of fear, betrayal, and anger are not uncommon among employees in the
acquired or less dominant company.
In the first 100 days of a merger, Mirvis and Marks (1994) argue that the
following must occur in order to counter the ‘merger syndrome’ in employees.
First, employees must come to see that it is perfectly normal to feel a wide vari-
ety of emotions because of the merger or acquisition. They should be trained
in developing coping skills to deal with the stressthat comes with such massive
organizational change. Second, information must be transparent, and freely com-
municated to employees. When executives sit on decisions and announce
them abruptly ‘as needed’ it simply fuels the problem discussed above: height-
ened levels of stress and anxiety. It also fuels an emergent distrust of manage-
ment’s motives, ethics, and decision-making effectiveness on the part of
employees (Stahl and Sitkin, 2001). Information can be shared in a wide vari-
ety of forums: lunch gatherings, company intra-nets, e-mails, etc. Third, senior
management must communicate a vision throughout the company, one that is pos-
itive and guides the employees from both previous companies towards a new
and better future. Combined with symbolic acts that show a positive regard for
all employees, infusing the new culture with a positive image of the new com-
pany as it moves ahead is a critical aspect of initial post-merger management.
Finally, it is critical to involve people at all levels from the previously separate com-
panies with each other in some kind of role quickly; that is, the formation of
teams to share knowledge, break down stereotypes, in training workshops, etc.
has the effect of dissipating the power of ethnocentric ‘us vs. them’ factions.
Developing systems that allow for interaction amongst people from the two
companies, in settings that are positive, is an important process to undertake
quickly after a merger or acquisition is announced.
Retaining talentMany acquired businesses lose key employees soon after the acquisition, and
this is a major contributing factor to the failure of acquisitions. Research evi-
dence from US acquisitions indicates that the probability of executives leaving
increases significantly when their firm is acquired by a foreign multinational
(Krug and Hegarty, 1997). When insufficient attention is paid to retaining tal-
ent, and especially if staff cuts are expected, employees will leave – head-
hunters inevitably move in and the best will exit first since they have other
choices. Retention of talent is particularly important for firms where the value
of the deal lies in the acquisition of intangible assets – the knowledge and skills
of the people inside the acquired firm – as with many such deals in the high
technology sector where companies use acquisitions to plug holes in their R&D
portfolio or to rapidly build up new capabilities (Chaudhuri and Tabrizi, 1999).
This means knowing exactly who are the talented people and why they are
essential to the new organization, including those lower down in the acquired
firm, though getting this information as part of the human capital audit may
102 International Human Resource Management