Making a Merger Work - Heading in New Directions

Mar 1, 2002
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HR Magazine, March 2002 Even after a mega merger, and in the face of a slumping economy, AOL Time Warner has continued to expand at Internet speed. Last year it shelled out more than $2 billion to purchase the London-based IPC Group Limited and a chunk of Times Mirror Co., thus adding more than 100 magazines to its already bulging portfolio. And last November—arguably the low point in the current recession—the company’s Warner Music Group agreed to purchase Nashville, Tenn.-based Word Entertainment Co., a leading producer of pop Christian music.

HR—which has been pressed to develop a framework that can accommodate rapid change—has responded in the following ways:

Business strategy. The ventures and promotions that drive the company’s growth are devised at biweekly executive sessions chaired by co-chief operating officer Robert Pittman, the firm’s established rainmaker, who will become the sole COO in May. Senior HR managers develop the agendas for the meetings, matching discussion topics to the participants’ talents and skills to avert conflicts and delays.

Training. The executive e-commerce training program is headed up by Julian Kaufmann, vice president for leadership and organization development. Kaufmann focuses on acquisitions, customer strategies and the process of making money in the digital age, thereby placing HR near the heart of the firm’s decision-making process.

Although HR doesn’t determine what companies to acquire, “HR does have a hand in shaping the thought process by which those decisions get made,” Kaufmann says.

In addition, training for rank-and-file employees often is limited to one-day seminars and customized to fit specific projects or tasks, thereby reducing the need for broad, time-consuming cross-training.

Acquisitions. When AOL Time Warner is acquiring a company, HR scouts for potential management and personnel problems at the target firm. Blueprints for consolidating back shop operations, downsizing and the retention of key talent are drafted early in the game, during the due diligence review, thus preventing extra headaches down the road.

And instead of calling the shots from the top, the front office leaves pre-merger decisions to HR at the unit that is making the purchase. For instance, the acquirer, Time Inc., conducted the review of IPC Group Limited with advice on IPC’s culture and management style from the HR team at Time Atlantic in the United Kingdom.

—Marc Adams

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SHRM Featured Article: Making a Merger Work (HR Magazine)

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