A constantly changing business environment has led to numerous mergers and acquisitions (M&As) in the banking sector with the aim for survival and growth. The fallout of M&As is changing employee behavior. Numerous studies have observed that M&As, or even simply an announcement of one, has resulted in lower employee commitment towards the organisation. The present study measures employees’ commitment to an organisation, a nationalised bank, that underwent a merger with one of its subsidiaries, as per recommendations of various committees. The study addresses the issue at three stages – identity of the employees, level of job and residual years of service left. Further, with the help of ANOVA, the difference between the mean values was assessed and the results were depicted on the basis of p-value. The results suggest that commitment level is influenced by the level of job, which was found to be statistically significant. Mean values indicate that employees of both the parent organisation and the acquired one tend to have lower commitment levels. Similar findings were recorded for the tenure of service of employees. Employees with long tenures were more committed, which can be attributed to long service duration and their internal passion for their job.
Keywords: Merger and Acquisition, Bank, Organisational Commitment, Identity, Level of Job
In the Indian banking sector, mergers and acquisitions (M&As) have been initiated to move from a regime of ‘large number of small banks to small number of large banks’. The larger a bank, the higher is its competitiveness and better its prospects of survival. One of the major issues at the time of M&A is treatment of employees of the merging bank. Narasimhan Committee report (August 1991, 1997, 1998) recommended merger of large Indian banks to make a strong support for international trade. They recommended a three-tier banking structure – three large banks of international level; eight to ten national banks and a large number of regional and local banks.Read Full Article