HR has major role to play in mergers

first_img Previous Article Next Article HR has major role to play in mergersOn 25 Sep 2001 in Personnel Today Related posts:No related photos. Forward planning and paying heed to different work cultures is what mattersmost with any merger.  And much ofHewlett-Packard and Compaq’s success will rest with HRManagement teams and close advisers will have spent months devising andhoning the strategy that brings together the two computer giants,Hewlett-Packard and Compaq. The ultimate aim is the creation of shareholder value, the corporate HolyGrail. There will be an audible sigh of relief from the two head offices whenall the legal and regulatory hurdles are overcome. However, at this stage notone penny of shareholder value has been created. The work has only just begun and the success of the merger cannot be judgeduntil integration has taken place. The challenges for the HR team are considerable.The figures vary but all research is consistent in confirming that themajority of mergers fail. The reasons are inevitably to be found in theimplementation of the merger – inadequate planning, for example. Only one infive acquirers appear to devise a clear implementation plan. Also the planningand implementation of the post-merger integration has to occur alongside the”business as usual” activities. Too often the managers responsiblefor integration have day jobs. Other reasons for failure include a lack of consistent methodology –frequently managers have no previous experience of managing integrations. Andtoo many managers pursue their own agendas where self-preservation ofthemselves and their colleagues appears to be paramount. Too often mergers are dogged by poor and sometimes conflictingcommunications. There is little worse than the announcement explaining or evencorrecting the previous announcement. Also culture is often ignored with the underlying assumption that theacquirer’s existing cultural values will automatically and enthusiastically beadopted in the newly merged business. In this merger the cultural differences arise from the mature hierarchicalHewlett-Packard coming together with the relatively young more flatly organisedCompaq. The cultural differences must be carefully analysed and understood asthey will provide the backdrop to all aspects of the integration. Unfortunatelythere is a tendency to regard implementation as low-value operational work withtoo few senior managers prepared to roll up their sleeves and lead from thefront, which may explain the high failure rate. This can have disastrous consequences for the merged company, particularlyin the so-called people businesses such as media, technology and financialservices. Key executives with responsibilities for customers, leadership andthe support areas of the business can quickly become disillusioned and leave. The difficult market conditions that both companies are experiencing dictatethe need for cost-cutting – a euphemism for redundancy. The manner in whichthis is handled will in turn send signals to the workforce about the type ofcompany that is being created. Don’t expect employees to show loyalty if theemployer does not act with the utmost integrity and sensitivity. HR directors need to make certain there is adequate planning and the seniorteam stays focused throughout the merger. The board should consider appointingan independent resource with mergers and acquisitions expertise to advise thetop team. HR executives are also well placed to understand the cultural issues andneed to take a lead in developing equitable processes for appointments anddispute resolution as well as ensuring that communications are handledeffectively. They need to make sure the integration of the respective HR functions andemployment-related issues are handled professionally. If that goes wrong, HRwill lack credibility in telling the rest of the business how to do it. By Mike Harrison,  a director of Integrum,which provides support for businesses involved in major change or corporaterestructuring, particularly when undergoing a merger or an acquisition Comments are closed. last_img

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