Forward planning and paying heed to different work cultures is what matters
most with any merger. And much of
Hewlett-Packard and Compaq’s success will rest with HR
Management teams and close advisers will have spent months devising and
honing the strategy that brings together the two computer giants,
Hewlett-Packard and Compaq.
The ultimate aim is the creation of shareholder value, the corporate Holy
Grail. There will be an audible sigh of relief from the two head offices when
all the legal and regulatory hurdles are overcome. However, at this stage not
one penny of shareholder value has been created.
The work has only just begun and the success of the merger cannot be judged
until integration has taken place. The challenges for the HR team are considerable.
The figures vary but all research is consistent in confirming that the
majority of mergers fail. The reasons are inevitably to be found in the
implementation of the merger – inadequate planning, for example. Only one in
five acquirers appear to devise a clear implementation plan. Also the planning
and implementation of the post-merger integration has to occur alongside the
"business as usual" activities. Too often the managers responsible
for integration have day jobs.
Other reasons for failure include a lack of consistent methodology –
frequently managers have no previous experience of managing integrations. And
too many managers pursue their own agendas where self-preservation of
themselves and their colleagues appears to be paramount.
Too often mergers are dogged by poor and sometimes conflicting
communications. There is little worse than the announcement explaining or even
correcting the previous announcement.
Also culture is often ignored with the underlying assumption that the
acquirer’s existing cultural values will automatically and enthusiastically be
adopted in the newly merged business.
In this merger the cultural differences arise from the mature hierarchical
Hewlett-Packard coming together with the relatively young more flatly organised
Compaq. The cultural differences must be carefully analysed and understood as
they will provide the backdrop to all aspects of the integration. Unfortunately
there is a tendency to regard implementation as low-value operational work with
too few senior managers prepared to roll up their sleeves and lead from the
front, which may explain the high failure rate.
This can have disastrous consequences for the merged company, particularly
in the so-called people businesses such as media, technology and financial
services. Key executives with responsibilities for customers, leadership and
the support areas of the business can quickly become disillusioned and leave.
The difficult market conditions that both companies are experiencing dictate
the need for cost-cutting – a euphemism for redundancy. The manner in which
this is handled will in turn send signals to the workforce about the type of
company that is being created. Don’t expect employees to show loyalty if the
employer does not act with the utmost integrity and sensitivity.
HR directors need to make certain there is adequate planning and the senior
team stays focused throughout the merger. The board should consider appointing
an independent resource with mergers and acquisitions expertise to advise the
HR executives are also well placed to understand the cultural issues and
need to take a lead in developing equitable processes for appointments and
dispute resolution as well as ensuring that communications are handled
They need to make sure the integration of the respective HR functions and
employment-related issues are handled professionally. If that goes wrong, HR
will 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 corporate
restructuring, particularly when undergoing a merger or an acquisition