Good planning by HR team helped smooth Hewlett-Packard’s merger

As vice-president for HR at Hewlett-Packard, Hugo Bague was a key figure in
the company’s merger with Compaq last May. 
He was responsible for bringing together two cultures and more than
42,000 staff from across Europe, the Middle East and Africa. Here he answers
questions on how to handle mergers and acquisitions

Q What are the main HR challenges in managing mergers?

A One of the key challenges is actually keeping the organisation focused
on the customer throughout the process. There’s a natural tendency for managers
to concentrate on their own situation. Everybody is shaken-up so you have to
ensure there is a stable business.

HR should be integral to the planning stage because the better the planning,
the better the execution. You have to keep people at the centre because
cultural differences are the main reason mergers fail. It’s about working out
the culture of the new entity and deciding how you get there.

Q Is HR’s role in mergers changing?

A Over the past 10 years or so it’s changed dramatically. When I
first started out, HR was only involved at the last minute and then to perform
very basic tasks. Now it’s at the forefront of important organisational work.

Q What were the main problems encountered during the HP-Compaq merger?

A The major challenge for us was the size of both companies. In a
merger, size is the defining thing – it touches every element of the process –
so the sheer scope was a challenge. We looked for best practice at both
companies and used an ‘adopt and go’ system. This meant we found the best
policies from both companies and implemented them as the new HP system. This
really helped stabilise the firm because of its speed and continuity.

We also used a system we called ‘Fast Start’ where, for a few days, the new
teams (in HR, finance and marketing, for example) would come together to talk
about cultural differences between the two companies. We also got them to
decide exactly what areas they would focus on and after the first two quarters,
90 per cent had done so. For me the key points are speed, discipline and

Q What advice would you give to other HR professionals preparing for a

A Detailed planning is vital. There’s the tendency to question every
little aspect of the business and that can slow things down. You have to
balance the need for high quality with speed – don’t reinvent both companies.
During the first few months concentrate on the basics and clearly define your

Q What will be the problems to a potential merger at Safeway?

A I don’t want to get into discussions about other people’s business,
but from our experience of such a big merger it’s often a long and legalistic

There’s not much you can do about the uncertainty because change is the very
nature of a merger. We controlled it by engaging in continuous communication
with staff on a daily basis.

Q What tools helped most during the HP-Compaq merger?

A Our plans were announced in September 2001, but discussions went on
until April 2002, and we just wouldn’t have made it without good workforce
communication. We had some great tools in-house that allowed us to distribute
e-mails from the chief executives and managers.

We used an IT system called the HP Portal which has three basic elements. It
acts as an information tool for managers who can access all sorts of guidance
and HR policy, as well as being a basic HR self-service system. It’s also a
communication tool that showcases high technology and allows us to talk to the
entire workforce.

Q Was there anything you learned about internal communications from the

A One of the best things you can do as a manager is stand in front of
staff and have a discussion. Our technology really helped, but these ‘coffee
talks’ led to open discourse because the employees want to look company leaders
in the eye.

Q What are the challenges facing you in the depressed IT market?

A It is no longer what it was, and people need to be able to cope in
this new environment. HR can help to identify the work that needs to be done.
There needs to be a balance between regional employees and the flexible
workforce to counter ups and downs.

Q You run the HR function in several countries, which is the hardest to

A Each one is different and has its own difficulties. Germany and
France are legally complex and in Eastern Europe it’s difficult to manage the
growth. You have to balance the business needs with regional reality.

Q What are the challenges specific to the UK?

A The UK has one of the most flexible working environments and that
benefits the country. There’s a very skilled workforce, but the challenge is to
strive to compete in a European, if not global, marketplaces. The workforce has
to maintain competitiveness against worldwide competition.

By Ross Wigham

Essential background

– HP was founded in 1939 by Stanford
University graduates Bill Hewlett and Dave Packard. The company name was
decided on the toss of a coin

– Compaq Computer Corporation was formed in 1982 at a pie shop
in Houston, Texas

– The new HPQ? Came about after Compaq and HP merged on 3 May,

– The merged company has a combined revenue of $81.7bn (£50.5bn)
based on 2001 figures with operations in more than 160 countries

– The firm provides IT products, technologies, services and

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