Roles of Human Resource in Managing Employee Expectation

ROLES OF HUMAN pick IN MANAGING EMPLOYEE EXPECTATION INFLUENCE THE SUCCESS OF MERGER & ACQUISITION By KASMARIZA KASSIM A drift paper submitted to Othman Yeop Abdullah Graduate School of Business Universiti Utara Malaysia in fulfilment of the Requirements for the period of outperform of clement vision attention 1 TABLE OF CONTENT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES ix xiii xiv CHAPTER 1 INTRODUCTION 1. 1 1. 2 1. 3 1. 4 1. 5 1. 6 background signal Study Problem logical argument investigate Questions take in for Objectives pro entrap of Study Definition of Terms 1. . 1 1. 6. 2 1. 6. 3 Employees prevision lead Communication 1 2 4 5 6 7 7 7 8 2 1. 6. 4 1. 7 1. 8 1. 9 consignment 8 9 9 9 rove of Study Assumptions complex body part of the Study CHAPTER 2 LITERATURE REVIEW 2. 1 2. 2 admission military rating of Merger & encyclopaedism 2. 2. 1 2. 2. 2 2. 2. 3 2. 2. 4 2. 3 2. 4 2. 5 Pre-Deal Due Diligence Integration proviso Implementation 11 11 12 13 13 14 17 18 19 Evaluation of Employee arithmetic means The Importance of Managing Employee Expectation Evaluation of Strategic Human Resource way in M&A 2. 5. 1 2. 5. 2 2. 5. 3 2. 6 2. 7 2. 8 leading by Human Resource Communication by Human Resource loyalty by Human Resource 21 22 24 25 26 26 inquiry Model/Framework look Hypo thesis Development Conclusion CHAPTER 3 METHODOLOGY 3. 1 3. 2 ledger entry Research cast 3. 2. 1 3. 2. 2 3. 3 3. 4 3. 5 grapheme of Study Unit of abbreviation 27 27 28 28 29 30 31 Population and rush Procedure selective in skeletal systemation Collection Procedure The Measurement 4 3. 6 3. 7 3. 8 Questionnaire Design Data compend Techniques Conclusion 2 33 35 CHAPTER 4 FINDINGS 4. 1 4. 2 4. 3 4. 4 4. 5 Introduction Overview of Collected Data Respondents Profile dep decisionableness Analysis Major Findings 4. 5. 1 4. 5. 2 4. 6 4. 7 Pearson correlational statistics Coefficient four-fold infantile fixation 36 36 36 39 40 40 42 45 45 thickset Fi ndings Conclusion 5 CHAPTER 5 DISCUSSION AND ANALYSIS 5. 1 5. 2 5. 3 5. 4 5. 5 5. 6 Introduction Discussion Limitation of Study Recommendations for Future Research Theoretical and Practical Implication Conclusion 46 46 50 51 51 52REFERENCES APPENDIX A Questionnaire APPENDIX B frequence Analysis APPENDIX C Descriptive Statistics APPENDIX D Reliability Analysis APPENDIX E Correlations Analysis APPENDIX F simple regression Analysis 53 58 63 66 76 77 78 6 LIST OF TABLES defer 3. 1 elude 3. 2 board 3. 3 hold over 3. 4 Table 4. 1 Table 4. 2 Table 4. 3 Table 4. 4 Table 4. 5 Table 4. 6 Sample Breakdown Likert- descale Measurement Items Questionnaire Layout repartee lay out Respondents Profile Reliability Analysis Inter-Correlations of the Major Variables Results of Regression Analysis Summary Findings 30 31 31 32 37 37 38 41 43 44 LIST OF FIGURES code 2. 1 Figure 2. 2 Merger & encyclopedism Life Cycle similitude of Where HR Playing A Lead Role in real no-hit Deals vs. Less Successful Deals 15 21 Figure 2. 3 Research Framework 25 8 CHAPTER 1 INTRODUCTION 1. 1 primer coat of Study. Merger and achievement (M&A) has certainly be go in the mechanism for companies to respond to the demands of the furrow world. It has been since several long time, a main topic for strategical literature, since its wagess in its obligation occasion seat be estimated in high take aims of competitive advantages for companies.Companies that argon facing trades in their shapingal complex body parts through a M&A, give up definitive modifications in the processes, politics, ranks and frame of references. Each participant of this processes either the acquiring or the acquired, birth to face diametrical process and ch eachenges. Clearly, twain companies argon abnormal part of their identity and way of doing things. The ch scarce(prenominal)enges of this adaptation argon much evident when the difference of core business surrounded by the so me(pre nominated)(prenominal) companies is more(prenominal) obvious. thitherfore, the kind of industry is a fundamental element to insure the transition.First of all, some fields argon more take over to realize an M&A, for instance, industries, where the economy of eggshell is rattling relevant, and much easier to be chthonianstood in term of economy. Moreover, if the companies be complementary in their own business, synergies are or so likely to be reached in price of marketing, finances and giving medicational goals which sham it a natural growing process. 9 Through the persist century, companies remunerative more attention to the three by-line prospects strategy, economics and finance.Nevertheless, these last age, it has seen the increment of a fourth mindset, as gentlemans gentleman beings factors to win a holy integration of both companies. Though M&A process is regarded to be an integral organizational change, but the military manity comp whizznt m uch appears to be the determinant element to break through or fail (Parra, 2006). This is because stack are susceptible to fear modification in their environment in that locationfore the effectuation has to be put to death with clear and coordinate plan in night club to diminish possible resistance. To have a go at it M&A process expeditiously in the best conditions is very far to be easy.If some barriers are perfectly identifiable such(prenominal) as tender-hearted costs of scale, listless innovation and so forth, there are others more niggling to let out and measure like the in distinct structure of mindsets. For all of these reasons, an pregnant and recently oeuvre has to make in the depression place the bargaining of M&A (Parra, 2006). 1. 2 Problem Statement The M&A is an on red process. This means that the action runs from the moment the comp both is interested by another one until and after the achievement of the M&A. For instance, a number of M&A succeed in t he long run, often clocktimes after a long degree of time.This illustrates that M&A process is always running, even 10 before the bargaining of transactions freelancerly of the destiny or circumstances that palisade the process. The M&A process has to launch and develop through companies integration. This is super oriented toward the portion outment of pot and the strategies substantial to in incorporate them into the bran-new trance and philosophy that the caller entrust pull in with the commixr. This stage of the process represents the hassle that leave alone be analysed, described, and explained in this discover.Though integration and its achiever depends on m any factors like corporate culture compatibility, corporate coat and dimensions, management mode and, ability to communicate effectively, another vital issue to acknowledge is the give up environment throughout the whole process of M&A where man talent is aimd. This gitnot be realised without the abetance and involvement of valet de chambre choice. Having said, the M&A strategy should be driven by gentleman election. It is indispensable that military man election play vital quality in the adult male side of the M&A process especially managing employee arithmetic mean. there are literally hundreds of reasons why the M&A un undefeated person rates are so high and many have been traced was due to the exclusion of human choice professionals in the pre- hoi polloi readiness variety. Human preference only function to the last minute inclusion after the transaction has closed. This is a classic parapraxis of too little, too late (Clemente & Greenspan,1999). 11 In order to detect a better insight of the situation preceding(prenominal) described, this thesis look addresses its taper on reading the transition process in a M&A developed by twain giant oil and gas operate providers in Malaysia SapuraCrest crude Berhad and Kencana Pet qualityum Berhad.Some factor s leave alone structure the analysis of this investigation such as employee aspect, leaders, chat & commitment. Most importantly, this thesis will look into the factors that influence the M&A success through human resource initiatives by tensioning on the employee chance. The initial and grassroots assumptions of this investigation is being able to explain and analyze how human resources initiatives and pencil lead characters, being the around important dimension in M&A process could be considered to have the more or less impact to the success or failure of the integration .This is precise since the coalition in the midst of SapuraCrest oil Berhad and Kencana Petroleum Berhad has triggered issues in oil & gas industry. The involvement of risk and massive coronation make so far by both companies, are the call reasons why this M&A cannot afford to accept failure as the closure. 1. 3 Research Questions This look into will initially be command by these questions 12 R Q1- Is there any fundamental consanguinity betwixt human resource strategic roles in terms of leadership and employee expectation towards the success of M&A?RQ2 Will there be any human family human relationship mingled with human resource strategic roles in terms of talk and employee expectation towards the success of M&A? RQ3 Will human resource strategic roles in terms of commitment contribute in managing employee expectation towards the success of M&A? 1. 4 Research Objectives in that location aren? t many studies on the relationship amid the employee expectation and strategic human resources in the case of M&A. However, the main objective of this speculate is to narrow which amongst the multivariates contributes most to the success of M&A.They are addressed by specific objectives such as RO1 To plant significant relationship surrounded by human resource strategic roles in terms of leadership and employee expectation towards the success of M&A. RO2 To examine t he relationship amidst human resource strategic roles in terms of colloquy and employee expectation towards the success of M&A. 13 RO3 To determine the relationship between human resource strategic roles in terms of communication and employee expectation towards the success of M&A. 1. Significant of Study In general this look for aims to promote the infrastanding of employee expectation after the announcement of M&A to the management, as head to look the impact of human resources roles on the success of the integration. Even though in today? s rapid growth of business and the acknowledgment of the benefits gained by proceeding with M&A, it is observed that the look done was insignificant. Most M&A research preaches on corporate culture compatibility, corporate size and corporate dimension as factors contribute to the integration success.This issue unavoidably to overcome in ensuring that the management are aware that in any M&A, there is the human side to deal with. Appar ently, the most popular factors cited as keys to M&A success? are communication, cultural integration and fit, integration project planning, due applications programme, leadership and talent placement and management. totally of these factors are intrinsically linked to human resource. Hence, the involvement of human resource in this big step taken is vital. Since employees are the one drives the success of a company, human resource being the backbone of a company, functions to manage the employee expectation in any M&A process. 4 This study is hoped to give an insight to the management of SapuraCrest Petroleum Berhad on the awareness of the splendor of human resource strategic roles in managing employee expectation towards the M&A success. Since the integration stage is still at the initial stage, it is worth getting the feedback on the employee expectation. The finding will at least assist in ensuring that the rest of the process is carried out in accordance such as cultural assimilation and placements. 1. 6 Definition of Terms For the purpose of this study the following terms are unsexd as follows 1. . 1 Employee Expectation Employees concern that transform into expectations concerning both themselves and their work group. These expectations are with respect to neighboring(a) line of business and employment worries to longer term status, and behavioral and cultural concerns in the new? organization (Surkund, Purang & Gupta, 2006). In this case, the expectations reflected by the touch on employees of SapuraCrest Petroleum Berhad in the process of M&A. 1. 6. 2 Leadership A process whereby ones influences others to achieve a prevalent goals (Northouse,2001).In this case, it is referred to the management of SapuraCrest 15 Petroleum Berhad through human resource strategic role and the affected employees. 1. 6. 3 Communication Defines as the communication transaction between individual(a)s and/or groups at various levels and in different areas of specialization that are intended to design and redesign organizations, to give birth out design and contribute from day-to-day activities (Frank & Brwnell, 1989). In this case the communication is meant between the management of SapuraCrest Petroleum Berhad through human resource strategic role and the affected employees. . 6. 4 Commitment The meaning behind commitment in the organizations appears to be shifting from a desire to lodge in, and identify with, the organization towards a highly proactive, innovative and challenging approach to work, as a mutually beneficial psychological contract between organization and individual (Vinicombe, 1998). This summarise the intention definition of commitment in this study where human resource strategic role acts on behalf of the management of SapuraCrest Petroleum Berhad in ensuring commitment is offered to employees throughout the process of M&A. 6 1. 7 Scope of the Study The research is carried out on SapuraCrest Petroleum Berhad? s (S CPB) affected employees. The announcement to merge with another giant oil & gas attend provider in Malaysia, Kencana Petroleum Berhad has triggered some concerns amongst the affected employees. This study is in the beginning designed to followup the relationship between SapuraCrest Petroleum? s human resource strategic roles and employee expectation on the uniting plan success. 1. Assumptions A researcher assumes that all respondent at SapuraCrest Petroleum Berhad (SCPB) answer all questions sincerely and that respondents are fully understand and aware the purpose and objectives of this study. researcher also assumes that the sample in this study represents the world of organization that is passing play through a amalgamation exercise in Malaysia. 1. 9 building of the Study This study consists of five chapters. The first chapter outlines the introduction, purpose and objectives of this study.It also touches on the research line of works, questions and the significant of the study. Chapter Two discuss on review of cerebrate literature based on the research done, research fabric framework, and research hypothesis development. 17 Elaboration on the research design, try out and randomness collection procedures, measurement & instrumentation and, data analysis techniques are adumbrate in Chapter Three. Chapter Four discusses on the overview of the data stack away, profile respondents, reliability psychometric test, major(ip) findings, correlation analysis of varyings, multiple regression and summary findings.The final chapter presents the watchword of the research done, recommendations for hereafter research as intimately as limitation. 18 CHAPTER 2 LITERATURE REVIEW 2. 1 Introduction Chapter Two offers a literature review on issues cogitate to M&A, employee expectation and human resource management. The development of research framework/ forge and hypotheses will be discussed in this chapter. Then, it is followed by theoretical framework. 2. 2 Evaluation of Merger & Acquisition Mergers and acquisitions represent the end of the continuum of options companies have in combining with each other.This combining has the greatest implications for size of investment, control, integration wants, pains of separation, and people management issues (Doz & Hamel, 1998 Hamel, 1991 Harbison, 1996 Sparks, 1998, 1999). With the focus on mergers and acquisitions, it is important to distinguish them. In a merger, two companies come together and create a new entity. In an acquisition, one company buys another one and manages it consistent with the merchant bank? s needs. However, both sustain the resembling predicament.The primary purpose of merging and acquiring new firms is normally to improve overall performance (Lubatkin, 1983) by achieving synergy, or the more unremarkably described as the 2 + 2 = 5 effect (Cartwright and Cooper, 1993) 19 between two business units that will increase competitive advantage (Porter & 1985). Howev er, the mere existence of capableness synergism is no guarantee that this chance will be realized (Cartwright & Cooper, 1993). Recent research indicates that these M&A has a negative impact on the economic performance of the new entity (Cartwright & Cooper, 1993).With the estimated rates of their success from 20-60 percent, it sure will paralyse the competitiveness in the new entity (British Institute of Management, 1986). hence, although M&As are usually passing well planned out in terms of fiscal and good aspects, the conclusion that has to be drawn is that these pitiful results have come to be attributed to poor human resource planning. Consequently, for sustained competitive advantage to be achieved, it is imperative that the M&A be implemented from a financially and legally sound standpoint, as well as from a behavioural approach.Most mergers and acquisitions follow a four-stage process as per discussed by Schmidt & Griffin, 1993. there are the pre-deal stage, due loti on stage, integration planning stage and implementation stage. 2. 2. 1 Pre-Deal Based on its growth strategy, the acquirer searches for an appropriate engineer or partner, assesses potential targets and develops a plan for executing the deal. This first phase involves scrutinizing for suitable entities for M&A. During this phase it is usually done to develop a set of criteria for the selection of a suitable 20 entity.In this early phase the organization defines its objectives and desired outcomes of the merger or acquisition and searches for suitable entities. This often involves extensive research and gathering of market intelligence to access the potential of suitable candidates. 2. 2. 2 Due Diligence After making the offer, the acquirer ensures that the deal is strategically and economically sound and has a high likeliness of success. Thorough, detailed achievement of this stage is critical. Once a suitable entity has been identify, usually the next step is to make an offer t o acquire or merge with the new entity.This offer is usually made conditional on the finis of the due diligence. During this second phase, a review of the new entity is undertaken to ensure the sapience of the deal and to access any risks involved with the completion of the deal. During this phase the organization will typically review the financial relations, strategies, business plans, resources and operations of the entity to hold their assessment of the commercial suitability of the deal. Often many transactions do not go beyond this phase because the due diligence highlights the distant risks associated with the deal. 2. 2. Integration Planning The acquirer creates a comprehensive plan for integrating the two organizations. This stage takes place within the first one C geezerhood of the decision to 21 merge and can begin during due diligence if both sides believe the deal will go forward. The detailed plans, milestones and activities are developed to ensure the triple -crown implementation of the deal. This phase is often conducted under very tight time frames and requires extensive and detailed involvement from see personnel. Detailed project management plans are established to ensure the runny implementation of the deal. 2. 2. Implementation The final stage builds on all the planning that has gone before. Implementation can take months or even years to complete, depending on the complexity of the deal and the size of the merging companies. This phase requires the execution of the detailed planning conducted in phase three. Again, this phase is usually conducted under tight time frames and requires the execution of many complex plans simultaneously. Strong project management skills are required during this stage. The implementation phase is very visible to, shareholders, staff, clients and competitors and is conducted under tremendous scrutiny of these parties.However, according to the study carried out by the Ministry of Manpower Singapore (2 003) there should be another stage that sums up M&A process. This neglected final stage is cognize as evaluation. The final phase requires reviewing the performance of the new entity to ensure that a successful integration has been completed and that the objectives of the M&A have been achieved. Performance of 22 the new entity is assessed against the original objectives determined in the pre deal phase. Figure 2. 1 Merger & Acquisition Life Cycle Source The Ministry of Manpower Singapore,2003 There are numerous reasons for companies to merge or acquire. Some of the most keep going include ? ? ? ? ? ? ? ? ? Horizontal mergers for market dominance economies of scale Vertical mergers for subscriber line control Hybrid mergers for risk spreading, cost cutting, synergies, defensive drivers Growth for initiatory leadership and global reach Survival critical mass Acquisition of cash, deferred taxes, and excess debt capacity Move quickly and inexpensively Flexibility leverage Bigger as set base to leverage borrowing 23 ? ? ? ? keep abreast potentially disruptive technologies Financial gain and personal power Gaining a core competence to do more combinations Talent, knowledge, and technology Hence, M&A are supposed to create new, substantiveer organizations, but history shows that such combinations often fall far short of expectations. Every M&A promises to create value from some kind of synergy, yet statistics show that the benefits that look so good on paper often do not materialize. The result, more often than not, is value destruction. The literature on M&A indicates that failure rates typically range from 50 to 70 percent or even high.A Business Week (2004) study of megamergers conducted between 1998 and 2000 found that in more than 60 percent of the cases, shareholder value was destroyed. Why do so many corporate combinations that looked like such great opportunities end up in disaster? Recent research suggests that contrary to common belief, it is not poor strategic fit that most often causes M&A to fail but poor execution. The errors can be seen, for example, in instances of insensitive management, lack of trust building and communication, slow execution, power struggles, or a leadership vacuum following the deal.Even with this kind of information, most corporate combinations still place special emphasis on the strategic and financial goals of the transaction, whereas the cultural and people implications rarely receive as much attention. 24 2. 3 Evaluation of Employees Expectations in M&A Mergers between different organizational entities have been a widespread phenomenon during the past decades. Our newspapers abound with stories to the highest degree organizations in the process of merging their activities. It is expected that approximately one in three employees will face a merger or acquisition in their working ife (Hubbard, 1999). In the past decades, many works, both donnish and business, have been dedicated to this phenomeno n, and the reasons for merging and the actual implementation have both been described extensively (Cartwright & Cooper, 1993). The issues under investigation have initially concern the strategic, financial, or operational side of mergers. However, even perfect(a)ly planned mergers often fail to materialize and much of the air division in the prediction of merger failure remains unexplained (Amiot, Terry, & Callan, 2007). Many companies believe that M&A are a key means for growth.By combining, companies may gain market share, new markets, a wider range of product offerings, control over the supply chain, and cost efficiencies. It isn? t just being bigger that matters. Employees may not always agree with the merger rationale, but their understanding of it guides decisions and actions, motivates them to devote the muscularity and time to changes, sustains their performance and retention during the merger, and develops an enthusiasm for a better early (Walker & Price,2000). 25 Mer ger announcements should not simply be a cliche.Stating that the merger will enable us to become more competitive globally or to become the technology leader in our industry says very little to employees. Beyond increased shareholder value, an acquiring company should define specific benefits expected and how they will be realized (Walker & Price,2000). A focus on the human side of mergers could accordingly be valuable. Human kinetics become even more relevant with the growing trend toward connect combinations which involve a great extent of people integration (Cartwright & Cooper, 1996).The human side of mergers has been examined according to a variety of perspectives and theories such as expectations in certainty on the future direction of the company, departure of key personnel, cultures clashed, job Security and morale (Cartwright & Cooper, 1996). 2. 4 Importance of Managing Employee Expectation An estimate by Davy et. al (1998), blames employee problems as being responsible for one-third to one-half of all M&A failures. Therefore, the underlying causes of employee resistance need to be canvas carefully because their understanding has the potential of improving merger planning outcomes.Managing employee expectation is crucial as it leads directly to the success of merger. This is very much related to the importance of employees? engagement. consort to Harter, Schmidt and Hayes (2002), a highly engaged employee will 26 consistently deliver beyond expectations. Employee engagement is critical to any organization that seeks to retain valued employees. The Watson Wyatt (2010), a consulting company has proved that there is an intrinsic link between employee engagement, customer loyalty and profitability.As organization going globalize and become more subordinate on technology in a virtual working environment, there is a greater need to connect and engage with employee to provide them with an organizational identity (Vazirani, 2007) whole those who are i nvolved with the M&A process should take into consideration the human expectations. They should be able to understand human attitudes and behaviours in order to manage the expectations. Given the magnitude and importance of the employees? sychological reactions on the merger outcome, it is very important to understand the sources of this stress and the way it affects the organization in order to be able to geld employee resistance as a way to increase synergy realization (Moran, 2005). 2. 5 Evaluation of Strategic Human Resources Management in M&A Given the increased importance of people issues in an M&A transaction, it? s somewhat surprising that look back results conducted by Towers Watson (2008) shows that human resource function tends to be only peripherally involved in much of the M&A process. It? not until the planning and implementation phase of the acquisition that human resource plays a more predominant role, with 38% of 27 respondents saying that they? re brought to the leadership police squad at the integration planning stage and 35% of respondents saying they have a leadership role during the integration implementation phase. There is conclusion to suggest that bringing human resource to the leadership team earlier in the acquisition makes sniff out it is interesting to note that very successful dealmakers appear to involve human resource in more aspects of the deal than others.The data shows that a small number of very successful dealmakers chose to involve human resources a lot earlier in the process. For example, 17% of very successful dealmakers involved human resource in the due diligence phase with some involving their human resource function in the target evaluation phase. It is believed this may be an appropriate response to the impact of people issues in affecting long-term deal success. Figure 2. 2 Comparison of Where HR Playing A Lead Role in very Successful Deals vs. Less Successful DealsSource Canadian Financial Executive Resea rch Foundation, 2010 28 If one assumes that human resources is the unit best equipped to protagonist the new company manage the people-related issues of a merger, the next step is to look at how human resource functions during a merger or an acquisition. harmonize to Schmidt & Griffin (2002), downstairs are strategies that should be taken or at least considered by human resources in dealing with M&A process 2. 5. 1 Leadership by Human Resources The greater the absolute frequency and magnitude of change, the more important leadership and culture become.Leadership holds it all together. It is a make or break function (Arian, 2007) He confirms that leadership is the most important driver of employee engagement. During periods of transition and disruption, employees look first to leaders for focal point about(predicate) how to react and behave, for motivation, and for focus. Experience shows that what leaders do during mergers and acquisitions has a significant impact on how emplo yees of both organizations react and promote a sense of community and purpose. Positive employee perception of leaders is crucial to successful change.Employees neediness to believe that leadership cares about them. When employees are convinced that leaders actually do care about them, they become more open and uncoerced to make necessary transitions (Arian, 2007). Companies that foster a high degree of leadership visibility and involvement during M&A instil a verificatory organizational culture with a better than average chance of success (Olson, 2007). Leaders set the priorities and create the verifying business 29 pulsation and discipline required during M&As.They instil in employees the necessary level of commitment, engagement, confidence and comfort to work through difficult transitions. Leaders, who by their statements and actions scoff a shared sense of purpose, coherence, community and trust, enable employees to focus and remain highly engaged during M&As and post-mer ger integration. Establishing and sustaining cultural alignment during the first 100 days is particularly important in shaping the pertly formed organizational culture and employee perceptions of it. Leadership intervention is a critical symbol of the new organizational culture (Olson, 2007).Strong leadership and maintaining energy for change among employees are the two principles of success that reinforce each other when executed well (McKinsey, 2008). Only human resource truly has its fingers on the round of the acquired employees. Only human resource can shape the organizational mindset that will move the merged firm forward in the marketplace. Therefore human resource must take a leadership role in these most important areas. 2. 5. 2 Communication by Human Resource It is well accepted that communication is the key tool within any changes (kanter, Stein & Jick, 1992).Any failure to communicate leaves employees uncertain about their future and will lead them to seek other means to reduce this uncertainty, such as reliance on bruits and other means of informal 30 communication which are not an effective means in trim down anxiety (Rosnow, 1988). This is because it tends to focus on negative and inaccurate information. Buono and Bowditch (1989) mention that, during mergers and acquisitions activity, rumour mills and the grapevine work overtime, leading to more anxiety and, in many cases, considererproductive behaviours.Often based on fears rather than reality, these rumours can importantly exacerbate employee anxiety, tension and stress. This anxiety and uncertainty are usually leading to dysfunctional outcomes. The extensive literature on managing communication in periods of organisational change and merger, shows that frequent and honest communication to staff about the merger has a stabilising effect (Ashkenas et al. , 1998). The literature suggests communication strategies serve to reduce uncertainty, but also acknowledges that staff are frequently sc eptical about management messages.Furthermore, it is evident that such scepticism is not misplaced in times of change where futures are uncertain and directions are evolving. Procedural jurist research emphasises the importance of two-way communication, in which both management and employees can voice their opinions, concerns, desires and provide information. Research shows that employee opportunity to voice an opinion results in the process being perceived as fairer, although this is negated if that opinion is perceived to be ignored by the decision maker (Citera and Rentsch, 1993).With all concerns mentioned earlier, clear communication is the tool to ensure their anxiety is entertained. The primary goals of post merger 31 communications should be to inform, and more importantly to inspire The best median(prenominal) will be none other than human resource as the intermediary. 2. 5. 3 Commitment Another crucial human resource role is helping employees cope with change. It has far- reaching consequences, including maintaining productivity, stemming the loss of key talent and smoothing the integration of the two cultures. Change can be particularly difficult for employees involved in a M&A, especially those who work for the target.Unanswered questions about job security, movement and new reporting relationships, spawn rumours, anxiety, resentment and the loss of top talent, who can most easily find jobs elsewhere. All this can lead to glower productivity and diminution of a company? s intangible assets. In the growing world of global financial services mergers, these issues take on h eightsomeened importance (Schmidt & griffin, 2002). Exhibiting commitments to the employees in the light of merger is essential. Things rarely remain the same in the wake of a major transaction.Roles and responsibilities change. Employees are normally re-assigned or worst case scenario, terminated. New policies and new procedures are adopted. Employees must be aided and psycholog ically prepared, to accept the changes that are inevitable. They must be made understand that additional changes may have to be enacted in the future as the integration process moves through its various stages. Helping employees to 32 accept and understand change is a commitment by human resource where it will accelerate the process and minimize the pain associates with the uncertainty. . 6 Research Model/Framework Based on the literature discussed earlier, the following research framework has been developed as a model for this study. This research model is designed to identify the relationship between helpless variable of employee expectation and three free-lance variables of human resources strategic roles. Based on the literature review presented, further investigations on the relationship among the variables are accomplished. The model framework is as per illustrated in Figure 2. 3 below. Figure 2. 3 Research FrameworkDEPENDENT VARIABLES Leadership Communication Commitment H1 H2 H3 DEPENDENT VARIABLES Employee expectation towards M&A success 33 2. 7 Research Hypotheses Development From the model in Figure 2. 3, three (3) hypotheses are developed as below H1) There is a significant relationship between human resource strategic roles in terms of leadership and employee expectation towards the success of M&A. H2) There is a relationship between human resource strategic roles in terms of communication and employee expectation towards the success of M&A.H3) There is a relationship between human resource strategic roles in terms of commitment and employee expectation towards the success of M&A. These hypotheses had been tested victimization appropriate data analysis technique. 2. 8 Conclusion This chapter has presented a review of literature that focused on the employee expectations and how human resource strategic roles could assist in managing them subsequently ensuring the success of merger & acquisition. Research framework has been developed to see the si gnificant relationship between employees? expectation and human resource Strategic roles.The following chapter describes in details of the procedures and methodology used for data collection and analysis for this paper. 34 CHAPTER 3 METHODOLOGY 3. 1 Introduction This chapter provides the methodology use in this research to study the significant relationship between the independent variable and the dependent variables. This chapter begins with research design, population and sampling procedures, data collection procedures and data analysis techniques. 3. 2 Research Design A research design is a master plan explaining the methods and procedures for hive away and analyzing the information.The design is to ensure that all of the information gathered are appropriate for solving the problem (Zikmund, 2003). Research design offers critical choice points to carry out the research. It outlines the details or the necessary procedures in carrying out the research. This research intends to inv estigate the relationship between independent and dependent variables, as well as it offers a platform for hypothesis testing. According to Sekaran (2006) studies that engage in hypothesis testing usually explains the nature of certain relationship. 35 3. 2. Type of Study The method used to analyse data was carried out utilize quantitative persuasion where the researcher measured the phenomena under investigation with the use of statistical analysis of raw data collected from a structured questionnaire. It used various statistical tests and Statistical Package for mixer comprehension (SPSS) to interpret the results of data. The study will be carried out specifically among affected employees at SapuraCrest Petroleum Berhad. 3. 2. 2 Unit of Analysis The unit of analysis refers to the level of aggregation of the data collected during the data analysis (Sekaran, 2000).The problem statement of this study focused on how the success of merger is significantly influence by the relation ship between strategic roles of human resources and employee expectation. Data was collated from individuals working at SapuraCrest Petroleum Berhad. The approach to this study was a heap study where data was generated via distributing questionnaires. Affected employees had been asked to furnish and answer the questionnaire to the problem statement of this study evaluate the existence of relationship between human resource strategic roles and employee expectation. 6 3. 3 Population and Sampling Procedure The samples at SapuraCrest Petroleum Berhad are selected utilize the truthful random sampling technique. The simple random sampling method is chosen because every element in the population has a known and equal chance being selected as the sample. According to Sekaran (2006), simple random sampling has the lease bias and offered the most generalization. In order for this research to become more reliable, it is important to have the right sample size. The population of this study cover all affected employees in SapuraCrest Petroleum Berhad.Affected employees are defined as the first cohort joining the new entity. Due to tight time frame of the thorough implementation process of M&A as well as the business and operations requirement, the management has decided to implement the merger in phases. It started off with all employees that are hired directly under SapuraCrest Petroleum Berhad cost centre. There are 134 employees all together. The rest of the 1466 employees are hired under business unit cost centres. Due to the operations requirement these employees will not be affected immediately. The second phase will only commence 8 months later.The reason why only this population chosen is very much aligned to the significant of this study as per mentioned in Chapter One. Out of 134 affected employees, the random sample of 100 employees is identified via Raosoft Sample Size Calculator with 5% margin error and 95% tolerance of confidence level. 37 Below is the breakdown of the 100 participated employees Table 3. 1 Sample Breakdown Category/ chisel Grade tea leaf Lady & Driver (DO & OA) Non Executive (G1-G3) Admin & Secretary (S1-S4) Executive (E8-E6) Middle Management (E5-E3) Senior Management (NG-E2D) Management skillfulNon-Technical 4 6 7 6 22 20 4 15 13 3 3. 4 Data Collection Procedure The major approach in generating data for this study is through questionnaires which intended to measure employee expectation towards merger & acquisition. The survey is conducted at SapuraCrest Petroleum Berhad. The questionnaire was distributed to 100 employees both via email as well as hard copy extended by hand. The respondents were given 1 week to respond to the survey. 38 3. 5 The measurement The major measures for this research are employee expectation, leadership, communication and commitment.Participants are required to respond to all questionnaire items for measures using a five-point likert scale. Two scales are used in this research. First is nominal scale, specifically for Section A. Likert Scale is used for Section B, C, D and E. The scale below show the measurement used in Likert-Scale scoring from 1 to 5 (Sekaran, 2003). Table 3. 2 Likert-Scale Strongly Disagree 1 iridescent Uncertain Agree Strongly Agree 5 2 3 4 Source Sekaran, 2003 Responses on items for each measure are averaged to form an overall score such that higher scores indicated a higher standing on the measures.The items for each of the measures are given in the Appendixes. Table 3. 2 outlines the measurement items. Table 3. 3 Measurement Items Variables Employees Expectations Items 5 Scales Five-point Likert Scale Sources adopt from Clemente & Greenspan (1999) 39 Leadership 5 Five-point Likert Scale Adopted from Avolio, Gardner & Walumbwa (2004) Adopted from Cartwright & Cooper (1993) Adopted from Allen & Meyer (1990) Communication 5 Five-point Likert Scale Five-point Likert Scale Commitment 7 3. 6 Questionnaire Design The questionnaire consists o f five (5) sections.The first part contains information regarding respondent? s demographics features which include age, gender, academic qualification, job grade, length of service and job compartmentalisation. The second part of the questionnaire consists of questions on employee expectation, which subsequently followed by leadership, communication and commitment in that order. Table 3. 4 Questionnaire Layout Sections A Variables Respondent Background ? while ? Gender ? Academic Qualification ? Job Grade ? space of Service ? Job mixture Employee Expectation Leadership Items 6 B C 5 5 40 D ECommunication Commitment 5 7 3. 7 Data Analysis Techniques The first step in statistical analysis involved physically going through all the completed questionnaires page by page and browsing through them in order to understand the responses. Raw data, as per written in the questionnaire will be coded for analysis purposes by using Statistical Package for Social Science (SPSS) Program. The a nalysis of data begins with reliability test for the scales through Cronbach? s important. The Cronbach important testing is used due to well accepted reliability test tools applied by social researcher (Sekaran, 2005).Cronbach? s Alpha reliability analyze that the closer Cronbach? s Alpha is to 1. 0, the higher the ingrained consistency reliability (Cronbach, 1946). Cronbach scale analyzes I. II. III. reliability less than 0. 6 is considered poor reliability in the range 0. 7 is considered to be unexceptionable reliability more than 0. 8 is considered to be good Secondly, in order to determine whether there are significant relationships among the independent and dependent variables, Pearson Correlation 41 Coefficient analysis was carried out.The scale model suggested by Davies (1971) is used to describe the relationship between the independent variables and the dependent variable, as shown below I. 0. 7 and preceding(prenominal) very strong relationship, II. 0. 50 to 0. 69 s trong relationship, III. 0. 30 to 0. 49 moderate relationship, IV. 0. 10 to 0. 29 low relationships and V. 0. 01 to 0. 09 very low relationship. Thirdly, bigeminal Regression Analysis was conducted to exam which among the three independent variables is the most important variables in exhibiting employees? xpectation. According to Sekaran (2005), the correlation coefficient, R, will indicate the strength of relationship between two variables and it will also show how much of the fluctuation in the dependent variable will explain when several independent variables are theorized to simultaneously influence it. Besides that the square of multiple, R2 is the amount of variance which will explain the dependent variable by the predictors. Beta value ( ) is used to identify the most important variables. This is known as fivefold Regression. 42Finally, frequency distribution is being carried out to obtain a count of number of responses associated with different values of one variable a nd to express these counts in to percentage terms 3. 8 Conclusion This chapter discussed the research method proposed for this study by presenting the theoretical framework and research hypothesis. Aside to that, it also includes the watchword of sampling design, data collection, questionnaire, measurement and data analysis. 43 CHAPTER 4 FINDINGS 4. 1 Introduction This chapter outlines the results of data analysis obtained based on data collected from respondents.The main purpose of this research is to study the relationship between the independent variables of HR strategic roles namely leadership, communication and commitment with the dependent variable which is employee expectation. The findings intend to verify the hypotheses made in chapter two. The statistical method of Pearson Correlation is used to determine the existence of any relationships between the independent variables and dependent variable. In addition, regression analysis is conducted to examine independent variabl e and determine which serve the most important to explain employee expectation.This chapter also illustrates the reliability test made to the instruments used using Cronbach Alpha. All in all, this chapter is divided into eight segments which includes overview of data collection, profile of respondents, goodness of measure, descriptive analysis, major findings, summary of findings, and conclusion. 44 4. 2 Overview of Collected Data A total of 100 sets of questionnaires were distributed to respondents. All 100 sets of questionnaires were returned on a timely manner within 1 week. It has been found that all questions were answered by the respondents and considered valid and ready-fit to be analyzed.Table 4. 1 Response Rate Data Questionnaire distributed Collected questionnaire Usable questionnaire Discarded questionnaire Total 100 100 0 0 Percentage (%) 100 100 0 0 4. 3 Respondents Profile The survey demonstrated the details concerning demographic characteristics or respondents? profi le as shown in Table 4. 2 below. Table 4. 2 Respondent Profile No 1 Demographic Age Categories ? Below 25 ? 25-34 years ? 35-44 years ? 45-54 years ? 55 and above ? Male ? Female Frequency 8 55 34 3 0 57 43 Percentage (%) 8 55 34 3 0 57 43 2 Gender 45 3 Academic Qualification Secondary ? Diploma ? Degree ? Master ? PhD ? Professional ? DO &OA ? G1-G3 ? S1-S4 ? E8-E6 ? E5-E3 ? NG-E2D ? Below 2 years ? 2-4 years ? 5-7 years ? 8-10 years ? More than 10 years ? Management ? Technical ? Non- Technical 6 11 67 9 1 6 4 13 6 42 32 3 18 56 24 1 1 7 43 50 6 11 67 9 1 6 4 13 6 42 32 3 18 56 24 1 1 7 43 50 4 Job Grade 5 Length of Service 6 Job Classification The study indicates more than half of the respondents are within the age of 25 34 years old, where approximately one third of the respondents are within the age of 35 44 years old.It is self explanatory, when majority of 57% of the respondents are male due to the nature of business which is oil & gas, which known for performing tasks unde r harsh environment. A highest rate of respondents 67% 46 did their degree and only small percentage of 9% holds master degree followed by 1% who pursued PhD. Lastly, this questionnaire managed to capture different job classification where 7% from the management, 43% from technical and 50% from non-technical. 4. 4 Reliability Analysis According to Sekaran (2003), the closer the reliability coefficient gets to 1. , the better it is, and those values over . 80 are considered as good. Those value in the . 70 is considered as unimpeachable and those reliability value less than . 60 is considered to be poor (Sekaran, 2003). According to George & Mallery (2003), reliability is the degree to which measure are free from error and therefore yield consistent results. Table 4. 3 Reliability Analysis Variables Employees Expectations Leadership Communication Commitment No. Of Items 5 Items Dropped 0 Cronbach? s Alpha 0. 6 5 5 7 0 0 0 0. 8 0. 6 0. 8 As shown in table 4. , alpha value for indepen dent variables ranges from 0. 6-0. 8 which can be considered good. In addition, dependent variable has found to be at 0. 6 on acceptable value. 47 4. 5 Major Findings The results of Pearson Correlation Analysis and Linear Regression are presented in the following section. 4. 5. 1 Pearson Correlation Coefficient According to Sekaran (2003), in research project that includes several variables, beyond knowing the means and hackneyed deviations of the dependent and independent variables, the researcher would often like to know how one variable is related to another.This means that the researcher should see the nature, direction and logical implication of the bivariate relationship of the variables used in the study which is the relationship between any two variables among the variables tapped in the study. A Pearson correlation matrix will provide this information, which will indicate the direction, strength and substance of the bivariate relationships of all the variables in the stu dy. Theoretically, there is a possibility of a perfect positive correlation between two variables, which is represented by 1. 0 (plus 1), or a perfect negative correlation which would -1. (minus1). While correlation could range between -1. 0 and +1. 0, and the researcher need to know if any correlation found between two variables is significant or otherwise (i. e. if it has occurred solely by chance or if there is a high hazard of its actual existence) As for the information, a significance of p ? 0. 05 48 is the loosely accepted conventional level in social sciences research. This indicates that 95 times out of 100, this can be sure that there is a admittedly or significant correlation between the two variables, and there is only a 5% chance that the relationship does not truly exist.The correlation matrix between dependent variable and independent variables are exhibited in Table 4. 5 below. The finding from this analysis is then compared against the hypotheses developed in thi s study. Table 4. 4 Inter-Correlations of the Major Variable Variables Leadership Communication Employee Expectation Employees -. 544** . 502** Expectations Leadership . 782** Communication Commitment Commitment . 460** . 857** . 680** **Correlation is significant at the 0. 01 level (2-tailed) *Correlation is significant at the 0. 05 level (2-tailed)Hypothesis 1 There is significance relationship between human resource strategic roles in terms of leadership and employee expectation towards the success of M&A. The relationship between leadership is tested against employee engagement. The results between the two variables is found as r=. 544, n=100, p?. 05. The correlations coefficient indicates that there is a strong relationship between the variables. Hypothesis 1 is accepted. 49 Hypothesis 2 There is significance relationship between human resource strategic roles in terms of communication and employee expectation towards the success of M&A.The relationship between communication against employee expectation is investigated. The results shows quite similar to leadership where the two variables are found as r=. 502, n=100, p ? .05. The relationship is significant with strong relationship. Hence, hypothesis 2 is accepted. Hypothesis 3 There is significance relationship between commitment and employees expectation in SapuraCrest Petroleum Berhad. The relationship between commitment against employee expectation has found to have poor significant with r=. 406, n=100, p