IMPACT OF TAKEOVER PROCESSES ON EMPLOYEES – EVIDENCE FROM FOOD, RETAIL AND FINANCIAL SECTOR

Takeover processes imply integration of different organizational cultures, especially in case of crossborder takeovers. Using a survey questionnaire, authors conducted a research to examine the changes and satisfaction with all interest groups in taken over companies operating in fields of food industry, retail sector and financial activity in the Serbian market. Method applied to process the data is discriminant analysis, and research results are presented tabular form as well as graphically in form of ellipses. The aim of the study is to examine the differences of impact of takeover processes on various interest groups of production company, retail chain and financial institution and assessment of their satisfaction. Study’s contribution is an informative support for managers of both company acquirer and target company in future acquisition processes, because analysis of differences, change and satisfaction of employees provides a concrete answer regarding elements influencing success of takeover process in terms of management of human.

The largest number of foreign investments came to Serbia through the privatization of social enterprises and state-owned companies operating in telecommunications, banking, food industry and trade. In the period from 2001, four fifths of the total 20 billion USD of foreign investments came from European Union countries.
Foreign direct investments play a significant role in the Serbian economy according to Đurić, Ristić and Đurić (2016). Foreign direct investments had a growth trend from year 2001 and reached their maximum in 2006, when they amounted to 14.3% of the GDP. Onset of the World economic and financial crisis in the summer of 2008 led to a rapid decline in investment activity worldwide and in Serbia as well. Another growth of foreign direct investments was recorded in 2011: wholesale and retail trade sector (38%), processing industry (21%) and financial activity (11%) of the total foreign investments in 2011 (Chamber of commerce and industry of Serbia, 2017).
In the period from 2001-2011 growth rate of production industry was 0.7%, where processing industry dictates growth pace to a significant extent 0.4% (food production amounts to 1.6%, while beverage production amounts to 0.5%). Food industry accounts for 18.6% of the total Industry, which is the highest percentage share according to the Chamber of commerce and industry of Serbia, 2017. Contribution of food industry to GDP is 3.3%. According to Jakšić et al. (2015) transitional processes, lasting up to two and a half decades along with the effects of the global economic crisis, are characterized by the decline in economic activity in Serbia which increased the relative importance of the agriculture in the total economy. Arrival of big multinational companies to the Serbian market in the trade sector led to a higher concentration of market share. Contribution of trade to the gross domestic product is 11.7%. Trade accounts for 34 Integrating different organizational cultures represents an important part of crossborder mergers and acquisitions. Organizational culture encompasses a set of values, reasoning and believes of one group of people, and connecting organizational cultures of two companies, that were previously separate entities, represents a very important instrument influencing the efficiency of the overall business performance of the integrated company. The decision of management to include a company into an acquisition process surely affects company's human resources of both company acquirer and target company. Transactional theory is based on the possibility of reducing transaction costs of management, adjustments and other expenses that arise at the internationalization of the company (Demirbag, Glaister, & Tatoglu, 2007;Chen & Hennart, 2004;Yin & Shanley, 2008). One of the main tasks of managers is to understand the environment in which it operates to make decisions based on the statements of accounts were in order to improve organizational competitiveness (Lima et al. 2016).
In that regard, the authors did the research on the effect of takeover processes on human resources of target company post takeover. The analysis was done using a survey questionnaire. Research sample includes 101 respondents from three fields which are affected by the takeover processes to the greatest extent in the Serbian market: production company from food industry, bank from financial sector and retail chain from trade sector. The aim of the study is examining differences regarding the effects of takeover processes on various interest groups of production company, bank and retail chain. This analysis should provide a concrete answer regarding the success of the takeover process and its effect on the employees' satisfaction in the Serbian market post takeover. Study provides an informative support to managers, as it encompasses three industries and all interest groups of companies in the Serbian market, thus satisfaction analysis of the previous period can be useful in preparing due diligence for future acquisition processes. Managing organizational climate and culture is an important part of due diligence affecting the success of takeover process, as confirmed by numerous empirical studies.

Literature Review
Human resources, organizational culture and business climate imply the analysis of prevailing values and norms especially in case of crossborder acquisition. Study of human resources includes the analysis of working conditions, salary and compensation system, improvement and advancement opportunities, adjustment of managerial approach, etc.
There are numerous examples of unsuccessful acquisitions due to managerial incompetence to solve the problem of integration of two companies with different organizational culture and climate. Effect of cultural differences on success of takeover process was subject of empirical studies done by many authors, Denison In more recent times, there is an emphasis on learning theory as stated by Zollo, Reuer, & Singh (2002) and choice of investment type. Studying the correlation between organizational learning, i.e. previous experiences with M&A activities and future M&A activities, authors arrived at a conclusion that experience increases probability for further M&A activities. There is an especially positive correlation between a positive experience in a certain country and repeated investment in that country as stated by Collins et al. (2009).
Companies with experience often create a position -integration manager whose job is to ease the process of adjustment of human resources of previously two separate companies according to Ashkenas and Francis (2000). Some companies hire consultants EP 2017 (64) 4 (1393-1412) Jelena Andrašić, Vera Mirović, Nada Milenković, Branimir Kalaš, Miloš Pjanić to help managers by providing advice and assistance in bringing together organizational cultures and creating work environment that enhances business efficiency according to Fubini, Price, Zollo (2007).
In their study, Shook and Roth (2011), suggest the significance of the active role of experts in the sphere of human resources management in integration processes.
Crossborder acquisitions often produce unintended consequences on employees in terms of downsizing workforce after the integration of companies. This finding is confirmed by Mylonakis (2006), who studied taken over banks in the European market in the period from 1998-2003, and by Siegel and Simons (2006), who studied production companies in the Swedish market.
Birkwnshow et al. (2000) researched the effect of takeover process on human resources through a questionnaire, surveying both shareholders of the target company and shareholders of the company acquirer. They claim that success of acquisition depends on two parallel processes: operative integration (through operative and financial synergy) and human resources integration.
Acquisition adjustment process greatly depends on employees' readiness for change according to Holt, 2007;Jensen, 2000;Wanberg, 2000. Jones (2005 came to a conclusion that the stronger employees' perceptions of the organizational culture the greater their readiness for change. Large number of authors dealt with studying cultural distance of country acquirer and target country, as well as choice of entrance model of a foreign investor. Regarding cultural distance (Hofstede, 1991) measured by uncertainty avoidance index, the authors determined that with higher aversion toward risk and uncertainty, investors prefer low-level ownership through entrance models: joint ventures and strategic alliances. Regarding industry relatedness, when an acquisition of target companies in developing countries is performed in related industries (compared to unrelated or loosely related industries) there is greater probability of full over low-level ownership or majority over minority ownership.

Data
Study of effects of takeover processes on human resources was done through a survey questionnaire. The study sample includes 101 respondents from three fields that were mostly affected by the biggest takeover wave in the Serbian market: production company from food industry, bank from financial sector and retail chain from trade sector.
Survey questionnaire was used to study changes in company's human resources after the ownership change, i.e. after the completion of the takeover process. The whole study was done in 6 thematic units. Analysis of differences between industries (production company, retail company and financial institution) was done in regard to analysis of general data, analysis of working conditions and workload, analysis of structure of interest groups, analysis of employees' salaries, analysis of employees' professional development and analysis of employees' satisfaction.
Questionnaire is conceived in such a manner as to find out whether there are any changes concerning the employees in the target company after the change in ownership structure (Milojević, Zekić, 2015). The questionnaire was handed out to employees on all position levels: management, administrative workers, workers behind the counter and fieldworkers. The analysis of general data included general information about respondents: occupation, gender, marital status, work position, qualifications and age. Questions within working conditions and workload unit referred to examining whether there are changes in workload, working conditions, interpersonal relations and position changes post takeover. Within the unit Structures of interest groups questions referred to management changes post takeover and whether takeover brought about any reduction or increment in number of employees. The unit Employees' salaries contained questions about changes in employees' salaries and whether there was a post-takeover introduction, increase or reduction of bonuses and compensations for the employees. Within the unit Professional development analysis focused on employees' motivation, whether tasks are performed in a team and whether there are opportunities for employees' advancements. The last unit Employees' satisfaction rated feelings of satisfaction on a scale of five, by comparing periods prior to and after the takeover EP 2017 (64) 4 (1393-1412) Jelena Andrašić, Vera Mirović, Nada Milenković, Branimir Kalaš, Miloš Pjanić in order to have an overall result of the research -whether takeover processes had a positive or negative effect on target companies' employees.

Methodology
Analyzed determinants have nonparametric characteristics, and thus the analysis was done using a nonparametric method based on frequency of modalities through multivariate statistical analysis -Discriminant analysis. Of univariate methods Roy's test, Pearson's contingency coefficient (c) and multiple correlation coefficient (R) were used. Calculating discrimination coefficient allowed for characteristics to be differentiated between those that determine subsample specificity and those that are to be excluded from further processing, i.e. the observed area was reduced. Following thresholds for statistical significance were used in the study: p<0.05 (there is a significant difference), 0.05<p<0.1 (there is a difference and a higher risk for drawing conclusions) and p>0.1 (there is no significant difference among analyzed determinants).
Research results are shown in form of ellipses in the study appendix. In case of two or more subsamples, differences or similarities between them are shown visually. If two ellipses overlap there is no difference between them, when they are separated and don't have any points in common there is a significant difference between subsamples for observed parameters, and when the ellipses overlap partially conclusions are drawn on the basis of the analyzed data.

Research results
Data was processed using discriminant analysis. Discriminant analysis is a more complex analysis compared to multivariate analysis MANOVA, since calculating discrimination coefficient and contribution of determinants to the overall study makes the overall study complete and allows for more complex conclusions to be drawn. Source: Author's calculation Based on the given table it can be concluded that there is a substantial difference and a clearly defined limit (p<0.05) with five analyzed units: general data (.000), working conditions and workload (.000), structure of interest groups (.000), employees' salaries (.000) and employees' satisfaction (.000). There was no substantial difference with the determinant professional development (.145).   More respondents answered that working conditions remained at the same level in the retail and production companies, whereas they worsened in the financial institution. Interpersonal relations in the retail company improved, while other changes were not significant. In the financial institution interpersonal relations worsened, workload became greater; there was an increase in number of employees and promotion of existing employees. In the production company, interpersonal relations remained the same, workload diminished and employees generally remained at their positions. Based on the shown table it can be observed that there is a substantial difference among respondents in regard to analyzed data with: management (.000) and number of employees (.000). The biggest changes were observed with analysis of structure of interest groups, thus by interpreting results which are significant it can be concluded that in the retail company number of employees remained at the same level, in the financial institution that number increased, whereas in production company there was a reduction in number of employees.
In the retail company management was completely changed, in the financial institution it changed partially, whereas in the production company the majority of respondents answered that management was not changed. Based on the given table it can be observed that there is a substantial difference with determinants: salary (.004) and bonuses and compensations (.000). Analysis of employees' salaries showed that majority of respondents in the retail company and financial institution answered that there was an increase in salaries, whereas majority of respondents in production company answered there was a reduction in salaries post takeover. Bonuses and compensations were not implemented in the retail company; they were pre-existent in the financial institution, while in the production company they were implemented post takeover.
Production companies in the Serbian market were mostly taken over by large companies whose salary systems mostly included basic salary and overachievement bonuses. Based on the analysis of employees' professional development, it can be concluded that there weren't differences among employees of production company, financial institution and retail company. With all three companies, in terms of professional development majority of respondents answered that, after takeover, companies invest much more into employees' education, or that they don't feel a difference; in terms of post-takeover work motivation there are more opportunities for advancements or they don't feel a difference; while in terms of task completion the majority of respondents answered that employees' suggestions are more appreciated and that more demanding tasks are performed in a team. Source: Author's calculation Discrimination coefficient indicates that contribution among respondents' industries in regard to employees' satisfaction analysis was biggest with, i.e. the difference was the biggest with: satisfaction prior to takeover (.179), satisfaction after takeover (.169).
The presented table shows a substantial difference with both determinants: satisfaction prior to takeover (.006) and satisfaction after takeover (.001). Based on the given table and contribution of determinants to characteristics (dpr %) it can be concluded that the biggest contribution is with: satisfaction prior to takeover (51.44%) and satisfaction after takeover (48.56%). Homogeneity for retail company is 83.33%, for financial institution 67.74% and for production company 82.35%.
Employees' satisfaction analysis in the retail company shows that interest groups expressed a high level of dissatisfaction prior to takeover, whereas post takeover there was a significant change in their level of satisfaction at work. In the financial institution there was extensive worsening of employees' satisfaction, ranging from "satisfied with my job" prior to takeover to very unsatisfied with my job* unsatisfied with my job* post Jelena Andrašić, Vera Mirović, Nada Milenković, Branimir Kalaš, Miloš Pjanić takeover. In the production company majority of respondents answered "satisfied with my job", while prior to takeover none of the answers stood out as significant, i.e. all answers related to employees' satisfaction were equally present.

Conclusion
Beside the changes they create in company's business performances, takeover processes also lead to changes with human resources of target company and company acquirer. Regardless of whether takeover processes are motivated by creating synergy or value of control, managerial decisions lead to changes in all segments of business, and each of those changes regardless if it is directed towards profit increase or cost cuts, downsizing, increasing workload, selling unprofitable parts of company and other activities, has an effect on employees and their satisfaction. Takeover processes with all three industries had a positive impact on increasing employees' motivation, since there are more opportunities for their advancement and companies, according to employees' ratings, invest much more into employees' education post takeover.
Based on research results it can be concluded that the most satisfaction post takeover was reported by production company's employees, who confirmed that there was downsizing post takeover but on the other hand, there was an implementation of bonuses and compensations that were not existent prior to the arrival of foreign investors. This creates better involvement and dedication of employees in order to achieve higher salary. Although there was an increase in number of employees in the financial institution post takeover, employees expressed less satisfaction mostly due to worsened interpersonal relations and increased workload. Employees in retail industry did not report significant change in their level of satisfaction prior to and after the takeover. Managing organizational climate and culture represents an important segment of due diligence, affecting the success of takeover as confirmed by numerous empirical studies. One of the solutions to help with post-acquisition adjustment is hiring an integration manager whose prevailing role is to reconcile attitudes and behaviour models of employees in previously two separate companies. Also, hiring consultants experienced in acquisition processes could help managers in post-acquisition adjustment. Further research should be directed toward the initial phase -acquisition planning, where it would be necessary to review the very elements that managers consider important when planning integration, and then compare them to the results of post-acquisition assessment of impact on human resources, because such overall analysis of planning period and post-acquisition adjustment period could provide useful guidelines for future acquisition processes.   Legend: retail company (1); financial institution (2); production company (3); same (odns-1); better (odns-2); worse (odns-3); bigger (obps-1); smaller (obps-2); same (obps-3).