The psychological contract and employee performance in post-acquisition integration

Abstract

The purpose of this research study was to measure and understand if there was a change in the psychological contract post-acquisition and if so, did this change have a positive, negative or no effect on employee performance. Previous research and literature has suggested that identity was a critical measure of post-acquisition success (2011, p. 26; Weber&Drori, 2011, p. 76) leaving employee performance unmeasured. Rouzies (2011) further suggested that a merger or acquisition can lead to a drop in psychological attachment, identification and commitment to the acquired organisation (2011, p. 25). In addition, Chambers (2008) also made mention of personnel and culture integration being underestimated (p. 16). Therefore, this research has measured psychological contract (identity, culture and communication) in terms of employee performance (potential turnover, job satisfaction and productivity) in the context of post-acquisition integration.The results showed that changes in the psychological contract affect employee performance positively. Equally, if not more, important is maintaining the psychological contract in the post-acquisition integration process and thereby avoiding a drop in employee and acquisition performance.Identity and culture are strong influences of employee performance. The data collected suggested that identity positively impacts employee performance. More specifically, there was a slight positive impact on potential turnover and a more positive impact on job satisfaction and productivity. Culture also positively impacted employee performance. When measured against potential turnover, this impact was slightly positive while job satisfaction and productivity were more positively impacted.Communication was found to be important in reducing potential turnover. From data collected, communication does not impact job satisfaction and productivity. However, the data suggests that communication was adequately handled in the post-acquisition integration process.Recommendations were made dealing with principles to be considered preacquisition, on the importance of minimising disruption and maintaining continuity during post-acquisition. Based on the findings in this research, the psychological contract needs to be maintained in terms of identity, culture and communication. This will in turn ensure that employee performance is maintained post-acquisition. This implies that in addition to financial due-diligence being performed prior to a merger or acquisition, organisations need to be aware of employees’ feelings and attitudes towards the impending change.Future research may look at measuring psychological contract and employee performance in post-acquisition integration across different industries and countries or the same variables could also be measured pre-acquisition. Alternatively, additional variables such as extra-role behaviour and affective commitment could be added to the assessment tool to measure employee performance more closely.