the top so as to avoid getting trapped in endless debates while the ongoing
business suffers (Percy Barnevik’s transformation of Asea and Brown Boveri is
one positive cross-border example).
Finally, a complicating factor in international acquisitions is that there will
often be parts of the organization where a particular approach to the merger
makes sense and others where it does not. There are few M&A that fit neatly into
the assimilation, integration or other categories. For some countries or regions,
or for some parts of the business, a full assimilation may be the best approach; in
other parts of the firm, a reverse merger could be a more appropriate strategy.
4 MANAGING CROSS-BORDER INTEGRATION:
THE HRM IMPLICATIONS
There is no shortage of evidence that attention to people and cultural issues is
one of the most critical elements in making the cross-border acquisition strat-
egy work. In a recent McKinsey study of international M&A, the four top
ranked factors identified by responding firms as contributing to acquisitions
success are all people related: retention of key talent (identified by 76% of
responding firms); effective communication (71%); executive retention (67%);
cultural integration (51%) (Kay and Shelton, 2000).
A similar conclusion can be drawn from the Conference Board study
(Conference Board, 1997). At the top of the list of HR concerns in mergers and
acquisitions is the retention of critical talent, identified as a very important or
important factor by 86% of the respondents. Second on the list is ‘blending cul-
ture’, listed by 83% of the respondents, closely followed by retention of key exec-
utives (82%). Differences in approaches to compensation/benefits were ranked
fourth (73%). Perhaps surprisingly, impact on the workforce size (37%), down-
sizing (35%), and redeployment of employees (25%) are at the bottom of the list.
Finally, in another recent survey sponsored by KPMG, the three ‘keys to
success’ were selecting the management team, resolving cultural issues, and
communication (KPMG, 1999). For example, companies that prioritized the
selection of the management team in the planning stage were 26% more likely
to execute a successful acquisition. An early focus on identifying and resolving
the organizational culture issues had a similar impact on success.
In fact, it is hard to find an acquisition where people issues do not matter.
When the objective is to establish a new geographic presence, then managing
cross-cultural, language, and communication issues tops the list of priorities.
When the aim is to acquire new technology or to buy market share or compe-
tencies, retaining key technical staff or account managers is the principal
challenge. When the objective of the deal is consolidation, dealing effectively
with redundancies at all levels is the dominant concern.
HRM in Cross-Border Mergers and Acquisitions 97