Closure and Mergers and Its Impact on Wellbeing

Closure and Mergers and Its Impact on Wellbeing

December 26 2022 TalktoAngel 0 comments 61 Views

What is a closure in business?

Closure in terms of business is the termination of a company and its services. Closure of a business involves letting go of all the employees and rusticating services that it used to provide. A business is closed when it’s no longer feasible or profitable for the business to continue to maintain its position in the market. The closure of business has a psychological impact in terms of anxiety, and stress on management and employees, accordingly many companies engage in Online Consultation Best Psychologists in India for workplace counselling their employees.

What is a merger in business?

A merger is a strategic decision in which two companies merge and act as a single legal entity. Companies that agree to merge are typical of equal scale and scope of activities. The merger also at times led to mental health issues at the leadership and employees level.

Why do mergers occur?

Companies will get greater resources as a result of the merger, as well as the scale of activities will expand.

Companies may decide to merge in order to help their shareholders. Following the merger, current shareholders of both the original organizations receive shares in the new company.

Companies may agree to merge in order to expand into new markets or diversify their product and service offerings, thereby improving earnings.

Mergers occur when businesses wish to buy assets that'd require time to build internally.

To reduce its tax liability, a corporation with considerable taxable revenue may consider merging with a business with massive tax loss carry forward.

A merger of companies eliminates rivalry among them, lowering the cost of product advertising. Furthermore, the price reduction will benefit customers and subsequently improve sales.

Employees working at both the buyer and target business sides may experience a great deal of stress as a result of an impending deal.

Change comes with closure and merger, which can cause a wave of uncertainty among employees who are concerned about a change in culture, change in management, losing their position, taking on a higher responsibility, and other factors.

Given the importance of human capital in most modern firms, there is a substantial danger of value destruction if humans are not prioritized in a transaction.

What happens when two companies merge?

There are very few cases where a merger does not result in some type of labor upheaval.

Examples also include the acquisition of an asset in a transaction involving no human capital (for example, the purchase of land or property) or the acquiring of intellectual property rights.

Excluding these types of transactions, we are left with acquisitions involving persons.

When one firm acquires a competitor in the same market, many of the functions done by personnel at both organizations will have some overlap.

This is most commonly observed in:

  • Secretaries and administrative assistants are examples of administrative personnel.
  • Employees at the Director level
  • IT and catering personnel are examples of support personnel.

It is pointless to try to sugarcoat the scenario that will eventually result from this redundancy: many of these individuals will be an excess to requirements in their existing positions, and removing them should provide synergies for the newly-formed business.

Most employees will be mindful of this existential threat to their jobs and may begin looking for alternative employment.

This duplication does not have to be detrimental to value. On the contrary, high-value personnel should be retrained for new positions created by the transaction.

Regardless of how many employees who are no longer needed have left, there are going to be human resource concerns with the people that remain.

Because of the complexity of human relations, the list of these concerns is nearly endless; however, the following are amongst the most prominent issues which the newly formed corporate organization will have to deal with:

Concerns about culture: Consider a home visit in a foreign nation as an example of how culture influences individuals: virtually all of it is different, even if the change isn't visible.

Wage discrepancies: It is likely that various wage inequalities will exist among the two merging enterprises. 

Employees will discuss this, and even seemingly minor differences might lead to significant animosity.

Disillusionment in general: Change can be a cause of disillusionment among employees. Because of the nature of M&A, some employees will simply refuse to bet on it for a variety of reasons.

Anxiety is a word that comes up frequently when addressing the detrimental consequences of mergers and acquisitions on personnel. This is understandable considering that most people are aware that mergers inevitably result in layoffs.

Increased anxiety can lead to decreased performance, workplace discontent, and sometimes even voluntary resignations.

If a person who would otherwise contribute significantly to the merged organization believes that their employment is in jeopardy, they may decide that it is safer to choose a position in a company that really can guarantee their work for the foreseeable future.

After the deal is completed and the post-merger integration period begins, at least one of the companies will go through a cultural transformation.

This may cause dissatisfaction among certain individuals who believe they must work even harder or that new practices are "not how things are carried out around here."

This discontent, or the resulting reaction, is likely to reduce performance in the short term at the very least.

Job loss or being laid off has an impact on well-being is one of the most stressful life experiences, learn how to reduce being laid off. It may potentially result in mental or physical health issues. These can be exacerbated by the loss of health insurance. Of course, the lack of regular pay might cause financial and family problems. To know about how to cope with spouse laid off read more at TalktoAngel.

Loss of regular income can lead to prolonged stress, anxiety, and strain in relationships.

Research has linked the causality of psychiatric disorders caused by stress to an increase in individuals who lose their jobs.

For further assistance, you can connect with TalktoAngel Asia’s No. 1 Online Counselling and digital health well-being platform for your mental health concerns.

Contributed by: Dr (Prof) R K Suri  Wellness & Leadership Coach and Ms. Varshini Nayaar



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