1.

INRODUCTION

What is merger and acquisitions

Mergers and acquisitions (M&A) are defined as consolidation of companies. Differentiating the
two terms, Mergers is the combination of two companies to form one, while Acquisitions is one
company taken over by the other. M&A is one of the major aspects of corporate finance world.
The reasoning behind M&A generally given is that two separate companies together create more
value compared to being on an individual stand. With the objective of wealth maximization,
companies keep evaluating different opportunities through the route of merger or acquisition

In the case study given by the IPM for module 20 is based on the basically about the merger and
acquisition project of NDB and DFCC bank in Sri Lanka. So now we will go to the background
of the case study.

1.1 Background of the case study

NDB bank one of Sri Lankan best established bank in past few years and doing well in financial
world. Along with doing all banking operationsconduct and marking as one of fastest growing
bank in Sri Lanka it wants to go for a merger and acquisition project with DFCC bank.

DFCC bank belongs to category of institution known as Development finance institutions or

DFI. DFCC bank were amalgamated on 1stof October 2015 and the surviving entity is DFCC
bank plc.

Most of commercial banks in Sri Lanka lack adequate financial instruments for surviving long
time in the market successfully. A small country like Sri Lanka cant handle more financial
institutions. So it is better to go for merger or acquisitions create for successful infrastructure for
banking industry.

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According to the given case studyNDB Bank PLC and DFCC Bank PlC which were supposed to
merge under the central banks financial sector consolidation plan are now awaiting the results of
an evaluation conducted by a committee appointed by RanilWickramasinghe. The case study is
within us now, so it is not necessary to go deep details about the case, so all we want now is to
find answers for the following questions.

1. Redesign the.managerial positions from internal competent officers and find out the best
selection process for it.
2. Considering the nature of the bank, propose a suitable performance pay and reward
system for managerial staff.
3. Discuss the aspects of Balance scorecard techniques
4. Report to the board of directors explaining, how chief HR officer could contribute
developing Brand value of the bank.
5. As a manager Speech to deliver to the customer forum, explaining your clients, as to
how profitability could be enhanced through improvement of productivity.

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Problem solving

1. Organizational redesigning helps to improve effectiveness of the organization and aspects

of work flow, procedures, structures and systems, realigns them to fit current business
realities/goals and then develops plans to implement the new changes. The process
focuses on improving both the technical and people side of the business. In this case
study with the merger both banks and the Board of directors are planning to redesign the
organization structure.They want to fill all managerial positions by internally competent
people. So it is easy because when we recruit internally there is no need to go for external
newspaper advertisements or external recruitment methods. And also NDB and DFCC
are now merged and so we have enough competent people inside the both organization.
So we can recruit suitable employees within the organization.So here, we want to
understand,what is the best selection process for the redesign the organizational structure.
Networking
Assessment centers
Conduct competency based interviews

Networking

Networking is one of best selection process for merger banks.DFCC and NDB banks have best
talented employees within their organization. We have only to select who are the best employee
for selected position. Linkedln is a best networking process for internal and also external
recruitment process. Chief HR officer can maintain a linkedln account with connection to
employees who are in senior positions and willing to grow up within the organization. When
organization doing redesigning process, HR manager can call suitable employees to the
recruitment interviews.

After identifying suitable employees ,you can participate them to assessment center process.

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Assessment center process

When you invite suitable employees to participate to the selection process through networking,
there may be so many suitable candidates will apply for the position. So to identify most suitable
candidate, you have to conduct assessment center.

Through the assessment center it asses your suitability for the job through various tasks and
activities, allowing employers to test skills that aren't necessarily accessible in a traditional
interview. In the assessment centers candidates have to do different activities such as
presentation by the employer, group exercise, individual exercises, interviews etc.

Example ; if we assume merged DFCC and NDB bank want to recruit new chief HR officer for
their organization. DFCC bank and NDB bank both has chief HR officers in their banks. But
after merging there is no need to have two HR managers. So we have to select one HR manager
for the organization. Sometimes there may be some employees who are good enough for the
position of chief HR manager and they are willing to apply for the position. So we can call them
for interviews through internal networking and guide them to go through assessment center
process. When we recruiting HR manager, we need certain qualities which we expect from
them. So recruiting new manager is a challenge for the organization. To identify suitable person
organization can go through the above assessment center process.

presentation : presentation can be used to test the presentation skills of the candidate. As
a manager he/she needs good communication skill and delivers his/ her idea clearly and
concisely.
Group discussion : involve working with other candidates as part of a team to resolve a
presented issue. These execrise are designed to measure interpersonal skills such as group
leadership, teamwork, negotiation, and group problem solving skill.
Individual exercise : asking some questions from the candidate about his present job and
his personal interest may be include to this category.

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Conduct competency based interview

Competency based interviews are more systematic, with each question targeting a specific skill
or competency.Candidates are asked questions relating to their behaviour in specific
circumstances, which they then need to back up with concrete example. Through competency
based interview you can judge certain competency of different candidates and select who is the
best candidate for the certain position.

When we redesigning the organization, internal recruitment is best for select the most suitable
candidates for the certain positions. When it comes to the managerial positions selecting through
assessment center activities is best for merged two banks.

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2. Pay-for-Performance systems tie compensation directly to specific business goals and
management objectives. To do this, companies must deliver competitive pay for competitive
levels of performance, pay above market for exceptional performance, and reduced pay for poor
performance. To achieve this, companies must match measurable and controllable performance
targets to company objectives. According to the case study this is a new strategy for both DFCC
and NDB bank. Because earlier both banks are operating along in the banking sector and now
both competitive banks are became one bank. So it is a highly challenging task for prepare a
suitable performance and reward system which is suitable for both bank employees and
managerial staff. In this case study we have to prepare suitable pay and reward system for
managerial staff.

To the managerial staff individual pay system will be suitable. Managerial staff does not willing
to work as team so much. So it not suitable to apply group incentive system for managerial staff.
DFCC and NDB is now one organization and all managerial staff who came from both banks
must be treat and must be reward same.

Bonuses : bonuses is one of motivating factor for managerial staff in banks. The
employee receives the bonus when he/she has fulfilled objectives that are based on
results. If the result is according to the budget, the employee will receive a bonus that
respond to a predetermined sum. So newly merged organization has new targets to
cover. so paying bonuses for managerial staff may motivate them to cover their new
targets.
Benefits :aim for benefits is to provide security for the employees, and thereby make
them feel they are members of a considerate organization. Benefits can be include such
as vehicle given by the organization, medical benefit, family trips, family day outing
packages etc. Through these benefits employees become loyal to the organization.
Commission : when specific departments cover their targets, it is good to give
commission for managers and employees both.

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Performance pay and reward system provide incentive and rewards to enhance organizational
performance through improved individual or group performance. Now we will discuss the effects
of such system.

Advantages of performance pay and reward

A good PRP system will reward the best performers

It is an effective way of dealing with poor performance

Rewarding high performance can assist in retaining staff

It provides a direct incentive for employees to achieve defined work targets

The contribution an employee makes is recognized with a tangible reward

A healthy performance based culture can be developed with its introduction

Apart of advantages there may be some disadvantages also in this performance pay and reward
system.

Employees can be de-motivated if the goals set are too hard to achieve

It reduces pay equity and can make a company liable to costly equal pay challenges if not
operated fairly

Team spirit and co-operation can be hindered

As reward is made for a short-term quantifiable goal, it can be too narrowly focused

There is a danger that employees can expect an additional payout year on year. In a low
inflation climate the rewards might not appear to be that great

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3.Before going to the third question we have to understand, what is balance scorecard. Balance
score card is a strategic planning and management system used to align business activities to the
vision statement of an organization'. According to the case study question we have to discuss
aspects of balance scorecard technique that can be implement for the merge bank.

To embark on the Balanced Scorecard path an organization first must know (and understand) the
following

The company's mission statement

The company's strategic plan/vision

The financial status of the organization

How the organization is currently structured and operating

The level of expertise of their employees

Customer satisfaction level

In this situation there is a one organization, but it is a combination of two leading banks. So
aligning two organizations aspects into one is not easy. But through the balance score card we
can align the two banks into one. There are 4 perspectives in balance score card. Through this we
can discuss the aspects of balance score card.

Financial Perspective : return on investment, cash flow, financial results of quartley and monthly

Customer perspective : quality service for customers, customer satisfaction, improve customer
percentage of market, improve customer retention rate

Internal perspective : process alignment, right employees in right position, employee satisfaction,
retain best employees with the organization

learning and growth perspective : employee turnover, job satisfaction, training/ learning
opportunities

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In the balance scorecard each of the four perspectives is inter-dependent - improvement in just
one area is not necessarily a recipe for success in the other areas.

4.Brand Value

The biggest challenge for the banking industry is to tangibilize the intangible banking
experience. One way of overcoming this challenge is creation of strong brands. It has been well
organized that brands are regarded as one of the most important corporate assest. Brand plays a
strategic role in the success of any business. Relative brand values can be significant in
determining the acquisition values. Brands increase consumer willingness to take the risk of
buying even premium products if they are convinced that it is from a credible source and they
trust the company. Along with a brand name a logo or symbol also help people to recognize the
product.

When it comes to the merger and acquisition, it is a combination of two banks (DFCC and
NDB). So we have to treat both bank samemanner.WE have to keep our brand equity. The role
of brand equity on mergers and acquisition is very important. DFCC and NDB as one
organization we want same strategy to remains our previous customer happy and loyal to the
organization. Through this journey brand value of our organization play a vital role in banking
industry. As combination of two banks we have to do lot of things to enhance our brand value in
the market. The more responsibility of this strategy goes to the chief human resource manager in
our organization. How he can contribute to enhance the brand value of the organization.

o Understand the Companys Culture, Mission, and Vision: Before any branding efforts,
the firms identity and goals should be fully understood by all employees.
o Compare the Existing and Desired Employer Brand: Effective HR brands should convey
the same message both in and out. Collect survey inputs from multiple targets
applicants, customers, and internal focus groupsto see how they perceive the
companys employer brand and compare the result with the desired image.
o Establish Employer Brand: After conducting a gap analysis from the previous step,
engage the current employees to build an appropriate employer brand that is reasonable
and practical to attain. Set specific action plans and visualize how the brand may be
perceived internally and externally.

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 o Managining culture of the organization :This is little bit difficult because employees are
come from two backgrounds. But hr can develop similar culture to both organization as
one organization.
o Digitalize your brand strategy :The digital technologies underlying talent attraction,
engagement and retention may not be now, but they are being used to new effect.
Enormous amounts of information are accessible as never before, from whats being said
about your company online to internal forums focused on improving business processes.
o Improve the organization network : Through Networks such as linkedln, facebook,
twitter you can convey massage about your organization and attract new young
generation to the organization.
o Understand Economic Trends and Country Primed for Growth : It is good for future
forecasting of the organization. When organization makes there budget for new business
year they must be aware about the economic stability of the country.

In the end, brand value comes down to distinction, our ability to set your brand apart in the
industry. You have to be able to tell a better story and it has to be consistent across all marketing
channels to remain strong.

Once we built value into our brand from the product to the campaigns, its important to
understand where our brand falls on the value scale and to continually adapt marketing strategy
to suit.

Everyone in the organization is responsible for developing a strong brand. However, it is our
responsibility as a marketer to communicate that value to the mindful consumer who goes in
search of a strong, high value brand they want to be part of.

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 5. Dear valued customers,

Today I am going to be talking about how profitability could be enhanced through improvement
of productivity in our bank. This is not a ordinary speech of a bank manager. I want to give some
knowledge about how banking industry survive in the market with other competing industries.
As you know, DFCC and NDB are now one organization. So our organization now has strengths
of two banks and because of that we can grow faster in the market. So including me our
management think we can increase our profitability as soon as we can, through increasing our
productivity. So I want to give brief speech about to aware you how productivity could be
enhanced through improvement of productivity.

First of all I would like to talk about managerial efficiency and productivity how to apply for
increase the profitability of the organization. In recent years the focus has been on customer
perceived quality, especially when dealing with service operations as it is seen one of the main
drivers of retail banking and increasing banking profitability. The role of manager in the scenerio
of increasing profitability is very important because branch manager is the person who
encourage his employees to deal pleasantly with the coustomers. Attraction of more
coustomersgains attraction of more profitability.

Second one is employee productivity. Productive employees are treasure to the organization. We
can improve employee productivity by improving pleasant working environment, improve good
working methods and etc.And most worthy thing is promote the effective human resource
practices to the employees.

Restructuring is another factor which to have an effect on the banking profitability. Restructuring
may involve de-layering the management of banks, adopting new standards and policies,
increasing operational efficiency and other similar activities which increase the overall efficiency
of performance and profitability of bank. Because healthy recruitment process retain good
employees with the organization and organization does not need to spend more cost to recruit
employees again and again.

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Automating customer care In the digital age, customers demand more self-service options and
any-time, anywhere service. So expanding customer self-service, case management, dispute
management and event-based decision-making can be perceived as better customer care, while
lowering operational costs and increasing effectiveness. However, banks should continue to
make compelling offers as incentives for customers to use lower cost channel and improve
profitability.

Innovative bank branch design is another methodology to increase profitability. Because, both
customers and employees love innovative environment. Innovative environment create more
easy working environment to the employees. Employees can do their day to day duties very
easily and they can perform their job well. It increases their productivity and it directly influence
to the profitability of the bank. And another point is DFCC and NDB banks are private banks and
customers who are coming to these banks are little bit social and innovative. So they also like to
have innovative bank environment. So innovative bank branch design makes organizations
productivity and profitability.

Move with technology is another strategy for making profitability through productivity. In today
world technology make easy of our day to day work. Mobile banking, easy account creatin,
electronic statement, automatic bill payment, mobile check deposits etc make customers life
easy. And also to do electronic banking services organization does not more employees. So
reducing employees is a cost beneficial for the organization. It makes profitability of the
organization.

In my speech I gave you some hints to increase profitability through the productivity. I hope as
customers you will gain some extra knowledge to you for your future customer life. Thank u!!!

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References

http://www.makeuseof.com/tag/7-best-online-banking-features-simplifying-life/
www.analyticbridge.com
smallbusiness.chron.com
balancedscorecard.org
https://balancedscorecard.org/Resources/About-the-Balanced-Scorecard

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