Merging Compensation Strategies By Susan J' Wells

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Merging Compensation StrategiesBy Susan J. Wells

• MGMT 610
• Discussion Leaded by Willy Chang
• May 16, 2005

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Reasons for Mergers and Acquisitions

• Increased market power
• Overcoming entry barriers
• Lower cost and risk of RD and increase speed to
  market
• Increased diversification
• Avoiding excessive competition
• Learning and developing new capabilities

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Summery

• Too little, too late
• Merging old plans
• Starting from scratch
• Communicating the changes

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Managing Compensation Differences

• Understanding why the deal was done
• Setting a competitive compensation strategy for
  the merged organization
• Deciding which programs and common language need
  to be redesigned or redefined
• Determining costs once programs and practices are
  redesigned
• Applying an appropriate transition plan to put
  new elements in place

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Typical Acquisition Behavior

• On Being Acquired
• Shock
• Fear of Job Loss
• Career Uncertainties
• Sense Making
• Information Vacuum
• Brain Drain
• Wanting to Look Good
• Stress

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Typical Acquisition Behavior

• Collective Behaviors
• A Them and Us Attitude
• Stereotyping

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Factors influencing the ability to manage
employee expectation

• Communication
• Honesty of communication
• Consistency of communication and subsequent
  action
• Fairness of action
• Logic of action
• Trustworthiness of the organization and
  management
• Management credibility

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Question/Comment