Lessons on Acquisitions

The two cases presented above underscore the point that rational decisions are made only when executives observe the three principles of human capital strategy:

• Systems thinking. The acquiring company must be very clear about the purpose of the acquisition and the strategy to be pursued. The human resources of the acquirer and the acquired are parts of a larger system whose purpose is to execute the chosen strategy. Whether the acquirer accepts the human capital practices of the acquired company or bends them to its own way of doing things, they will have an impact on the system.

• Base integration decisions on relevant facts. Many integration decisions are based on hunches or a superficial understanding of the facts. These often lead to disappointing results. A company can avoid disappointments by taking the time to dig out the facts about the workforces that will be integrated. ILM Analysis can be used to get the facts.

• Select the course of action that will create the greatest value. A company should not get hung up on the issue of cost; instead, it should focus on value.