TM - August 2008 - (Page 54)

Assessing the cultures of the acquirer and target; developing a strategy and interventions to create a culture that rewards the right behaviors; formulating change management and communications strategies for the transformation; and aligning culture modiﬁcation activities with other merger-integration work streams are all vital activities during an acquisition. 3. Total rewards: Has HR optimally conﬁgured pay, beneﬁts, rewards and careers to support unique workforce needs and the ﬁnancial parameters of the business? Reward programs are the area of greatest visibility People-related issues are among the most-cited reasons for M&A failures. Therefore, it is critical for HR to understand the impact of differing employee segments on the business strategy and the roles that will be most and least critical to implementing the strategy. From that analysis, talent managers can classify positions along a continuum, from pivotal to strategic to contributing to noncritical, and determine where there are talent gaps to ﬁll or surpluses for redeployment. A strategic talent selection approach that looks at future needs with a focus on building a pipeline of future leaders is critical to achieve business objectives. 6. Governance: Has HR established the structure, roles and authorities to efﬁciently manage and renew the strategy of the business on an ongoing basis? Unsuccessful M&A activity in 1988, and again in 1998, was characterized by less-than-rigorous governance throughout the entire process of identifying and acquiring target companies. A uniﬁed corporate direction should be created by identifying a governance framework and setting up associated guidelines that deﬁne organizational and individual accountabilities based on desired business outcomes. The success of any merger, acquisition or restructuring, large or small, is as much about people and organizational culture as it is about timing and ﬁnancials. and concern to employees. Direct people costs are second only to cost of goods sold for most companies and account for more than one-third of every revenue dollar, according to 2007 ﬁgures from the S&P 500. Aligning the reward program of the integrated company with overall business objectives is critical to both the short- and long-term success of the transformation. 4. Organizational design: Has HR determined the most appropriate structure for the business, including geographic deployment, spans of control, stafﬁng levels, linking mechanisms and supporting and/or underlying business processes? Merging two separate organizations, each with its unique culture and history, is probably the single biggest challenge in an M&A transformation. Aligning organizational structure and the people and processes of both companies drives synergies and rapidly achieves targeted business results. 5. Talent selection and stafﬁng: Has HR clearly identiﬁed the organization’s employee segments and how each segment creates and maintains value for the business? Within those segments, have talent leaders deﬁned the optimal deployment strategy and the skills, experience and knowledge required to deliver the organization’s strategy? 7. HR service delivery: Is the HR function service delivery model — sourcing, structure, talent, processes, technology and governance — strategically aligned to the operating principles and requirements of the business? As part of any merger, acquisition, restructuring or divestiture, talent managers must service a reconstituted employee population. Interruptions in basic HR services can negatively affect workforce engagement and productivity. The HR team must deﬁne and design the future state of HR technology; assess, select and integrate HR technology systems to support the needs of the new organization; and capture key data quickly and effectively using databridging techniques. Ultimately, companies will face tradeoffs between cost and growth objectives, and it appears HR still has work to do to help leadership make thoughtful decisions that align with short- and long-term business needs. Optimizing investments in human capital — as opposed to simply cutting people costs — is the key to creating value in any business transformation. John Koob is a principal with Towers Perrin. He can be reached at editor@talentmgt.com. 54 August 2008 talent management magazine www.talentmgt.com http://www.talentmgt.com

Table of Contents Feed for the Digital Edition of TM - August 2008

TM - August 2008 Editor's Letter Contents Human Performance Leading Edge Foundations Global Background Screening Does Global Assessment Work? Global Total Renumeration: Creat One Organization Border Insecurity: Immigration Reform and Talent Management The Global Workforce: Communication Across Cultures Around the World in How Many Days? Insight: Exelon: Performance Under Pressure Special Report: Perspectives on Managing People Application: Reinventing Sales Rewards at Motorola Dashboard: Mideast Meets West Dashboard: Mergers and Acquisitions 2008 - Don’t Leave Employees Behind Editorial Resources Advertisers' Index Full Potential

TM - August 2008

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