Final answer:
The primary reason mergers fail, according to Darnell Littal, is the absence of a well-understood human performance plan which is essential in aligning and integrating the workforce during mergers.
Step-by-step explanation:
The author Darnell Littal suggests that the number one reason mergers fail is due to the absence of a well-understood human performance plan. In the context of a market-oriented economy, where firms are afforded the freedom to make diverse operational decisions, such as expansion, pricing, and innovation, the expertise to manage human resources effectively becomes paramount. A human performance plan involves the strategic integration and alignment of a company's workforce with its overarching objectives, ensuring that employees are not only skilled and competent but also motivated and committed to facilitating a successful merger. Without this plan, the blending of corporate cultures can result in conflicts that may undermine the benefits of the merger. This insight into merger failures illustrates the importance of understanding that businesses depend not just on financial metrics and market strategies but significantly on the management of human capital.
Mergers and acquisitions can involve complex integrations that may lead to a clash of corporate personalities if not managed well. In contrast, the power of a human performance plan lies in its ability to bring together various elements such as leadership, communication, training, and goal alignment to create a cohesive workforce that can navigate the waters of change effectively. Thus, businesses must prioritize developing and implementing robust human performance plans to mitigate the risk of failure in mergers and acquisitions.