Mwaka Miyanda
Research Report
GSB 5040 / Business Management
Dr. Maja Zelihic
26th March, 2017
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Research Report
Making Lay Off Decisions after a Merger & Acquisition (case study Finance Bank)
Abstract
After a merger and acquisition cost cutting measures such as layoffs are almost inevitable.
The purpose of this paper is to analyze the decision making challenge that a manager is faced with
when deciding to let go of employees. The paper provides insight on various alternatives the
manager should consider before making the decision as well as the factors that a manager must
take into account when selecting who to layoff. The paper also discusses some of the
physiological biases that a manager should avoid when making a layoff decision. Additionally, the
paper brings to light the vital role of communication in determining the attitudes of employees
affected by layoff strategy.
Introduction
The decision to let go of employees is one of the most difficult tasks that managers face,
whether it’s laying off a single employee or conducting a massive layoff. In the face of such a
challenging task of having to reduce a company’s workforce, managers have to establish the
criteria for employee layoffs that will be used to decide which positions will be eliminated and
which employees will lose their jobs. Furthermore, the manager must make sure that a fair,
reasonable and explainable selection process is developed. The manager must also be prepared to
show that the selection was based on sound business decisions.
This paper discusses the different alternatives that a manager considers before conducting a
layoff and whether the bank can do so legally. The paper further discusses what factors the
manager takes into consideration when setting up the layoff criteria and highlights some of the
mental shortcuts to avoid when making the decision to lay off employees. Lastly, the paper
discusses the importance of effectively communicate this change strategy to affect parties.
Overview of the Finance Bank Merger & Acquisition
Altas Mara Limited (“Atlas Mara”), the sub-Sahara African Financial Services group
(which owns BancABC Zambia) announced the completion of its acquisition of Finance Bank
Zambia Limited (“FBZ”) on 30th June, 2016. Atlas Mara further announced that it would begin the
process of integrating FBZ and Atlas Mara’s existing Zambian Subsidiary African Banking
Corporation Zambia Limited (“BancABC”). The company further announced the appointment of
Benjamin Dabrah, as the new Finance Bank Zambia Managing director with immediate effect.
The two distinct Zambian banks would eventually be unified, enabling the group to optimize its
client offering, leveraging off the effective use of innovative technologies and products (Imanga,
2016).
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Research Report
During an acquisition consultants are hired to help redefine the organization’s mission,
strategic direction or operations. While consultants can be of benefit to a right struggling firm,
their recommendations often result in organizational restructuring and downsizing. According to
the Zambian observer website, the processing of merging FBZ and BancABC has been
excruciating, especially for the FBZ employees as they have been subjected to uncertainty and
speculation over their employment. The report further states that more than half of FBZ employees
stand to lose jobs due to the sale and merging of the two banks (Hundreds lose jobs in Finance
Bank, 2017).
Decision Plan and Factors to Consider When Making the Layoff Decision
The decision to let go of employees is one of the most difficult tasks that managers face,
whether it’s laying off a single employee or conducting a massive layoff. Laying off refers to an
employment termination based on economics, usually involving more than one worker (Making
Layoff Decisions). Unlike firing an employee, a layoff is not the fault of the employee. The
financial state of the company is the underlying cause of the layoffs. Some managers arrive at the
decision depending on gut feeling, though majority aim for a more rational type of decision
making approach in the interest of fairness.
To ensure the decision to lay off employees is the most favorable choice, it must be
rational. That is to say, the decision must be based on reasonable data, facts and a precise step by
