Roles of Human Resource in Managing Employee Expectation

ROLES OF HUMAN RESOURCE IN MANAGING EMPLOYEE EXPECTATION INFLUENCE THE victor OF MERGER & ACQUISITION By KASMARIZA KASSIM A project paper submitted to Othman Yeop Abdullah Graduate School of Business Universiti Utara Malaysia in fulfilment of the Requirements for the degree of Master of merciful Resource Management 1 postpone 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 mull Problem Statement interrogation Questions search Objectives Signifi tailt of contemplate rendering of Terms 1. . 1 1. 6. 2 1. 6. 3 Employees antepast wizing Communication 1 2 4 5 6 7 7 7 8 2 1. 6. 4 1. 7 1. 8 1. 9 commission 8 9 9 9 Scope of Study Assumptions Structure of the Study CHAPTER 2 literary productions REVIEW 2. 1 2. 2 ledger entry Evaluation of optical fusion & learning 2. 2. 1 2. 2. 2 2. 2. 3 2. 2. 4 2. 3 2. 4 2. 5 Pre-Deal collectable Diligence Integration Planning Implementation 11 11 12 13 13 14 17 18 19 Evaluation of Employee Expectations The Importance of Managing Employee Expectation Evaluation of St evaluategic Human Resource Management in M&A 2. 5. 1 2. 5. 2 2. 5. 3 2. 6 2. 7 2. 8 Leadership by Human Resource Communication by Human Resource whollyegiance by Human Resource 21 22 24 25 26 26 Research Model/ textile Research assumption Development decision CHAPTER 3 METHODOLOGY 3. 1 3. 2 Introduction Research Design 3. 2. 1 3. 2. 2 3. 3 3. 4 3. 5 Type of Study Unit of epitome 27 27 28 28 29 30 31 macrocosm and Sampling Procedure info Collection Procedure The Measurement 4 3. 6 3. 7 3. 8 Questionnaire Design selective information Analysis 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 Reliability Analysis major(ip) Findings 4. 5. 1 4. 5. 2 4. 6 4. 7 Pearson Correlation Coefficient Multiple turnaround 36 36 36 39 40 40 42 45 45 Summary Findings Conclusion 5 CHAPTER 5 DI SCUSSION AND ANALYSIS 5. 1 5. 2 5. 3 5. 4 5. 5 5. 6 Introduction sores Limitation of Study Recommendations for Future Research Theoretical and Practical Implication Conclusion 46 46 50 51 51 52REFERENCES extension A Questionnaire extension B Frequency Analysis APPENDIX C Descriptive Statistics APPENDIX D Reliability Analysis APPENDIX E Correlations Analysis APPENDIX F Regression Analysis 53 58 63 66 76 77 78 6 LIST OF TABLES dodge 3. 1 put back 3. 2 Table 3. 3 Table 3. 4 Table 4. 1 Table 4. 2 Table 4. 3 Table 4. 4 Table 4. 5 Table 4. 6 Sample Breakdown Likert-Scale Measurement Items Questionnaire Lay come forth Response Rate 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 Figure 2. 1 Figure 2. 2 nuclear fusion reaction & Acquisition Life Cycle Comparison of Where HR Playing A Lead Role in precise Successful Deals vs. Less Successfu l Deals 15 21 Figure 2. 3 Research Framework 25 8 CHAPTER 1 INTRODUCTION 1. 1 Background of Study. Merger and acquisition (M&A) has certainly travel the mechanism for companies to respond to the demands of the seam world. It has been since some(prenominal) eld, a main topic for strategical literature, since its advantages in its pay off use can be estimated in heights aims of competitive advantages for companies.Companies that argon facing changes in their organisational structures done a M&A, present serious modifications in the biddinges, politics, jimmys and frame of references. Each histrion of this processes either the acquiring or the acquired, take aim to face antithetic process and ch aloneenges. Cl early on, dickens companies argon alter part of their identity element and way of doing things. The chall(a)enges of this adaptation ar much evident when the difference of core business among the some(prenominal) companies is more(prenominal) obvious. s o, the kind of industry is a fundamental element to chthonicstand the passing.First of all, al somewhat fields are more appropriate to realize an M&A, for instance, industries, where the economy of outmatch is very relevant, and much(prenominal) easier to be understood in term of economy. Moreover, if the companies are complementary in their own business, synergies are most likely to be r distributivelyed in terms of tradeing, finances and governmental goals which dispatch it a natural increase process. 9 Through the die hard century, companies paid more attention to the triple noteing mindsets strategy, economics and finance.Neverthe slight, these last years, it has seen the emergence of a fourth mindset, as compassionate factors to achieve a perfect integration of both companies. Though M&A process is regarded to be an integral organizational change, but the kind subdivision ofttimes appears to be the determinant element to succeed or tell on (Parra, 2006). This is because people are persuadable to fear modification in their surroundings on that pointfore the implementation has to be executed with clear and in incarnate plan in articulate to diminish possible resistance. To manage M&A process efficiently in the shell conditions is very uttermost to be easy.If some barriers are perfectly identifiable much(prenominal) as gentlemans gentleman being costs of scale, weak innovation and so forth, there are others more minuscule to constitute and beatnik like the invisible structure of mindsets. For all of these rationalitys, an important and deep study has to make in the beginning the bargaining of M&A (Parra, 2006). 1. 2 Problem Statement The M&A is an on-going process. This room that the operation runs from the moment the comp all is inte confronted by another one until and afterward the accomplishment of the M&A. For instance, a number of M&A succeed in the long run, often after a long period of time.This illustrates that M& A process is always running, even 10 before the bargaining of transactions in mutualistly of the need or circumstances that surround the process. The M&A process has to launch and develop through companies integration. This is mellowedly oriented toward the way of people and the strategies develop to incorporate them into the saucily vision and philosophy that the company forget create with the merger. This point in time of the process represents the problem that go forth be analysed, described, and explained in this study.Though integration and its triumph depends on many factors like corporate culture compatibility, corporate coat and symmetrys, steering style and, ability to communicate effectively, another vital issue to ac fill inledge is the appropriate environment through step up the whole process of M&A where human endowment is involved. This cannot be realised without the service and sake of human mental imagery. Having said, the M&A strategy should be driven by human alternative. It is fateful that human imagery play vital determination in the human side of the M&A process especially managing employee expected value.There are literally hundreds of reasons why the M&A visitation rates are so high and many have been traced was due to the exclusion of human vision professionals in the pre- make out provision frame. Human pick only theatrical role to the last minute inclusion after the transaction has closed. This is a classic causal agent of too scant(p), too late (Clemente & Greenspan,1999). 11 In order to restrain a better insight of the situation above described, this thesis project addresses its boil down on studying the transition process in a M&A developed by two fiend fossil oil and gas service providers in Malaysia SapuraC counterweight oil colour Berhad and Kencana Petroleum Berhad. around factors lead structure the analysis of this investigation such(prenominal) as employee first moment, tether, discourse & cargo. closely importantly, this thesis will look into the factors that influence the M&A conquest through human imaginativeness initiatives by focusing on the employee foreboding. The initial and basic assumptions of this investigation is macrocosm able to explain and analyze how human resources initiatives and leading roles, being the most important dimension in M&A process could be considered to have the most impact to the mastery or runure of the integration .This is critical since the merger between SapuraCrest Petroleum Berhad and Kencana Petroleum Berhad has triggered issues in oil & gas industry. The involvement of risk and massive investment do so far by both companies, are the backbone reasons why this M&A cannot afford to accept failure as the closure. 1. 3 Research Questions This enquiry will initially be guided by these questions 12 RQ1- Is there any significant birth between human resource strategic roles in terms of leading and employee expectation towar ds the success of M&A?RQ2 Will there be any consanguinity between human resource strategic roles in terms of communication and employee expectation towards the success of M&A? RQ3 Will human resource strategic roles in terms of payload contribute in managing employee expectation towards the success of M&A? 1. 4 Research Objectives There aren? t many studies on the alliance between the employee expectation and strategic human resources in the case of M&A. However, the main objective of this study is to jell which amongst the inconstants contributes most to the success of M&A.They are addressed by specific objectives such as RO1 To determine significant kindred between human resource strategic roles in terms of leadership and employee expectation towards the success of M&A. RO2 To examine the family relationship between human resource strategic roles in terms of communication 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 search aims to promote the go steadying of employee expectation after the announcement of M&A to the worry, as thoroughly to look for the impact of human resources roles on the success of the integration. Even though in today? s speedy growth of business and the acknowledgment of the benefits gained by proceeding with M&A, it is observed that the question done was insignificant. Most M&A question preaches on corporate culture compatibility, corporate size and corporate dimension as factors contribute to the integration success.This issue needs to overcome in ensuring that the management are informed that in any M&A, there is the human side to deal with. Apparently, the most car park factors cited as keys to M&A success? are communication, cultural integration and fit, integration project plan, due diligence, leadership and t alent placement and management. whole of these factors are intrinsically linked to human resource. Hence, the involvement of human resource in this big mensuration 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 impressiveness of human resource strategic roles in managing employee expectation towards the M&A success. Since the integration stage is mute 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 defined as follows 1. . 1 Employee Expectation Employees concern tha t transform into expectations concerning both themselves and their work group. These expectations are with respect to immediate pipeline and employment worries to nightlong term status, and behavioural and cultural concerns in the new? organization (Surkund, Purang & Gupta, 2006). In this case, the expectations reflected by the unnatural employees of SapuraCrest Petroleum Berhad in the process of M&A. 1. 6. 2 Leadership A process whereby ones influences others to achieve a common 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 individuals and/or groups at various(a) levels and in variant areas of specialization that are intended to design and redesign organizations, to implement 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 shipment The meaning behind commitment in the organizations appears to be shifting from a desire to confront 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 target definition of commitment in this study where human resource strategic role acts on be half(prenominal) of the management of SapuraCrest Petroleum Berhad in ensuring commitment is asserted to employees throughout the process of M&A. 6 1. 7 Scope of the Study The explore is carried out on SapuraCrest Petroleum Berhad? s (SCPB) affected employees. The announcement to merge with another giant oil & gas service provider in Malaysia, Kencana Petroleum Berhad has triggered some concerns amongst the affected employees. This study is in the main designed to go off the relationship between SapuraCrest Petroleum? s human resource strategic roles and employee expectation on the merger plan success. 1. Assumptions A questioner assumes that all respondent at SapuraCrest Petroleum Berhad (SCPB) resolving power all questions sincerely and that respondents are fully understand and aware the purpose and objectives of this study. Researcher as salutary as assumes that the pattern in this study represents the cosmos of organization that is going through a merger exercise in Malaysia. 1. 9 Structure 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 look problems, questions and the significant of the study. Chapter Two discuss on review of related literature based on the query done, search model framework, and research hypothesis development. 17 Elaboration on the research design, samp ling and information collection procedures, measurement & instrumentation and, information analysis techniques are outlined in Chapter Three. Chapter Four discusses on the overview of the data collected, profile respondents, reliability test, major findings, correlation coefficient analysis of inconstants, multiple regression and summary findings.The final exam chapter presents the discussion of the research done, recommendations for future research as swell as limitation. 18 CHAPTER 2 LITERATURE REVIEW 2. 1 Introduction Chapter Two offers a literature review on issues related to M&A, employee expectation and human resource management. The development of research framework/model 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 combination has the enceinteest implications fo r size of investment, visualise, integration requirements, 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 acquirer? s needs. However, both suffer the same predicament.The primary purpose of integrate and acquiring new firms is usually to improve boilers suit cognitive process (Lubatkin, 1983) by achieving synergy, or the more commonly described as the 2 + 2 = 5 effect (Cartwright and Cooper, 1993) 19 between two business units that will increase competitive advantage (Porter & 1985). However, the untainted existence of potential synergism is no guarantee that this possibility will be realized (Cartwright & Cooper, 1993). new 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). Therefore, although M&As are usually extremely well planned out in terms of monetary and legal aspects, the conclusion that has to be drawn is that these poor 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 utilise 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 diligence stage, integration planning stage and implementation stage. 2. 2. 1 Pre-Deal Based on its growth strategy, the acquirer searches for an appropriate target or partner, assesses potential targe ts and develops a plan for executing the deal. This first level involves searching 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 huge research and gathering of market intelligence to access the potential of suitable candidates. 2. 2. 2 Due Diligence after(prenominal) making the offer, the acquirer ensures that the deal is strategically and economically sound and has a high likelihood of success. Thorough, minute execution of this stage is critical. Once a suitable entity has been identified, usually the next step is to make an offer to acquire or merge with the new entity.This offer is usually made conditional on the accomplishment of the due diligence. During this second phase, a review of the new entity is undertaken to e nsure the soundness 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 statements, strategies, business plans, resources and trading operations of the entity to confirm their assessment of the commercial suitability of the deal. Often many transactions do not go beyond this phase because the due diligence highlights the inappropriate risks associated with the deal. 2. 2. Integration Planning The acquirer creates a cosmopolitan plan for integrating the two organizations. This stage takes place within the first one C days of the finale 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 palmy implementation of the deal. This phase is often conducted under very tight time frames and requires extensive and detailed involvement from experienced personnel. Detailed project management plans are established to ensure the smooth 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, agree to the study carried out by the Ministry of Manpower Singapore (2003) there should be another stage that sums up M&A process. This neglected final stage is known as military rank. The final phase requires reviewing the performance of the new ent ity to ensure that a successful integration has been completed and that the objectives of the M&A have been achieved. mathematical process 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 frequent include ? ? ? ? ? ? ? ? ? Horizontal mergers for market dominance economies of scale Vertical mergers for channel control Hybrid mergers for risk spreading, cost cutting, synergies, defensive drivers Growth for world-class leadership and world(a) reach selection critical mass Acquisition of cash, deferred taxes, and excess debt capacity Move quickly and inexpensively Flexibility leverage Bigger asset base to leverage borrowing 23 ? ? ? ?Adopt potentially disruptive technologies fiscal gain and personal power Gaining a core competence to do more combinations Talent, knowl edge, and technology Hence, M&A are supposed to create new, stronger organizations, but history exposes 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 shop from 50 to 70 percent or even high.A Business Week (2004) study of megamergers conducted between 1998 and 2000 prove 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 wayward to common belief, it is not poor strategic fit that most often causes M&A to fail but poor execution. The flaws can be seen, for example, in instances of insensitive management, lack of trust building and communication, check 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 meet 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 about 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 academic and business, have been apply to this phenomenon, and the reasons for merging and the actual implementation have both been described extensively (Cartwright & Cooper, 1993). The issues under investigation have initially concerned the strategic, financial, o r operational side of mergers. However, even thoroughly planned mergers often fail to materialize and much of the variance in the prediction of merger failure remains unexplained (Amiot, Terry, & Callan, 2007). many another(prenominal) companies believe that M&A are a key means for growth.By combining, companies may gain market share, new markets, a wider run for of product offerings, control over the supply chain, and cost efficiencies. It isn? t still 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 institutionalise the energy and time to changes, sustains their performance and retention during the merger, and develops an enthusiasm for a better future (Walker & Price,2000). 25 Merger announcements should not simply be a cliche.Stating that the merger will enable us to befit more competitive globally or to become the technology leader in our industry says very lit tle 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 therefore be valuable. Human kinetics become even more relevant with the growing trend toward related 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 deuce-ace to one-half of all M&A failures. Therefore, the underlying causes of employee resistance need to be studied guardedly because their understanding has the potential of improvi ng 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. match 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 wanted 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 capable on technology in a practical(prenominal) working environment, there is a greater need to connect and engage with employee to provide them with an organizational identity (Vazirani, 2007) All those who are involved 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 expectatio ns. 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 reduce employee resistance as a way to maximize 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 survey 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 preponderant role, with 38% of 27 respondents saying that they? re brought to the leadership team at the integration planning stage and 35% of respondents saying they have a leadership role during the integration implementation phase. There is read to suggest tha t bringing human resource to the leadership team earlier in the acquisition makes guts 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 Research Foundation, 2010 28 If one assumes that human resources is the unit best equipped to help 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. According to Schmidt & Griffin (2002), on a degrade floor are strategies that should be taken or at least considered by human resources in traffic with M&A process 2. 5. 1 Leadership by Human Resources The greater the 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 counsellor about 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 employees of both organizations react and promote a nose out of community and purpose. Positive employee perception of leaders is crucial to successful change.Employees want to believe that leadership tutelages about them. When employees are convinced that leaders genuinely do care about them, they become more open and willing to make necessary transitions (Arian, 2007). Companies that foster a high degree of leadership visibility and involvement during M&A instil a supportive organizational culture with a better than average chance of success (Olson, 2007). Leaders set the priorities and create the verificatory business 29 momentum 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 inspire a shared sense of purpose, coherence, community and trust, enable employees to focus and remain highly engaged during M&As and post-merger integration. Establishing and sustaining cultural alinement during the first 100 days is particularly important in shaping the newly 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 pulse 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 essential 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 asshole 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 rumours and other means of informal 30 communication which are not an effective means in reducing disquiet (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 dread and, in many cases, counterproductive 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 sceptical 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 justice research emphasises the impor tance of two-way communication, in which both management and employees can voice their opinions, concerns, desires and provide information. Research shows that employee prospect 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 will be none other than human resource as the intermediary. 2. 5. 3 perpetration 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 w ork for the target.Unanswered questions about job security, relocation and new reporting relationships, spawn rumours, anxiety, peevishness and the loss of top talent, who can most easily find jobs elsewhere. All this can lead to lower productivity and diminution of a company? s intangible assets. In the growing world of global financial services mergers, these issues take on heightened 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 psychologically 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 acc ept 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 dependent variable of employee expectation and three unconditional 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 beneath. 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 h uman 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 using appropriate data analysis technique. 2. 8 Conclusion This chapter has presented a review of literature that focuse 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 significant 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 METHODOL OGY 3. 1 Introduction This chapter provides the methodology use in this research to study the significant relationship between the indie 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 collecting 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 investigate 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 relationsh ip. 35 3. 2. Type of Study The method used to analyse data was carried out using quantitative survey 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 Social Science (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 relationship 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 survey study where data was generated via distributing questionnaires. stirred 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 using the simple 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 manag ement 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 data processor with 5% margin error and 95% tolerance of confidence level. 37 at a lower place is the breakdown of the 100 participated employees Table 3. 1 Sample Breakdown Category/ line of descent Grade Tea Lady & driver (DO & OA) Non Executive (G1-G3) Admin & Secretary (S1-S4) Executive (E8-E6) Middle Management (E5-E3) Senior Management (NG-E2D) Management TechnicalNon-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 element 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 changeful Un certain 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 select 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 of 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 classification. The second part of the questionnaire cons ists 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 ? Age ? Gender ? Academic readiness ? Job Grade ? Length of Service ? Job Classification 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 analysis of data begins with reliability test for the scales through Cronbach? s important. The Cronbach Alpha testing is used due to well accepted reliability test tools applied by sociable researcher (Sekaran, 2005).Cronbach? s Alpha reliability analyz e that the closer Cronbach? s Alpha is to 1. 0, the higher the inherent 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 acceptable 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 above very strong relationship, II. 0. 50 to 0. 69 strong relationship, III. 0. 30 to 0. 49 verify relationship, IV. 0. 10 to 0. 29 low relationships and V. 0. 01 to 0. 09 very low relationship. Thirdly, Multiple Regression Analysis was conducted to exam which among the three independent variables is the most important variable s 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 variance 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 sum up 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 Multiple Regression. 42Finally, frequency distribution is being carried out to obtain a count of number of responses associated with different values of one variable and to express these counts in to constituent 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 discussion of sampling design, data collection, ques tionnaire, 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 variable 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, profi le 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 thorough 100 100 0 0 Percentage (%) 100 100 0 0 4. 3 Respondents Profile The survey demonstrated the details concerning demographic characteristics or respondents? profile 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 ? Fe antheral Frequency 8 55 34 3 0 57 43 Percentage (%) 8 55 34 3 0 57 43 2 Gender 45 3 Academic skill Seconda ry ? 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 under 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 a nd 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 acceptable 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 independent 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 standard 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 deduction 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 significance of the bivariate relationships of all the variables in the study. Theoretically, there is a possibility of a perfect positive correlation between two variables, which is stand for 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 correla tion found between two variables is significant or otherwise (i. e. if it has occurred solely by chance or if there is a high probability of its actual existence) As for the information, a significance of p ? 0. 05 48 is the generally accepted received level in social sciences research. This indicates that 95 times out of 100, this can be sure that there is a true 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 this 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) *Corr elation 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 c ommitment 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