Mergers: Joined up thinking

For Lynwen Hardaker, the nine years she spent as a customer care manager at HR software company PeopleSoft had been extremely happy ones. So when the news broke in mid-December 2004 that the company was to be acquired by its arch-rival Oracle, she and many of her colleagues were left in a state of “total shock and disbelief”.

The announcement marked the end of a bitter and very public 18-month takeover battle. There was fierce resistance to the deal from PeopleSoft’s management team, coupled with aggressive impatience in the Oracle executive board.

Throughout that struggle, says Hardaker, she and her colleagues had never believed that Oracle’s hostile bid for their company would be successful.

“We were told time and time again by our managers: ‘This will never happen. Get on with your jobs and don’t be distracted. There is no way this will ever happen’,” she says. “But then it did.”

Suddenly, the future looked pretty bleak, at a time when most employees had been looking forward to Christmas.

“We’d been encouraged to believe that Oracle would not be a pleasant company to work for. And to be honest, most people’s first thoughts were to leave before they found that out for themselves,” Hardaker says.

Many did not need to – by January 2005, more than 5,000 PeopleSoft employees worldwide had been made redundant by their new employer, which slashed the workforce by more than 50%.

The fact that, in some cases, this was done by letter rather than face-to-face exacerbated an already hostile situation.

The challenge for Oracle’s HR team, however, was now set: to integrate the remaining PeopleSoft employees into the newly expanded organisation.

Oracle took legal control of PeopleSoft on 1 March 2005, and the HR team had to move quickly to make the next stage of the transition as painless as possible for the new staff who would be joining them.

Integration game

According to Nick Foster, Oracle’s vice-president of HR in the UK, Ireland and South Africa, it was crucial that all PeopleSoft employees had ID badges and full access to PCs and other IT systems from day one under their new employer. And because Oracle operates a flexible benefits system, the new employees had some choice in negotiating new terms and conditions with the company.

It was also made clear to them that, as a much bigger company than PeopleSoft, Oracle could offer far more opportunities for career development and promotion than their previous employer. For Hardaker, this was a key factor in her decision to “tough it out” and stay on at the new company.

The most difficult areas to integrate, according to Foster, were research and development and sales. Since Oracle would continue to sell existing PeopleSoft products, it needed to retain staff in these areas and so had to offer them greater incentives to stay.

The situation with finance and administration staff, by contrast, was more clear-cut. “We tried to be as open as we could,” says Foster. “We explained to PeopleSoft employees that there would be cuts in these areas, but that it was in their best interests to wait and see what happened. Even if they were determined to leave, we pointed out that they would be better leaving with a redundancy package and a few months’ breathing space, which they could use to plan their job search, rather than just resigning. It made staying on seem like a far more attractive and realistic proposition.”

Despite a rocky start, it was not long before Foster started hearing comments from former PeopleSoft employees that Oracle was a much better place to work than they had expected it to be.

But even then Foster believes the merger could have been better communicated. Oracle held a number of ‘welcome events’, giving PeopleSoft employees the chance to ask questions and get to know their new colleagues. The company also launched a ‘buddy’ programme, under which each former PeopleSoft manager was shadowed by an Oracle manager.

But this wasn’t enough, Foster admits. “While I’m very satisfied that we did the best job we could in communicating with our new employees from PeopleSoft, we found out in hindsight that we could have done more to communicate to existing Oracle employees,” he says.

Hardaker agrees: “The buddy programme was not as successful as it might have been because many of the Oracle managers were in the dark about what was going on.” Plus, she says, the ratios were all wrong: there was just one Oracle ‘buddy’ to around five PeopleSoft managers. “It simply wasn’t enough,” she says.

Those problems came to light during another part of the integration process – an employee consultation survey in which both Oracle and former PeopleSoft employees participated.

Many Oracle managers reported that they had not received enough guidance on how to welcome the PeopleSoft workforce, nor enough information on the kinds of jobs they would be doing. Foster says: “It was a valuable lesson learned. We resolved in future to put more resources into communicating with our existing employees.”

Open communications

As a result, when Oracle acquired another company, Siebel, in September 2005, it revised the buddy programme, extending it to all new employees, not just managers, and reducing the ratio of Oracle buddies to Siebel employees.

And one of the first people to speak at the welcome event for Siebel employees was Hardaker. “I got to speak for 10 minutes about the transition to Oracle,” she says. “I told them the good and the bad, and I had the freedom to do that entirely unscripted. I also told them why I had decided to stay and about the new opportunities on offer.”

That kind of openness, says Foster, is why Oracle’s integration of PeopleSoft went as well as it did, despite a difficult start.

“If you’ve done a pretty good job of integrating people, of being honest and open with them and making them welcome, then you shouldn’t be embarrassed about anything they have to say about you,” he concludes.

Oracle: Two years of takeovers

  • December 2004 Oracle announces that it has signed a definitive merger agreement to acquire business software rival PeopleSoft.
  • January 2005 Oracle completes the PeopleSoft acquisition and has a global launch event for the combined companies.
  • March 2005 Oracle and PeopleSoft are legally combined in the UK.
  • September 2005 Oracle announces it has agreed to buy another business, software firm Siebel.
  • January 2006 Oracle completes its acquisition of Siebel.
  • March 2006 Oracle and Siebel are legally combined in  the UK.

Oracle: HR factfile

  • US software giant Oracle employs around 400 HR professionals worldwide. The top HR executive in the UK is Nick Foster, who reports to Vance Kearney, the vice-president of HR for Europe, Middle East and Africa. Kearney reports to the senior vice-president of HR, Joyce Westerdahl, who is based in the US. Westerdahl is a member of Oracle’s executive management team.
  • The HR team at Oracle is a mix of country HR directors, who have had previous careers in line management, finance and recruitment, but most employees are career HR professionals. Several run both HR and finance in the smaller countries.

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