Comprehensive Report on Global Staffing Strategies

Comprehensive Report on Global Staffing Strategies
Mergers and acquisitions are increasingly being used by firms to strengthen and maintain their position in the market place. They are seen by many as a relatively fast and efficient way to expand into new markets and incorporate new technologies. Yet their success is by no means assured. To the contrary, a majority fall short of their stated goals and objectives. While some failure can be explained by financial and market factors, a substantial number can be traced to neglected human resource issues and activities (Schuler & Jackson p.1).
As the Director of Human Resources for Clearly Heard, a telecommunications company it has been deemed necessary for me to revise the current staffing strategy in order to acquire Scene and Sound, another telecommunications company in Germany. The CEO has required that I prepare a comprehensive staffing strategy for the new expansion in order to prepare for a strategic audit of the HR systems of Scene and Sound. In order to get a complete understanding of the HR system I will also answer the following questions: What HR challenges may arise as a result of this acquisition? What unique cultural and regulatory factors (e.g. EEOC) need to be considered? How will they impact organizational effectiveness? What recruitment and selection practices will be used in staffing Scene and Sound? What mix of expatriates and internationals are expected to arise? What process will be used to determine what skills and abilities are needed? Once those skills and abilities are determined, what training and development practices will be used? What changes in the current organizational structure will be required to achieve the revised strategy, considering the possible results of the audit?
Clearly Heard is a telecommunications company whose roots have grown deep in the United States. The company has been extremely successful, and since it begin as a phone in manufacture in 1945 Clearly Heard has grown to become a household name known for wireless services, home services (internet/home phone), and T.V. service. Unlike most telecommunications companies, Clearly Heard has chosen to continue to manufacture its own equipment as opposed to outsourcing the service. This has given the company an edge in the market because it can meet its own equipment specs and if there are any warranty issues with the equipment it can exchange the device at any of its 2,500 retail locations.
Until recently this model has kept Clearly Heard atop the telecommunications industry as the clear leader. What has caused the firm to consider a change to its current business plan is its lack of access to popular wireless devices such as iPhone, Samsung, Nokia, Motorola, and LG. In order to gain access to these brands and other independent the company has decided to purchase Scene and Clear. Scene and Clear is Europe’s number one wireless company and supplier of wireless devices. Clearly Heard is hoping this purchase will give it the footing it needs to regain its dominance as the United States number one telecommunications company.
In a merger, two companies come together and create a new entity. In an acquisition, one company buys another one and manages it consistent with the acquirer’s needs (Schuler & Jackson p.2). Considering this is an acauisition, Clearly Heard will expect Scene and Sound to align its HR practices and business practices with Clearly Heard, the acquirer. In order to develop a manageable executiable HR strategy, the HR challenges representing both companies must be discovered and dealt with.
In order for Clearly Heard a U.S. based company, to operate in Germany the company must seek to comply with the legal constraints imposed in the area of EEO (Equal Employment Opportunity) and labor relations in each country of operation (Dreher & Dougherty p. 216). In the United States the EEOC is the governing body that is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person's race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate or retaliate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit. Employers with at least 15 employees are covered by labor unions and employment agencies are also covered. These laws apply to all types of work situations, including hiring, firing, promotions, harassment, training, wages, and benefits (www.eeoc.gov).
Affirmative Action is also a U.S. Federal law that was imposed in order to facilitate the accelerated hiring women and minorities. This law was passed concurrently with the Civil Rights Act of 1964. The Affirmative Action law state that there must be employment programs required by federal statutes and regulations designed to remedy discriminatory practices in hiring minority group members; i.e., positive steps designed to eliminate existing and continuing discrimination, to remedy lingering effects of past discrimination, and to create systems and procedures to prevent future discrimination; commonly based on population percentages of minority groups in a particular area. Factors considered are race, color, sex, creed, and age (www.legal-dictionary.com).
Affirmative Action law is enforced on a Federal level just as EEO laws are enforced. It needs to be understood that Affirmative Action was passed as a means to allow certain demographics the opportunity to “catch up” through employment practices endorsed by the Federal government. The law applies to all companies that operate in the U.S. with 15 or more employees; furthermore the law was not written to force employers to meet quota with their hiring practices (Dreher & Dougherty p. 221 – 222).
European countries take a different approach to regulating employment practices. Most European countries tend to forbid preference programs; this is a direct contrast of the affirmative action programs of the United States (Dreher & Dougherty p. 225). Since European nations do not practice using preference programs such as affirmative action, they do afford their workers an opportunity to be successful. The workers of European nations are encouraged to participate in government-financed training programs, which allow the workers to receive specialized skills. Most European countries tend to employee a significant percentage of women; while this practice employs a vast amount of women they are generally hired for traditional female occupations such as nurses, secretaries, or teachers (Dreher & Dougherty p. 225 – 226).
Within any company or country, there is a cultural that exists that must be taken into consideration when an acquisition of this size looms on the horizon. Generally, there are two types of economic nations that exists; in the westernized world you have LMEs (liberal market economies) and in Europe and Asia CMEs (coordinated market economics) exists. LME countries are distinguished by competitive market arrangements, with supply and demand forces having a large impact on organizational outcomes and processes. LMEs often are seen as 'shareholder value' nations, with performance measured by market value, returns evaluated on a short-term basis and the state rarely intervening in the economy. In effect, in these nations, the market for corporate governance focuses on current earnings, with regulatory regimes being tolerant of mergers and acquisitions (M&As) (Aguilera & Dencker p. 1360).
In contrast to LMEs, CMEs - such as Germany, Japan, Switzerland, and Scandinavian countries - are characterized by non-market relationships. In these 'stakeholder capitalism' national models, employees, suppliers, customers and financial institutions are part of the context within which the overall firm is judged. The market for corporate governance is such that firms are not entirely dependent on publicly available financial data or current returns. Thus, firms can allow themselves to be more long-term oriented; therefore this environment creates a network of relationships that will potentially restrict or even reject M&As in a number of ways.
For instance, in Germany work councils police collective bargaining agreements and training policies inside the companies and have a legal right to intervene in work reorganization. In addition, German workers tend to have flexible portable skills that were acquired through the government sponsored vocational training system. By contrast, in LMEs, industrial relations are characterized primarily by open labor market relationships, with firms having the freedom to hire and fire employees at will. Within LMEs collective bargaining is generally uncoordinated and takes place at the firm level. Training and education in LMEs frequently occurs in schools and universities, with skills acquired by employees being relatively general, in part because investment in firm-specific skills can be through employee poaching (Aguilera & Dencker p. 1361). These cultural differences will have an effect on how effective the organization can be if they are not addressed. In order to embrace these cultural differences it can be accomplished through a 3 step process:
Step 1 (Pre-combination): In the Pre-Combination step the most significant HR issues and their implications are described and discussed. The HR issues and the action needed to resolve them are outlined in the following table: HR Issues * Idntify reason for the M&A * Forming M&A team/leader * Searching for potential partners * Selecting a partner * Planning for managing the prcess of the M&A * Planning to learn form the process | HR Implications and Actions * Knowledge and understanding need to be disseminated * Leadership needs to be in place * Composition of team impacts success * Systematic and extensive pre-selection are essential * Conducting through du diligence of all areas is vital * Cultural assessment * Planning for combination minimizes problems later * Creating practices for learning and knowledge transfer |

Consequently, cultural assessments, as an element of soft due diligence, need to be commonplace when accessing the health of a M&A. Cultural assessments involve describing and evaluating the two companies’ philosophies and values regarding such issues as: leadership styles; time horizons; relative value of stakeholders; risk tolerance; and the value of teamwork versus individual performance and recognition (Schuler & Jackson p. 245).
In this M&A between Clearly Heard and Scene and Sound, it would prove to be a disastrous decision if leadership chose to replace Scene and Sound’s CEO with someone from the U.S. Research has shown that if the company leaves the current leadership in place and allow the team to adjust to the changes, it will prove to be successful in time. It is to be noted that goals and achievements need to be communicated on a regular basis.
Step 2 (Combination – Integrating the Companies) For Step 2 to be successful, it is paramount that planning for the companies integration activities be carefully and skillfully prepared in Step 1. Of all the M&As that underperform, research has shown that 80% of these companies failed to properly plan for integrations. The integration process is simply the combining of two companies after the merger or acquisition is announced. When poor integration occurs it is characterized by: * 50% drop in productivity * Leadership attrition soars to 47% within 3 years * Employee satisfaction drops by 14% (Schuler & Jackson p. 245).
To keep the M&A on track and in line with company goals the following table will outline some key HR issues and actions that should be taken: HR Issues * Selecting the integration manager * Designing implementation teams * Creating the new structures/strategies/leadership * Retaining key employees * Motivating employees * Managing the change process * Communicating with and involving stakeholders * Deciding on the HR policies and practices | HR Implications and Actions * Selecting the appropriate candidate * Creating team design and selection are critical for transition and combination success * Communicating is essential * Deciding on who stays and goes * Establishing a new culture, structure, and HR policies and practices is essential |

One of the first steps in the integration planning process that happens between signing and closing is to better identify those few key value drivers that will significantly impact the performance of the new acquisition. Recognize that there will be a number of day-today systems and processes that must be integrated in order to support efforts to attain synergies. Examples are sales reporting systems, certain IT systems, access to the global e-mail network, and the distribution chain. It is important to limit these activities to areas that are required to support the achievement of key synergies. If an acquired business has unclear or absent leadership, the result will be crippling uncertainty, lack of direction, stalled new product development, and the postponement of important decisions. Strong leadership is essential to acquisition success; perhaps it is the single most important success factor. Generally, a successful leader of the new business is described as being:
❖ Sensitive to cultural differences
❖ Open-minded
❖ Flexible
❖ Able to recognize the relative strengths and weaknesses of both companies
❖ Committed to retaining key employees
❖ Good listeners
❖ Visionary
❖ Able to filter out distractions and focus on integrating key business drivers. Communication is critically important as well. When effective communication is practiced, it seems to have a positive effect on the workers involved in the M&A. Acquired companies have reported satisfaction with communication as practiced by many individual both with the initial welcome and with the communication in ‘mandatory transactional’ areas including benefits, options, and payroll. It is just as important that any communications that are given are proactive and correct. For example, do not say merger when the transaction taking place is indeed an acquisition. In essence the lack of communication will lead to confusion, decreased productivity, high levels of uncertainty, and low morale (Schuler & Jackson p. 247). Helping to ensure that knowledge and learnings are shared across units, is the responsibility of HR through the implementation of policies and practices that appraise and reward employee sharing, flexibility, development, and long-term orientation.
Step 3 (Solidification and Assessment of the New Entity): Simply put, once two companies merge there is a clear and specific new entity that has been created. This new entity, the new company, i.e. Clearly Scene, will need ot address several HR issues. These issues are shown in the table below: HR Issues * Solidify leadership and staffing * Assessing the new strategies and structures * Assessing the new culture * Assessing the new HR * Assessing the concerns of stakeholders * Revising as needed * Learning from the process | HR Implications and Actions * Elective leadership and staffing of the new entity are essential * Creating and evaluating a new structure * Melding two cultures needs assessment revision * The concerns of all stakeholders need to be addressed and satisfied * The new entity MUST learn |
Developing key strategies for a company’s M&A are essential activities if the company is going to be successful with the current acquisition and future M&As. In order to create an environment for success, HR must manage the due diligent activities that every company needs in place to garner success. This can consist of any of following activities, but not limited to the included list:
❖ Gaining knowledge of the make-up and motivation of the two workforces
❖ Accessing the management team of the other company
❖ Conducting analysis of its organizational structure
❖ Comparing benefits, compensation policies, and labor contracts of both firms
❖ Assessing the cultural match between the two firms
HR is a change champion providing the change management skills to align the right people with the appropriate knowledge and skills base to meet the shared goals of the company. It is the responsibility of HR to advise upper management on the acquired company’s new organizational structure. With respect to fulfilling the needs of a smooth acquisition, HR will be required to create transition teams. These teams will be held accountable for developing the infrastructure for the new organization. A company without direction or infrastructure will fail every time. HR will also facilitate the development and deployment of new systems. This is necessary because, since two companies are combing the IT systems, shipping and receiving systems, and payroll must all be aligned. As stated previously, there will be cultural changes that are going to occur; HR will need to communicate these changes to ever member of the new organization. Training will also need to be a top priority. When cultural changes happen procedural changes seem to loom next. In the interest of a seamless transition, all employees will need to be trained and educated on any new process as quickly as possible. There are going to be new people hired, existing employees will be fired, and moved to new jobs within the company; therefore HR will develop strategies to oversee all of these staffing concerns (Schuler & Jackson p. 247).
Communication is the most important element when considering a positive acquisition. HR will need to develop a plan aimed communicating a vision. The responsibility of HR will also be to galvanize the workers as well. Most workers are going to be emotional about the acquisition due to nature of the fear of the unknown; putting people and processes in place to give workers an opportunity to be heard will keep morale up and dissention amongst the ranks low. Last but not least, HR must re-cast itself in order to align with the vision of the new organization. The company will change so the internal parts of the company must embrace the changes it would like to see implemented (Schuler & Jackson p. 247).
Another important question that needs attention is what mix of expatriates will be expected to be used? Third party expatriate trained individuals have become a growing trend of importance to multinational companies seeking to gain an advantage in the growing world of global mergers and acquisitions. Many companies do not realize the impact of expatriate success and do not adequately prepare expatriate. The expatriate often is charged with the varied tasks of transferring and introducing technologies, overseeing the operational implementation, establishing organizational culture, establishing new market operations, and developing communication skills for their respective overseas assignments (Neil p. 1). If the expatriate does not interact well with the host country and refuses or is simply ignorant in practicing the customs of the host country, the end result, even if the expatriate remains for the duration of the assignment, in most cases will have more devastating effects to the organization than the early return. The expatriate may have difficulties initially with the move to another culture. This adjustment period is often experienced in social and professional settings. When these difficulties do arise, they could potentially delay the start up of the assignment and the acquisition. It is highly advised that an expatriate not arrive in a host country an blindly practice Western management principles in a non-western culture (Neil p. 3)
. In the case I will be selecting a third party expatriate to complete the assignment. I believe using someone that knows the German culture and Western culture will prove to be invaluable as this acquisition moves forward. It would not be wise to send someone unfamiliar with German culture, because Germans have been known to disallow business deals to proceed if they feel offended.
Determining the skills that are need will be a daunting task, but one that will prove beneficial if executed. Within Clearly Heard there are key positions that the company cannot do without such as CEO, CFO, COO, and HR; in order to be successful in Germany these positions must be mirrored with the exception of the CEO. There can only be one boss, because having multiple people in charge will send mixed singles and messages. Keeping a company structure intact after an acquisition will only strengthen the workers to believe in the acquisition and adopt the new company culture at a much faster rate.
After much consideration and research, if this acquisition is going to be successes there are several key issues that must be observed and practiced. Patience, patience, patience and more patience. I cannot begin to overemphasize the importance of patience when dealing with a European company. European companies are far less focused on the short-term goals, so with that being said Clearly Heard cannot expect Scene and Sound to be an overnight injection of success into its current business model. The laws and regulations of the United States of America apply to Scene and Sound once they are acquired by Clearly Heard. In other words, even though Germany does not practice affirmative action or abide by EEO laws the company will be required to follow all U.S. federal laws. It will be necessary for the HRM to establish a way in which these laws can be followed without completely ignoring German cultural. The overall success of this acquisition will depend upon how well the line of communication stays open.

References: 1. http://legal-dictionary.thefreedictionary.com/affirmative+action 2. Neil, John,(2008). The Expatriate Venture: What Role Does Cross-Cultural Training Play and What Theories Guide Research in the Field? http://www.uri.edu Retrieved: April 2, 2012 From: http://www.uri.edu/research/lrc/research/papers/Neill_Expatriate.pdf 3. Schuler, Randall and Jackson, Susan (2001). HR Issues and Activates in Mergers and Acquisitions. https://ehis.ebscohost.com Retrieved: April 2, 2012 From: https://ehis.ebscohost.com/eds/results?sid=4f2ec533-e26c-419e-af94-879ae013eea7%40sessionmgr15&vid=25&hid=4&bquery=human+resource+at&=t+acquisitions&bdata=JmNsaTA9UlYmY2x2MD1ZJmNsaTE9RFQxJmNsdjE9MjAwMTAxLTIwMTExMiZ0eXBlPTAmc2l0ZT1lZHMtbGl2ZQ%3d%3 4. Dreher, George F. and Dougherty, Thomas W. Human Resource Strategy: A Behavioral Perspective for the General Manager. McGraw-Hill, New York. 2002. 5. Aguilera, Ruth V. and Dencker, John C. (2004) The Role of Human Resources Management in Cross-Border Mergers and Acquisitions. https://ehis.ebscohost.com. Retrieved: April 2, 2012. From: https://ehis.ebscohost.com/eds/results?sid=ddc44100-db43-4d53-a40e-89d40ac86328%40sessionmgr12&vid=1&hid=4&bquery=EIU+Viewswire+Database&bdata=JnR5cGU9MCZzaXRlPWVkcy1saXZl