not be a simple task – local managers may be protective of their people, there
may be cultural differences in what performance means, and many companies
do not know who their high performers are. Whenever possible, multiple
sources of assessment should be used – feedback from direct superiors, peers
and subordinates; past performance reviews; personal interviews; and formal
skill assessments.
Effective and open communication is a first element for success in retain-
ing talent, while financial incentives are also important (stock options, reten-
tion bonuses or other incentives given to employees who stay through the
integration or until a specific merger-related project is completed). But to retain
long-term talent, financial incentives cannot substitute for a one-on-one relation-
shipwith executives of the acquiring firm. Senior management involvement is
critical to successful retention. High-potential employees in most companies
are used to senior-level attention. Without the same treatment from the acquir-
ing company, they question their future and will be more likely to depart.
Distance may be an obstacle to be overcome, but it cannot be used as an
excuse. When BP-Amoco acquired Arco, another international oil major, it
quickly organized Key Talent Workshops – two-day events to network senior BP
executives with Arco’s high-potential employees.
Talent retention efforts should not stop with the completion of the first
100 days of integration. Junior employees may find the initial impact of the
acquisition to be quite positive, offering them opportunities for responsibility
and higher pay (especially if their seniors leave en masse). But many of them
depart later because they are not integrated into the leadership development of
the new parent company (Krug and Hegarty, 2001).
Creating the new cultureCreation of a new culture is difficult unless there is some explicit management
philosophy with values and norms that guide practice and behavior. To create
the new culture of ABB after the cross-border merger of Asea and Brown Boveri
in the late 1980s, the then CEO Percy Barnevik spent three months with the
new senior management team defining a policy bible to guide the intended
new organization. This was a manual of ‘soft’ principles such as speed in deci-
sion making (‘better to be quick and roughly right than slow and completely
right’) and for conflict management (‘you can only kick a conflict upstairs once
for arbitration’), as well as ‘hard’ practices such as the Abacus measurement
system that would apply across all units of the newly merged enterprise.
Companies with strong and successful cultures such as GE and BP impose
their culture on the companies they acquire, as BP did when it bought Amoco.
Indeed they see their success as originating from their culture and the practices
built on it. Therefore GE will bring to an acquired company its meaning of
performance commitment anchored in stretch goals, the underlying business
planning process, and the way it goes about managing people. On the other
HRM in Cross-Border Mergers and Acquisitions 103