While bank mergers may exacerbate the rising jobless rate, consolidation is a long-term positive factor for the sector, Tim Galpin, merger and acquisitions expert at consulting firm Watson Wyatt Worldwide, said yesterday.
"Mergers may raise the jobless rate in the short term, but it makes the industries more competitive in the long run," Galpin said yesterday, when asked about how corporate restructuring may add to the nation's rising unemployment ratio.
But mergers for the sake of mergers may not help, as recent international experience suggests most corporate marriages fail, Galpin said. Cultural differences are the key cause, he said, adding that most top executives ignore the cultural factors. "When it comes to the culture, they are either confused or scared," he said.
PHOTO: WATSON WYATT WORLDWIDE
Communication is also important, as any lack of interaction with employees will lead to lower productivity, with staff unable to concentrate on their jobs. Therefore, corporations mulling mergers should speed up the time of integration between the merged companies so as to avoid hurting productivity -- and hence profitability.
"It is similar to pulling off a band-aid: You can do it fast and painful or slow and painful, but there is still going to be pain," Galpin said. "So you might as well do it faster and get the pain over with fast."
Worse still, a slow integration process and lack of communication with staff may trigger the departure of key people from the company.
"Your best people will leave first because they can find jobs fast, and when they walk out of the door, the value walks out of the door," Galpin said.
Some companies, while trying to retain top-level executives, forget about middle management, he said. The strategy on how to retain the best talent should be based upon the nature of the company's business, he said.
While the firm's staff may know about the development of the deal, outsiders may rely on certain indicators to see if the deal is going well. Undesired turnover is one bad sign, he said.
"When you see people bailing out of a company, that is a very important indication that the deal is not going too well," he said.
As an example, Galpin said that top employees left Nation's Bank and Bank of America within two months after a merger between the two banks was announced. Two other major mergers -- Citicorp-Travelers and Daimler-Chrysler -- also experienced a similar bleeding of key staff, he said. One part of a company most likely to suffer after the departure of key employees is customer service.
"If customer service is bad, no matter what business sector we are talking about, and people are making excuses, then it is a clear indication that things are not going well," he said.
One model that may be emulated by other companies are mergers that have occurred with General Electric. The company has placed huge emphasis on integration by appointing internal specialists to help integrate companies and also relying on local talent to spur mergers, he said.
LOOKING TO GROW: A survey showed that 71 percent of executives at chipmakers said that they aim to increase their global workforce this year An overwhelming majority of semiconductor executives expect revenue to grow this year, driven mainly by automotive applications that are putting wireless communications to the backseat, a survey released yesterday by global consultancy firm KPMG showed. Eighty-one percent of respondents said that their company’s revenue would increase over the next year, and half of them said they expect growth of more than 10 percent, the survey of 151 global semiconductor executives last quarter showed. Although lower than last year’s 95 percent and 68 percent respectively, the findings are encouraging in light of recent economic uncertainty, inflation, monetary tightening and geopolitical tensions, a KPMG
TAKING OFF: Net profit soared 29.5 percent annually last year to a record NT$15.37 billion, as GlobalWafers received record-high prepayments from customers, it said Semiconductor inventory corrections should end next quarter, paving the way for a pickup in demand in the second half of this year, GlobalWafers Co (環球晶圓) said yesterday. As a majority of its customers believe demand would bounce back in the second half, the world’s No. 3 silicon wafer maker said it is keeping most of its factories fully utilized to ensure sufficient supply. “Our customers have committed to take those wafers. They only requested to push back shipments by a month or two,” GlobalWafers chairwoman Doris Hsu (徐秀蘭) told an investors’ teleconference. “Overall industry inventory adjustment should be mostly resolved in the second
The London Metal Exchange (LME) discovered bags of stones instead of the nickel that underpinned a handful of its contracts at a warehouse in Rotterdam, the Netherlands, in a revelation that would deliver another blow to confidence in the embattled exchange. The amount of metal represents just 0.14 percent of live nickel inventories on the LME, worth about US$1.3 million at current prices, so the immediate effect on the metals markets is limited. However, the shock announcement has much wider implications. In an industry riddled with scandals, the LME’s contracts are viewed as unquestionably safe. The news that even a few of
Oil on Friday posted its worst weekly loss since the early months of the COVID-19 pandemic as banking turmoil poisoned investor sentiment. West Texas Intermediate for April delivery dropped 2.36 percent to US$66.74 per barrel, falling 12.96 percent for the week, the largest drop in almost three years. Brent crude for May delivery fell 2.32 percent to US$72.97, posting a weekly loss of 11.85 percent. The failure of Silicon Valley Bank and troubles at Credit Suisse Group AG drove investors from risk assets, with oil-options covering accelerating the sell-off. “Crude action this week reminded many of how quickly the commodity can be decimated by
RSS