Human Capital Association hosts 2012 Human Capital Symposium

10/3/2012 5:00:00 PM

Human Resource professionals discuss challenges posed by M&As


The process of acquiring or merging with a new company is a difficult one, and between ensuring that the individual companies smoothly transition into one organization and tending to the needs of two sets of employees, human resources has a critical role to play in the integration. At the 2012 Human Capital Symposium, Leading through Transition: Human Capital Strategy for Mergers and Acquisitions, human resources leaders shared their insights on how to effectively integrate staff from different organizations, including how to overcome inherent challenges.

The symposium, hosted by Cornell’s student-run Human Capital Association (HCA), was held Oct. 28 at Sage Hall. HCA has over 100 members, the majority of whom are pursuing master’s degrees at the Samuel Curtis Johnson Graduate School of Management and/or at the School of Industrial and Labor Relations at Cornell University.

No organization handles mergers the same way, according to Jon Williamson, VP of human resources at Johnson & Johnson and a participant in a panel discussion on integration at the symposium.  For example, Johnson & Johnson always makes long-term decisions and never makes moves to meet a short-term earning target. When the economy was in bad condition in 2008 and very few companies were acquiring anything, Johnson & Johnson announced its decision to acquire Mentor, a breast-implant manufacturer.

“I remember when that happened, CNBC’s [Jim] Cramer threw a whole celebration for Johnson & Johnson on his show [Mad Money], because he applauded that we made such a bold decision in such a bad economy,” Williamson said. “What he didn’t know, though, was that we had been monitoring the plastic surgery industry for ten years leading up to our decision.”

Although each company does things differently, panelists agreed that certain aspects of the process are absolutely critical, especially when it involves integrating a company on a global scale.

“When you’re acquiring a company abroad, there is an added level of complexity,” Williamson said.” Something to keep mind, he explained, is the so-called Rule of 28 — if you can think of one implication of a decision, there are at least 28 other implications you haven’t even considered.

Williamson also emphasized the importance of seeking global counseling and consulting. “If you don’t have it, find it, because you need someone with experience to challenge the underlying assumptions of every decision being made,” he said.

“You really need someone who knows the ins and outs of the particular countries, and understands its peculiarities,” added Guillermo Cremer, human resources director for Latin America and South America at General Mills.

In many cases, a successful integration also requires a bit of humility. When Cisco acquired the Norwegian telecommunications company Tandberg, the Cisco team had to acknowledge that Tandberg’s technology was superior. “Their technology was simply better, and it took a bit of swallowing of pride on our part,” said Christine Bastian, director and lead HR business partner for finance at Cisco Systems, Inc.

“Ultimately, a lot of the time you just have to realize that that company made money in an area where you didn’t, and it’s often up to the human resources department to demonstrate that,” Cremer agreed.

In addition to helping two individual companies come together as one, human resource staff typically play critical roles in making sure the needs of all the employees are being met during the transition. “Sometimes, you need to make it clear that just because there is a merger or acquisition, it doesn’t mean you’re going to get fired,” Cremer said.

The three main responsibilities of an HR department, Williamson added, are to eliminate fear, provide certainty where possible, and address any doubts employees on both sides may have.

“When you have this nameless, faceless company acquiring yours, it doesn’t feel good,” Williamson said. “It’s up to us, as HR heads, to provide certainty as much as we can, and provide a timeline for any changes that we foresee. It’s vital to communicate whatever we can and to make sure that we help establish solid leadership on both sides.”

—     Maria Minsker

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