Case Study
Executive Summary
Mergers and acquisitions are difficult business maneuvers, especially due to the differences between organizations. They bring about communication difficulties, uncertainties of long-term goals, and different management styles, among other difficulties. However, companies like Cisco Systems have carried out successful acquisitions using the right human resource practices. Cisco Systems has focused on intensive employee training to make its mergers successful.
In an interview with an employee, the effects of a merger have been revealed. Mergers cause stress, conflicts, and anxiety among workers. But effective human resource practices such as training have made them successful.
Table of Contents
Human Resource Strategies used by Cisco Systems
Through its human resource practices, Cisco Systems has ensured the success of its acquisitions. One major strategy that the company has used throughout the acquisition period is focusing on talent. Cisco has focused on developing and motivating talents internally, especially leadership talents. The company took this initiative due to the difficulty in buying new talents and maintaining the acquisition rate. Cisco Systems has also focused on producing talents capable of increasing productivity and building products that generate revenues rather than create scale. Besides, the company has encouraged the sharing of talents with others. In this way, new workers and existing workers can share skills and contribute to their overall success. Cisco has also coordinated and mobilized its human resources by applying internal cross-function to solve customers’ issues. Through this strategy, the company has created talents with knowledge about both a customer’s business and products.
Besides talent motivation and development, Cisco Systems has also used human resource planning. Given that acquisitions present numerous human resource challenges, the company has used human resource planning to identify current and future human resource needs.
Cisco Systems has also used effective performance management to ensure that all employees are assessed. The company has used a talent assessment process to evaluate all employees’ performance. This assessment has helped the company ensure that employees from acquisitions are also productive.
Ignorance and Poor Handling of Human Resource Aspects of Mergers and Acquisitions
Although mergers and acquisitions are tools used to attain organizational goals, their human resource aspects have been ignored or handled poorly in many instances. Poor handling and ignorance are linked to the numerous human resource challenges posed, including diminished trust, incompatible management styles, and cultures, uncertainty of long-term goals, and lack of communication.
As with diminished trust, organizations taking part have little trust in each other. As a result, they fear investing too much on human resources. They fear that despite heavy investment in human resources, partner organizations would turn around and break the deal. Thus human resource aspects become ignores or poorly handled. The same case applies to the uncertainty of long-term goals, which indicates the fear of unaccomplished objectives. Organizations may fear that mergers or acquisitions would be unsuccessful in the long run, thus ignoring human resource aspects.
Organizations may also ignore or poorly handle human resource aspects due to lack of communication, especially when organizations from regions with different languages merge. Human resource management requires proper communication, and its aspects are likely to be handled poorly or ignored when language barriers exist. Besides language differences, different management styles might also lead to poor handling or ignorance of human resource aspects. When acquisitions or mergers occur, differences in human resource management style within the involved organizations may render management difficult. Thus the only way out for such organizations is by ignoring some human resource aspects.
Interview
I interviewed Harry, a friend who has been through a merger of two companies. According to Harry, mergers can be stressful, especially when employees never saw the merger coming. Harry and his colleagues were informed of a merger only three days to the actual day. They became increasingly concerned about how the merger would affect their professional and personal lives. They were also stressed due to issues surrounding performance, responsibilities, and payment structures. Harry particularly felt that early communication was necessary for them to prepare psychologically.
Harry also reported anxiety experienced during the merger. He felt threatened and confused due to the development of prioritizing techniques and unfamiliar attitudes. The merger also caused anger and conflict, as most employees began positioning themselves strategically and conflicting with both existing workers and rivals from the merging company. Overall, Harry’s morale, loyalty, and productivity were lowered by the merger. Harry’s productivity after the merger was caused by stress. Harry’s loyalty dwindled since he felt betrayed by the organization.
According to Harry, the main human resource practice used during the merger was training and development. He reported that both organizations invested heavily in training their workers to work with workers from a different organization during the merger. Workers were also trained to work with facilities and systems from the merging organization. Harry felt that training and development helped improve the efficiency of workers. The merging companies also conducted communication training, which improved cooperation between workers from the two companies.
Conclusion
Although mergers and acquisitions are avenues for organizational growth, they present several challenges to human resources management. These challenges include communication difficulties, different management styles, the uncertainty of long-term goals, and diminished trust. Nonetheless, Cisco Systems has overcome these hurdles by intensively training employees and leaders. Other companies should adopt similar strategies to ensure the success of mergers and acquisitions.
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