worry about the effect the merger will have on their position in the organization, remain uncertain about the degree of influence they will have in the new situation and feel the stress of facing yet another change in the organization. All of these factors are leading to employees' low moral. Low moral of the employees can lead to other issues such as a loss of productivity, difficulty in retaining qualified employees, and insufficient training for new employees. Besides the internal effects of low moral, employee interaction with customers can be negatively affected leading to a loss of customer satisfaction with the company. InterClean will also need to deal with layoffs, frequently called downsizing, a process in which companies remove, temporarily or indefinitely, a number of employees from their payroll. The general purpose of this practice is to reduce the organization's burden of excess labor costs when human resources cannot be used effectively. There will be some employees who do not fit the new corporate culture and want to leave, so InterClean could face additional costs of severance packages, recruiting replacements, and hiring temporary labor to fill immediate manpower needs. Because InterClean Inc. is planning to expand globally, the company will need a plan to deal with cultural differences that can have a significant impact on the integration of the acquired company into the new whole one. "In those situations where culture has been the deciding factor in stopping a deal, it is typically a result of senior leadership incompatibility or indications of strong differences in ethics/value systems" (Bundy, 2005). Another concern for InterClean is corporate culture which refers to the set of values, beliefs, and behavioral dynamics which exist in an organization. Successfully molding a corporate culture is a major challenge for any company which goes through an acquisition. Ineffective cultural integration is expensive in the form of lost productivity and sales, lost key personnel and customers. "Being able to merge and reinvent corporate cultures plays a critical role in national and international takeovers, joint ventures and mergers. If the cultures cannot be merged or reinvented then the business will fail" (Mowat, 2002). The goals of the merger demand new skills, deeper knowledge and understanding of the regulations and products that will affect the new offerings to the customers. InterClean's budget to train their employees is not sufficient to provide adequate training for the staff in their new roles and responsibilities. This lack of money will likely hurt customer satisfaction.

Opportunity Identification

There are many benefits and opportunities that the recent acquisition will bring to InterClean. The best time for the company's HR leaders to make changes to the workforce, inventory the skills of the current sales force, and identify skills and competency levels needed for the company's new direction is at the time of the merger. The acquisition of EnviroTech gives InterClean, Inc domestic market dominance in the sanitation and cleaning industry and allows the company to expand its business into new markets. The company will also gain valuable skills and the ability to expand service offerings and solutions to their customers. All these in turn will help company improve profitability, increase market share and advance the quality of service

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