This column addresses emerging trends and issues in the development and
implementation of human resource strategies.
Please respond with your views
Why Do Mergers Go RIGHT?
James W. Walker and Karl F. Price
A great many articles and studies on mergers dwell on why mergers
achieve their potential.
A common theme is that people-related issues were not
addressed early enough or effectively enough.
For example, a
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.
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
Here are seven questions we need to address.
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
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.
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