mergers - Perspectives This column addresses emerging...

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Perspectives This column addresses emerging trends and issues in the development and implementation of human resource strategies. Please respond with your views and experiences to walker@walkergroup.com Why Do Mergers Go RIGHT? James W. Walker and Karl F. Price A great many articles and studies on mergers dwell on why mergers fail to achieve their potential. A common theme is that people-related issues were not addressed early enough or effectively enough. For example, a Forbes survey of 500 CFOs found that the top reasons why mergers failed were not financial issues, but people-related issues: incompatible cultures, inability to manage the acquired company, inability to implement change, synergy overestimated, failure to forecast foreseeable events, or clashing management styles or egos. Mergers often go right in part because human resource leaders worked effectively with senior management to ensure that mergers and acquisitions are well conceived, planned, and executed with regard to people. As leaders, we can ensure communication of a clear business rationale, attention to people-related risks in the “deal”, and effective integration planning. We can ensure effective implementation of the merger by integrating and retaining vital talent, maintaining commitment and performance through the transition, and aligning people-related systems, processes, and organization with the new entity’s strategic direction. Here are seven questions we need to address. 1. Does the merger make sense? As part of the leadership team, human resource leaders need to articulate a clear, convincing business case for the merger. We can influence communications and perceptions regarding the merger rationale, and thereby affect implementation success. Many companies believe that mergers and acquisitions are a key means for growth. By combining, companies may gain market share, new markets, a wider range of product offerings, control over the supply chain, and cost efficiencies. It isn’t just being bigger that matters; greater capacity to compete effectively can create greater shareholder value. People may not always agree with the merger rationale, but their understanding of it guides decisions and actions, motivates them to devote the energy and time to changes, sustains their performance and retention during the merger, and develops an enthusiasm for a better future. May 13, 2000 Page 1
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Merger announcements should not simply be a cliché. Stating that the merger will enable us “to become more competitive globally” or to “become the technology leader in our industry” says very little to employees. Beyond increased shareholder value, an acquiring company should define specific benefits expected and how they will be realized. Managers need to evaluate assumptions regarding costs, risks, and benefits early in the process. Companies typically expect to gain: Revenue enhancement: new customers, new markets, marketing muscle, new products or development capacity, customer services and capabilities, access
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This note was uploaded on 10/28/2011 for the course MGT 448 taught by Professor Ard during the Fall '09 term at University of Phoenix.

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mergers - Perspectives This column addresses emerging...

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