Based on these observations, it may be seen as natural that the HR function
should play a significant role in all phases of the acquisition. The acquisition
process is typically divided into stages – the initial planning stage, including due
diligence; the closing of the deal; and the post-merger integration stage. Yet while
human resource management issues tend to get attention during the last –imple-
mentation – phase, the overall influence that HR has during the whole acqui-
sition process is patchy, even though many of the problems of merger
integration stem from failure to consider these issues early on. In addition,
many companies have neither the resources nor the know-how to give this HR
area the priority it merits (KPMG, 1999, p. 15).
As suggested earlier, one of the reasons why cross-border mergers may be
successful, despite their complexity, is that the people and integration chal-
lenges are more obvious, leading management to pay close attention to them at
all stages in the acquisition process. There are instances where such cultural dif-
ferences lead the management of the acquiring company to be excessively cau-
tious. When Japan’s Bridgestone purchased US-based Firestone, it refrained from
making significant changes in the organization, even though the acquired com-
pany was losing money. Bridgestone did not want to be seen as ‘ugly Japanese’
taking over a venerable local institution. In reality, many local middle managers
were looking forward to the takeover, expecting that their new owners would
tackle both the unions and the entrenched old-style top management – but
when nothing happened, they left in droves. Faced with growing losses, Tokyo
finally moved in several years later to ‘clean up the mess’. But it was too late,
the company was too thin on talent by then. Firestone never fully recovered,
and today the once powerful brand is on the verge of extinction.
We focus here on the following cultural and people issues that seem to be
particularly critical to the success or failure of M&A (see Evans et al., 2002, for
an extended discussion of the issues in this section):
- Assessing culture
- Undertaking a human capital audit and selecting the management team
- Effective communication
- Retaining talent
- Creating the new culture
- Managing the transition
Assessing culture in the due diligence phaseThe purpose of cultural assessment is to evaluate factors that may influence
the organizational fit, to understand the future cultural dynamics as the two
organizations merge, and to prepare a plan of how the cultural issues should be
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