Mergers, acquisitions and human

resource management

John W. Hunt and Stephen Downing

In recent years, there has been an appreciable world-wide growth in

merger and acquisition activity amongst business concerns. Indeed, in 1989
there were 2,028 acquisitions in the UK (Acquisitions Monthly, 1989) and
3,412 in the USA (Mergers and Acquisitions, 1990). This boom in
acquisition activity has attracted considerable attention not only by the
media but also from researchers. This is the fourth time this century that
the boom has occurred. The first was in the 1920s. The second 1967-9, the
third 1972-3 and the fourth began in 1984 and has continued into the
1990s. Boom conditions generally imply that the normal rate of acquisitions
and merger activity doubles or trebles. In the current boom the rate for the
UK has multiplied four times.
This phenomenon has attracted many writers. Most of the work has been
concerned with why this pattern of acquisition activity occurs at all
(Weston, 1953; Nelson, 1959; Gort, 1969; Schwartz, 1983; Becketti 1986;
Gartrell and Yantek, 1986; Kay, 1988). More recently strategists (Porter,
1980; Sandier and Rentoul, 1987; Grindley, 1986) and behaviourial
scientists (Burgelman and Sayles, 1985; Jemison, 1986; Hunt, 1990) have
joined economists in attempting to explain why some acquisitions succeed
and others do not. The level of success in acquiring another firm varies
widely but there is wide agreement that about 50 per cent of the
acquisitions are successful, 50 per cent are not regardless of the criteria
used to assess success.
Clearly, acquiring another firm involves the acquisition of human as
well as financial assets. In this paper we wish to investigate why it is that the
human side of acquisitions has only recently attracted attention from
serious researchers and why it is that the human resource function has been
largely ignored in a process where one might expect to see high levels of
HRM activity. There is no dearth of literature on the topic but there is a
dearth of research. As Napier (1989) noted most of the research that does
exist is dated (Kitching, 1967; Leighton and Tod, 1969; Mace and

195
John W. Hunt and Stephen Downing

Montgomery, 1962; Stewart et al., 1963) and much of the evidence i:

anecdotal or unrelated to theory. Finally, the paper will identify activities
for the HRM function in acquisitions.
One explanation for the absenee of investigations into the HRV
eontribution to mergers and acquisitions is the researchers' interest ir
maero rather than micro issues. Researchers locked into systems theory oi
contingency approaches may be more interested in eontextual issues rathei
than the coping behaviours of the people involved. This results in i
literature in which the HRM function is excluded from aequisition activity
(see Hunt etal., 1987; Buono and Bowditch, 1989). Yet ease analyses show
quite clearly that, in reality, while the HRM function may be excluded ir
the early stages it is heavily involved post acquisition, often with littk
preparation. So reality and the bulk of the research appear to differ widely
The involvement of the HRM function is a matter of a humanitarian
concern for absorbing grief among those people who were acquired. There
are compelling financial reasons for assisting in the integration process anc
transferring the acquired peoples' commitment to the firm's new owners
Without their commitment it is difficult to achieve the operational anc
strategie objeetives of the aequisition. The need to win the commitment ol
those people acquired is supported by the new wave of strategic change
literature that argues that transitions are rooted in the cultural (i.e. human)
fabric of the organization (Johnston, 1989; Turner, 1990; Peters and
Waterman, 1982) rather than in contextual variables interrelating at i
macro level.
Although anecdotal evidence implies considerable HRM activity th(
role of the HRM function has not been clarified. For example, there are
few studies which include the personnel or human resource function in the
early stages of collecting data on the potential target. Similarly there is
little research evidence that the HRM function is involved in preparing the
merger document once the bid has been made. Indeed, most studies have
found that the human resource function is excluded during the initia
phases (see Hunt etal., 1987). In studies of success and failure there is little
interest in the contribution of the HRM function to either. Instead, there
are only broad categories of eombined variables which may lead to higher
success rates. For example horizontal diversification as an objective is
more likely to be successful than diversification into unknown industries oi
into concentric marketing.
These broad conceptualizations and categories usually inelude the
strategic intent of the buyer, the motives of the buyer team, the health of
the acquired company, the acquisition experience of the actors etc. That is,
those variables which have been found to affect the proeess during the
targeting, bidding, negotiating and implementation phases. Clearly as
Napier concluded, despite all these attempts to classify the phenomenon

196
 Mergers, acquisitions and human resource management

'there are no set rules about what makes a merger or acquisition successful'
(1989: 276).
Configurations of more and less successful tactics have been suggested,
Jemison (1987 and 1988), Buono and Bowditeh (1989), McCann and Gilkey
(1989), Hunt (1990) but these remain very broad and type determined.
Hence, the hostile acquisition, by an experienced eompany motivated by
markets and growth, of a badly managed, smaller company of inexperienced
managers implies a very different set of post acquisition behaviours by the
buyer than a merger agreed to by two friendly owner managers, but even
here behaviour has not been precisely specified. Generalities are the
inevitable outeomes. For example, Buono and Bowditch (1989) in their
survey of the diverse literature come to the conclusion that 'com-
munications from both managements appear to be important' (pp. 194-5).
But while this truism is interesting if not very helpful to the practitioner nor
is their other conclusion: 'While most experts agree that communications
should be open, honest and continuous there is disagreement as to where
the communications should come from . . . existing management or the
new parent firm' (p. 199).
Nevertheless, at a macro level, certain variables recur in the research
and these are believed to have significance for the human issues (if not the
HRM function) in the broad sense of winning commitment after
acquisition from the acquired people. These variables include the motives
of the acquiror which has led to numerous attempts to classify strategic
intentions of the acquirors (Ansoff 1965; Pritchett 1985; Haspeslagh and
Jemison 1987; Buono and Bowditch 1989). Other macro variables which
have attracted researchers include the condition of the acquired company
(Hunt et al., 1987; McCann and Gilkey, 1989), its relative size (Kitching,
1973; Hunt et al., 1987), the experience of the actors (Hunt et al., 1987;
Buono and Bowditch, 1989) and the buyer's access to audit the firm he
wishes to buy (MeCann and Gilkey, 1989). All of these variables have been
found to variously affeet the outcomes. The negotiating phase has also
attracted wide interest though most of it is speculative. The tone of the
negotiations, the price of the bid, the time pressure to complete the deal
and the need for secrecy are additional variables (see Hunt, 1988) which
might be found relevant to success or failure. It is interesting that most of
these variables tend to be researched as though no humans were involved
in the acquisition at all.
In contrast, the post aequisition or implementation phase has produced
the largest HRM related literature most of it only marginally affected by
these macro variables. One segment of this literature focuses on the
reactions of people, especially the employees (Ivancevich et al., 1987;
Buono and Bowditch, 1989). Typically, if the macro variables do rate
attention then it is the motives of the buying company and the tone

197
John W. Hunt and Stephen Downing

(hostile, friendly, contested) of the negotiations which appear to be seen as

significant. Hence, the colourful categories of merging or integration
suggested by the Centre for Effective Organizations at the University of
Southern California - Pillage and Plunder. One Night Stands, Courtship
and finally Love and Marriage where full consolidation of the two firms
makes a single enterprise out of the two (see Buono and Bowditch, p. 258).
A broader literature argues that the reactions of people post acquisition
are a continuation of a series of reactions that began with the bid and may
continue for some years after the deal is finalized (Jemison, 1986). This
view of a behavioural process looks for expectations and attitudes that
develop during the negotiating phase which subsequently colour the
relationships between those buying and those being bought. This leads to
the conclusion that success and/or failure is the product of that behavioural
process which extends over several years. As Buono and Bowditch 1989
comment: 'Much of the failure and subsequent divesture of merger and
acquisition partners is due to ineffective management of the underlying
process' (p. 194). Integration and consolidation are part of a lengthy
process that can unfold over the course of several years and it is not
always clear where, when and how integration changes should be made
(Schweiger et al., 1987).
In summary, we find general success scenarios based on macro,
contextual variables or a sequential macro process and a preoccupation
with post acquisition behaviours as an explanation of failure rather than
success. The personnel or human resource function's role is implied rather
than specified. The most frequently cited causes of failure are the acquiring
company's inability to plan, or a failure of the acquired managers to take
the risks necessary to implement the necessary changes, and/or unclear
reporting systems, weak internal control systems, conflicting personnel
systems, clashes of cultures or management styles and a failure to induce
commitment from the acquired people (Hunt et al., 1987; Buono and
Bowditch, 1989; McCann and Gilkey, 1989).
To test these findings from the literature, data from a study of forty UK
acquisitions of public and private companies in the UK and the USA (Hunt
et al., 1987) were analysed. First, to examine the contingency argument
that combinations of macro variables lead to success or failure and second
to help us understand the exclusion or covert role given the HRM
specialists. Like most other studies this research has shown that of the forty
cases 55 per cent were successful or very successful using the evaluations of
the managers of both buyer and seller firms 18 months after the closure
date. In all the unsuccessful cases the plans of the buyer were unclear to the
employees in the acquired company. In the very unsuccessful cases buyers
totally overestimated the willingness of the acquired companies staff to
take risks. Successful cases spent time and effort explaining the reporting

198
 Mergers, acquisitions and human resource management

systems. In the unsuccessful cases the sellers staff did not understand the
buyers reporting systems and felt the buyer's staff demanded excessive
amounts of information. Buyers in successful cases did not impose
unilateral control systems (accounting, personnel) on the acquired firms.
In 100 per cent of the unsuccessful cases they did.
When we considered the HRM issues, which related to success and
failure, the relevant behaviours by the acquiror were much more specific.
In the majority of the successful cases, the buyers predicted there would be
personnel problems and acted quickly to resolve them, believing that
getting the acquired people committed to the new status was essential.
They invested time in explaining their personnel systems. In contrast, in
every case of failure the behaviour of the buyers team, post acquisition,
aroused resentments about specific personnel questions. The clash of
cultures or styles, which is the most frequently cited cause of failure in the
implementation literature, was also supported by this study but this was a
local issue not a global conceptualization of culture. The acquiring
managers of very successful cases worked hard to deal with conflicting
values and beliefs. In the unsuccessful cases these issues were not tackled.
Jemison (1988) examines post acquisition behaviour in terms of strategic
capability transfer. In a grounded theory exploration of acquisitions in
related businesses he concluded that integration is characterized by it being
a long, interactive process in which four facilitating conditions may create
the conditions within which the transfer can take place. These conditions
were very similar to the situation found in the successful British and
American cases. First, the cause-effect knowledge of benefits was clear to
the people involved. Second, reciprocal organizational understanding
occurred such that the people in both firms developed an understanding of
each other. Third, there was a willingness and capacity to participate; that
is both sides had people willing and ready to participate in the transfer
capability. Finally, there were slack resources meaning that managers.had
elbow room to deal with unexpected events.
What this and our research indicates is that the behavioural processes
post acquisition are of prime importance in success and failure. However,
the generality of the results encourage a literature which is not very specific
either about these behaviourial necessities or about the role of the HRM
function. To address this problem, representatives of the forty buyers and
forty sellers were asked in face-to-face interviews to be specific about the
important HRM issues which, if handled sensitively, positively affected the
implementation of the buyers strategy post acquisition? Responses from
these eighty respondents were ranked in order of frequency. The results
were as follows:

Different salary scales and/or salary systems.

199
John W. Hunt and Stephen Downing

Different fringe benefit systems.

Different pension schemes including issues about retained surpluses.
Different methods for evaluating individuals.
Different incentives; share options, bonuses, payment on results.
Different beliefs about the use of incentives to hold on to high
performing individuals.

What these responses indicate is that while researchers have been

concerned with the behavioural, long-term processes post acquisition in an
interactive sense, practitioners are more concerned about the short-term
and immediate issues. This focus on the immediate issues reflects a desire
for meaning, for explaining to oneself what has happened without consent.
This necessity to explain to 'me' what has happened produces what
Jemison sees as a leadership dilemma. When senior managers, responsible
for implementing the post acquisition strategy, do not invest in institutional
(i.e. visionary, symbolic), management, middle level managers waste time
building interpersonal relationships to fill the leadership vacuum instead of
devoting energy to making the acquisition work.
This split between immediate issues and the process of the integration of
two social systems over time plus the preference of macro, contingency
explanations over micro personal questions of adjustment may help
explain the relatively minor role provided by the HRM function in most of
the research. The assessment of organizational performance (profitability,
market standing, etc.) especially short-term tends to push personnel issues
into the margins of research. However, the day to day reality of the
managerial task, forces it into a focal role immediately the deal has been
concluded. What is clear from our research and that of others is the implied
importance rather than the recognized importance of the human resource
function in mergers and acquisitions. This relegation to a 'behind the
scene' activity does have some explanations in practice. Merger and
acquisition planning teams are small, usually three people. The most senior
line manager, the finance director and a link person who will remain after
the acquisition is completed. Adding the HRM function to the team would
have consequences for the dynamics of the team. Moreover the advice of
the HRM specialist can always be included in the team's analysis of the
situation.
What is less clear, given that this is primarily a human process, is why
there has been so little research on what the HRM function actually does
contribute. An examination of the studies of Jemison, Buono and
Bowditch and Hunt, Lees, Grumbar and Vivian illustrates that the
function is involved often covertly at all stages of the process but the

200
 Mergers, acquisitions and human resource management

respondents to researchers appear to ignore this fact. So, if the HRM

function is heavily involved, if not always centre stage, what does it do?
One caveat, as Napier (1989) proposes, is that the types of human
resource policies and practices must be related to the type of merger. Arms
length takeovers will have less parent involvement than takeovers in which
firms are to be merged on one site necessitating merging of personnel
policies and people.

Examples of HRM involvement in acquisitions

If for convenience we regard the acquisition process as falling into stages

we can see different HRM activities at each stage. From the HRM
perspective, the Targeting and Negotiating phases are mostly about details
but expectations are established in both the buyer's and the seller's
employees minds which will affect subsequent stages. The Implementation
phase is about both detail and the interactive, longer term process of
integration. What HRM activities occur, often covertly, at each phase?

Targeting
Once the acquisition team has focused on the seller firm, the HRM
function may become involved in data search for detail. What is it that the
buyer intends to buy in human terms. Possible activities are:

Human audit: numbers, levels, locations, pay levels, union affiliations,

community links.
Human costs (obstacles to rationalization): local merger and
employment law, local norms and values about work.
People quality: the key players, corporate culture (local, and national
culture), age profile, skills inventory (especially core skills of the
business); investment in management development and training,
executive shareholdings, ethnic mix.
The structure: organizational form (head office size and function; basis
of segmentation-SBU, divisionalized, matrix etc.), age of the firm,
history to date, fit with market-products, industry structure, competitive
advantages disadvantages.
Personnel policies: job grades, pensions, employment contracts, medical
provisions, severance pay, redundancy provisions, development and
succession policies.

201
John W. Hunt and Stephen Downing

Employee relations: history to date, unions, memberships, major

players in the unions, staff associations, expatriates.

Access to these data will vary with the type of bid. In a hostile bid these
data are much more difficult to obtain, but not impossible through market
intelligence. The amicable bid between friendly rivals should make most of
this information readily available.
The importance of the HRM input is not only its relevance as facts but
also its affect on the negotiations stage. Provided the data collection phase
has been effective then the subsequent stages should not be burdened with
surprises (e.g. complex financial arrangements in pension funds; over-
generous employment contracts, golden parachutes etc.). In the UK study
of forty acquisitions, every case of failure was characterized by subsequent
surprises about at least one major HRM issue. For example, in one case a
£6 million debt was found, after closure, in the acquired company's
pension fund.

Negotiating
Most acquisition teams exclude the personnel professional from the
negotiating team. There are disadvantages and advantages in this practice.
First, it excludes the professional who should have skills in negotiating.
Conversely, it keeps the team small. However, if the size of the team is to
be small and the HRM specialist is excluded then his/her advice should not
be ignored.

The process: advice could be sought on the negotiations themselves,

including the tactics of the sellers team.
Merger document: and/or the Letter of Intent invariably involves
questions about the staff. The avoidance of sloppy arrangements is
important as is controlling wild, personnel gestures to clinch the deal as
the momentum builds.
Advice on post acquisition demands: what will be required ofthe HRM
function post acquisition. What numbers of people will be involved; who
will be retained, made redundant or retired?
The use of external resources; acquisitions create demand for slack
resources. These may be sought outside the firm and the HRM function
will be able to advise on sources.

In three cases, of the forty studied, the demand for personnel resources far
outstripped the supply. By the time external consultants were located and

202
 Mergers, acquisitions and human resource management

contracted valuable time had been lost in implementing the post

acquisition strategy.

Implementation
There is a vast literature on this topic. If detail and data are the major
interests of the HRM functions pre acquisition, then detail gives way to
process post acquisition. Here the HRM function is usually centre stage.
Frequently task forces are created to link the two administrations together.
In human terms, this phase, is arguably, rich soil for human resource
management. Individuals are more ready to accept and tolerate change
now than at any other time. They expect it and wait for it. In organizational
change terminology the 'Unfreeze' will be effective if the changes are
introduced quickly and persuasively. This provides the buyer with an
unequalled opportunity to win or lose the people acquired. The time frame
of post acquisition integration is usually long (3 to 5 years), but action is
needed immediately as the sellers staff expect answers. Even where the
buyer is prepared to encourage the bought firm to maintain its own
personnel policies and practices there is a need for clarity and reassurance.
The extent to which personnel issues will be harmonized will vary widely
but there are clues from research as to which issues are most sensitive and
it is these that the HRM function might address. Buono and Bowditch
(1989) believe there are five critical issues in managing the human
resources post acquisition. These are: the competing claims between
different stakeholders; issues of secrecy versus deception; management
style questions of coercion versus participation, and finally, managing the
sense of loss and respect for employees (pp. 249-63).
A wider search of the literature suggests that these issues are reflected in
the following practical problems of integration: confusion about strategy;
problems of corporate image, unclear reporting relationships, imposed
control systems, resistance to restructuring; personnel policy clashes;
differences in culture and style; and finally in problems of motivation for
the acquired people.
Jemison (1988) takes this analysis further by looking at the facilitating
factors (already discussed) and the process constraints (determinism, cycle
of confusion and frustration, unexpected events; value destruction). All
these issues whether contextual or processural have a common theme,
communication. For both the detail (what will happen to my pension) and
the general (where will we be going in the future) refer to the importance
of communication in the interactive, preferably oral process post closure.
This is a central question for the HRM function in assisting line managers.
There is considerable consensus on how this communication may involve
the HRM functions advice. Hunt etal. (1987), McCann and Gilkey (1989),

203
John W. Hunt and Stephen Downing

Jemison (1989) and Haspeslagh and Jemison (1987) confirm the truism that
acquisitions are a human proeess. As Haspeslagh and Jemison (1987)
eomment:

The classic view of aequisitions focuses on creating economic value for

the shareholders. Ironically, acquisitions often destroy non economic
value for those who are asked to create eeonomie value after the
transaction is made. Creating economic value requires the cooperation
and commitment of operating level managers of both firms in order to
eombine the skills, resources or knowledge of the two firms, (p. 55)

Who are the communicators?

In suecessful eases the chief negotiator of the buying firm is most frequently
the foeal eommunieator. He or she is the 'face' of the intruder and it is his
or her skill in communicating which will affect the early stages of shoek and
grief.
The second condition for communication in suecessful cases is that it is
centrally controlled; unilateral power is vested in one person to avoid a
leadership vacuum. This is usually the chief negotiator but may be a
specially selected head of the implementation team. Practitioners have
strong views that the two teams should be different with a link member
common to both (see Hunt et al.. 1987).
The third condition is the control of task forces, created to harmonize
functions and search for synergies. The number of task forces designed to
investigate the need for integration in the human resource function will
vary with size and complexity. Usually, functional task forces in personnel,
production and marketing are established involving buyer and seller staff.
Harmonization is an option. These task forces appear to have a life span of
up to six months. Communication from task forces is routed through the
central power figure mentioned above.

With whom do they communicate?

The number of publics will vary greatly. Three suggested groups are: the
employees, external publics and the media. Internal communication will
occur for both the buyer and the seller's employees (the literature tends to
stress the seller and ignore the fact that the aequisition also affeets those
employed by the buyer).
The numerous external publics should be identified in advance. These
may include governments, politicians, customers, suppliers, local authorities,
aid agencies, lending agencies, banks, trades unions. Once these publics
are identified standard press releases or letters explaining the acquisition

204
 Mergers, acquisitions and human resource management

and its rationale are usually necessary to manage the flow of versions of
events. The media has an important role in aiding or abetting confusion.
As most literature points to the need for a widely shared rationale for the
integration this should be co-ordinated by the buyer and not left for the
press to invent.

Communicate what?
Clarity of vision for the future appears in most studies. This is different
from clear strategy. In short, it refers to creating certainty for those
affected. In hostile bids (where the buyer may not know exactly what he
has bought) the clarity relates to providing a plan of what will be happening
over the next six months while the acquiror's team(s) audit the business. In
most other acquisitions the clarity of direction is less dependent on data
search after closure so more detailed statements may be appropriate.
The management team should be identified and publicized. Severances
should be handled quickly (some writers suggest by people outside the
implementation team) and handled generously.
The relationship between the structure and systems of the buyer and
how it will affect the seller's structure and systems needs to be
communicated. Where a name is to be changed this should be com-
municated quickly and without debate. The degree of harnionization
should be stated. For example, will personnel policies be brought into line
or will they be kept local. Key employees should be identified, recognized
and encouraged. Benefits in salary, bonuses and career terms can be used
to weaken bonds with the old order.
What appears to be relevant in these early stages of implementation is
that the buyer earns the respect of the sellers staff by behaving
professionally. Conversely, negative outcomes appear to fiow from
flooding the acquired company with head office staff who adopt the role of
the victors over the vanquished. Tight control of the buyers implementation
team and other senior managers from the buyers head office appears
essential.

How to communicate
The message and the medium also has implications for the HRM function.
Face to face communications appear to be preferred over the use of letters,
memo or videos. There appears to be an important role for 'the face' of the
buyer. Walking the shop, touring the plants, meeting employees informally
and formally, moving through the organization quickly have all been found
helpful in the interactive process of merging 'them' and 'us'. Certainty,
direction, vision may be the message; repetition, eonsistency, enthusiasm

205
John W. Hunt and Stephen Downing

may be the important ingredients of the medium. Explaining the buyer's

jargon, social events, committee structure, etc. may be part of the
information package.
Jemison (1988) argues that top management concentrating on immediate
task details rather than the long term interactive process may be
dysfunctional. The more important the acquisition to the parent firm the
more likely the buyer's senior managers will become involved in detail to
help to ensure success, thereby hitting the leadership dilemma mentioned
above. Jemison notes

Yet this very involvement belies the iterative, evolutionary nature of the
integration process and often reduces the chance that people in the two
firms can interact in such a way that the facilitating conditions of
strategic capability transfer will be met. (1988: 22)

Establishing interpersonal relationships takes time and often time is in

short supply, especially if the acquisition is perceived by the seller's staff to
be a crisis. As Hamblin (1958) notes, group cohesion will increase in
conditions of crisis only if there is a shared view that an answer is possible.
Where there is no answer group cohesion will collapse as individuals begin
to look after their individual interests. A seller's staff that regards the
acquisition as a crisis without a solution leads to disintegration of the team
as individuals seek ways to exit. The effective hostile predator will use the
threat of crisis to introduce transformational change quickly. But his or her
solution should, when offered, be plausible. Without a persuasive vision
the acquired staff will begin to withdraw both psychologically and
physically. In the amicable bid, relationships need time to develop; without
crisis effort is required to reduce shock, to exorcize grief and to build
relationships for the future state.
In summary, this detailed discussion of communications throughout the
implementation stage gives rise to a minimum set of human resource tasks:

1, Explain the personnel policies and practices if harmonization is

intended or not. If there is to be integration then provide a timetable.
Address the following issues quickly and clearly: reward systems,
pensions, recruiting systems, assessment and development systems.
2, Be prepared to maintain local terms and conditions of employment.
Neatness is no guarantee of effectiveness. Often these local
differences have long and important histories which relate very
closely to the local culture.
3, Ask the personnel task force to clarify terms and conditions of
employment. Check practices on termination notices (3-12 months;
contract lengths 3 weeks-10 years); pension entitlements, pension

206
 Mergers, acquisitions and human resource management

management, car policy and other perks, share schemes, retirement

ages, performance criteria. Positions on private loans etc.
4. Ask the same task force to check redundancy policy and local law. In
implementing redundancy choose the best scheme and allow people
to leave with dignity. Act quickly, be generous, use out-placement
consultants. Avoid the double severance issues where local divisions
and head office of the acquired firm compete for the best
arrangements.
5. Conduct a management audit. Classify the high potential, short term
potential and 'really useful' actors. Identify the no potential people.
Relate the management audit to core skills and succession questions.
6. Advise the implementation team on communication practice short
and longer term as the basis for interactive integration.
7. Assist in overcoming language barriers, linguistic differences,
confusion about signals and symbols.
8. Focus attention on jobs not rumour; encourage line managers to be
honest and answer questions openly.
9. Manage these processes through the line; ensure that the HRM
function has a professional image.

Conclusions
There is a major role for the HRM function in mergers and acquisitions.
Yet the literature tends to ignore it. A survey of the literature suggests that
researchers concerned with success and or failure, look to contextual
variables and longer term contributions to integration rather than at the
immediate personnel issues. Yet the evidence from analysis of failure
indicates that many personnel issues (salaries, benefits, pensions) are just
the questions individuals want answered immediately. That is, researchers
looking to the processes of social interaction over time as an explanation
tend to see longer term interventions as the secret of success. In reality
winning the hearts and minds is an immediate necessity and this involves
the HRM function as soon as the closure is completed.
If we analyse successful cases of acquisition we find, contrary to the
literature that the personnel function has been busily involved from the
outset. Cross sectional research of large samples is unlikely to expose this
important contribution. Indeed, cross sectional research (our own included)
has probably contributed what it will to the debate because of the
limitations of a contingency approach. This approach blinds us to the
creative and dynamic, socially constructed processes which lead to
integration and resolution of the individuals dilemmas following take
overs.

207
John W. Hunt and Stephen Downing

This has forced our research to concentrate on specific cases to unravel

the HRM roles. From an analysis of forty cases a tentative checklist for
involving the HRM function is proposed for the commonly cited stages of
targeting to implementing post acquisition. This reveals a rich harvest of
strategic and practical activity in which the HRM function has a major role
to play. However, contingency theory based, cross sectional research with
large samples do not provide the sort of information we need about the
HRM role in acquisitions. Therefore, the next stage of this research is to
concentrate on the socially constructed processes pre and post acquisition
by analysing 10 new cases in depth to establish more confidently the parts
played by the actors including those in the HRM function.
Respectively Plowden Professor
and Research Fellow, in Organizational Behaviour,
Centre for Organizational Research,
London Business School,
United Kingdom

References

Acquisitions Monthly {19S9) Annual.

Ansoff. I. (1965) Corporate Strategy. New York: McGraw-Hill.
Becketti. S. (1986) -Corporate Mergers and the Bursen Cycle". Federal Reserve Bank of
Kansas Economic Review. 71: 13-26.
Buono and Bowditch. (1989) The Human Side of Mergers and Acquisitions. San Francisco:
Josey-Bass.
Burglemon. R. A. and Sayles. L. R. (1985) ln.side Corporate Innovation. New York:
Free Press.
Gort. M. (1969) 'An EeonomicTheory of Mergers". Quarterly Journal of Economic: 83-
624-42.
Gortrell. K. and Yontek. I. (1986). 'Congressional Politics and Corporate Mergers". Working
Paper, Academy of Management Meeting. Chicago. August.
Grindley. J. D. (1986)'Mergers and Acquisitions" I, Premerger'Human Resources
Planning". Personnel, (Sept.): 29-36.
Hoamblin. R. L. (1958) 'Group Interaction During A Crisis". Human Relations, II (1): 75.
Haspslagh, P. and Jemison. D. B. (1987) 'Acquisitions: Myths and Reality". Sloan
Management Review, 28 (2): 53-8.
Hunt. J. (1990) 'Changing Pattern of Acquisition Behaviour in Takeovers and the
Consequences for Acquisition Processes". Strategic Management Journat. 11: 69-77.
Hunt, J.. Lees. S.. Grumbar. J. and Vivian, P. (1987) Acquisitions: The Human Factor.
London: London Business School - Egon Zehender International.
Ivoncevich. J. M., Schweiger. D. M. and Power. F. R. (1987) 'Strategies for Managing
Human Resources During Mergers and Acquisitions". Human Resources Planning Jotirnal
10(1): 19-35.
Jemison. D. B. (1986) 'Strategic Capability Transfer in Acquisition Integration". Unpublished
paper. Graduate Sehool of Business. Stanford University. Stanford. California.
Jemison, D. B. (1987)'Value Creation and Acquisition Integration. The Role of Strategic
208
 Mergers, acquisitions and human resource management

Capability Transfer". Unpublished paper Stanford University. (Forthcoming in Liebcop

(ed.) Corporate Restricting Through Mergers, Acquisitions and Leveraged Buyouts.
Greenwich: JAI Press.
Jemison, D. B. (1988) 'Process Constraints on Strategic Capability Transfer During
Acquisition Integration". The University of Texas, Austin, Department of Management
Working Paper, m.S9-5-\.
Kay, J. (1988) The Economic Role of Mergers". London Business Schoot Journat,

Kitching, J. (1967) 'Why do Mergers Miscarry?" Harvard Business Review, (Nov.-Dec):

84-101.
Kitching, J. (1973) 'Acquisitions in Europe, Causes of Corporate Successes and Failures".
Business Internationat. Geneva.
Leighton,C. M. and Tod. G. R. (1969)'After the Acquisition: Continuing Challenge".
Harvard Business Review. (March-April): 90-102.
Mace, M. L. and Montgomery, (1962) Management Probtetns of Corporate Acquisiliotis.
Cambridge: Harvard University Press.
McCann, and Gilkey, (1989) Joining Eorces: Crealitig and Managing Successfut Mergers atid
Acquisitions. Prentice Hall.
Mergers and Acquisitions (1990) (May/June) 24 (6).
Napier, N. K. (1989) 'Mergers and Acquisitions, Human Resource Issues and Outcomes:
A Review and Suggested Typology". Jourtiat of Management Studies, 26 (3): 271-89.
Nelson, R. (1959) 'Mergers: Movements in American Industry 1895-1956". NBER Generat
Studies. Princetown NJ: Princetown University Press. 66.
Peters, I. and Waterman, R. H. (1982) In Search of Excettetice. Harper and Row.
Porter, (1980) Competitive Strategy. Free Press, New York.
Pritchett, P. {\9H5) After the Merger: Managitig itte Shockwaves. New York: Dow Jones
Irwin.
Sandier, R. A. and Rentoul, A. (1987) 'Strategy- the Key to Success". Acquisitiotis Montttty.
(Sept.): 25-8.
Schwartz, S. (1983) 'Micro Determinants of Conglomerate Mergers" in Craven, J. (ed.)
Industriat Organisation and Pubtic Poticy. Boston: Unilever Mijhoff, pp. 207-41.
Schweiger, D. M., Ivancevich, J. M. and Power, F. R. (1987) 'Executive Actions for
Managing Human Resources Before and After Acquisition". Academy of Management
Executive. 1 (2): 127-38.
Stewart, R., Wingate, P. and Smith, R. (1963) The Human Effects of Mergers. London: The
Impact on Managers Action Society Trust.
Turner, B. (ed.) (1990) Organisationat Symbotistn. De Gruyter.
Weston,J. (1953) The Rote of Mergers in ttie Growth of Large Eirms. Berkeley: University of
California Press.

209