With the mergers and takeovers abundant in corporate news, there are also those that have not yet happened but are largely speculated upon. One such merger is the one between Apple, a high-tech company that sprung from manufacturing of computers, and Nintendo, a Japanese video games maker. The combined company could easily attain a market capitalization of over $100 billion, presenting a formidable threat to Sony and Microsoft, its main rivals. Critics point out that Apple Computers could take a hit with the large competition in the PC market and a possible rise in virus output for Mackintosh, which would be bad for Nintendo. However, after the merger, the talented staff at Nintendo could get hold of Apple’ sizeable financial resources to implement their ideas. This paper will map out an appropriate change process for this situation, prepare contingency strategies, and analyze the role of HR in the process.
The Change Process Model
While there are a variety of change process models, to analyze the proposed change, we will base our proposal on the stepped model found in Randall (2004) and the merger plan developed by Adolph & Hoynes (2002):
- The first step implies the analysis of the status quo and determining the need for change. In the case of the merger, this analysis takes the form of “pre-merger diagnostic” including analysis of IT issues involved, synergies to be realized, cultural issues etc. (Adolph, Hoynes, 2002, p. 12).
- “Create a shared vision and common direction” (Randall, 2004, p.136). For the merged company, this common goal could be to become a leader in computer games, outstripping Sony and Microsoft and creation of the world’s best consoles.
- “Support a strong leader role” (Randall, 2004, p.136). Both companies have strong workforces that undoubtedly include large numbers of people with leadership potential. While Apple can look up to Steve Jobs as a revered leader who implemented a turnaround at the company, Nintendo is credited with a greater pool of innovative and talented workers.
- Merger planning. This stage includes the development of “organizational design, final synergy costs, implementation plans, communication plans, etc” (Adolph, Hoynes, 2002, p. 12). At this stage, both companies have to decide whether they will, for instance, keep Nintendo’s console production separate, or whether Apple’s staff will also be included in this business. Both companies are already purchasing CPUs from the same maker, so they may want to establish purchasing policies that will allow them to negotiate a lower price for the bulk quantity.
- Implementation of the plan.
- “Communicate, involve people and be honest” (Adolph, Hoynes, 2002, p. 12).
- Evaluate the results and reinforce change if necessary.
Implementation of the Change Process
- Both companies will have to undergo a financial audit, a structural survey, a skills audit, and a marketing survey (Randall, 2004, p.137). Also, their cultures can be analyzed and evaluated. The analysis of Nintendo’s and Apple’s culture will most probably reveal cultural affinity between the two as both have a ‘nerdish’ slant to their culture, with flexible internal policies and focus on innovation.
- The shared vision can emerge as a result of consultations between the company’s executives, ideally. This process also has to involve input from all employees of both Nintendo and Apple.
- Leadership has to be developed with serious consideration of cross-cultural issues that can emerge. Nintendo is a Japanese business that relies on cultural assumptions and notions that are often alien to American businessmen from Apple.
- Merger planning has to be developed with consideration of Day 1 activities as well as all subsequent steps. Policies in virtually all areas of organizational management (communications, compensation, discipline and penalties, financial reporting, etc.) have to be developed and implemented (Adolph, Hoynes, 2002, p. 12).
- Implementation of the plan. In the implementation stage, it is a good idea to establish continuous feedback from employees.
- Communication, therefore, should include both downward and upward information flows. The management needs to ascertain that the vision, goals, objectives, and criteria for success evaluation are clear to themselves and known to the employees.
- The results have to be evaluated according to the proposed criteria.
Evaluation of Results and Contingency Strategies
Results can be evaluated in several ways:
- Financial indicators (rise or drop in profits, revenue, profit margin, productivity measures, stock price)
- Marketing indicators (rise or drop in joint marketing share, competitor’ reaction, surveying the reaction of consumers to the merger)
- Employee support (testing overall job satisfaction, attitude to change, evaluation of its effectiveness and feasibility)
- If employee support wanes, the organization can employ the following strategies to overcome resistance to change:
- “Relinquish some control” allowing people to make a significant input in the planning process (Rosenberg, 1993, p. 20). Sometimes, “resistance to change may not mean that people object to the change, just to the way the change was introduced”(Rosenberg, 1993, p. 20). In the IT industry that typically gives staff enough flexibility, it is even more important to let people have control over what is going on.
- Encourage innovation. The company can turn its change management into an opportunity to find more people with fresh ideas. The challenge to integrate two companies can be addressed to employees to test how quickly they can come up with ideas for overcoming production snafus and other points of difficulty.
- Develop leaders. One way can be “forging teams by releasing energy and making things happen” (Randall, 2004, p.84). Construction of teams that will include people from both companies can create an atmosphere of good working partnerships and effective collaboration.
The Role of HRM in Change Management
Human Resource Management has an important role to play in making the merger process smooth and effective. The role of HR managers is to mobilize the human resources and overcome potential pitfalls and conflicts.
The HR professionals can help employers and employees overcome what they perceive as a change in the psychological contract between the two parties. In this sense, the HR department can help build an empowering culture that will help the workforce of the merged companies sort out various issues associated with the change. This transformation can be assisted by the implementation of formal measures such as focus groups that come together to discuss emergent issues. Focus groups composed of employees of both Nintendo and Apple can resolve many issues and offer a response to policies implemented by senior management.
Besides, the company can organize cross-cultural training for both Nintendo and Apple employees to inform them of differences between the two national cultures and strategies for coping with them.
HRM can also be helpful in organizing professional seminars and workshops, if necessary, to let professionals from both software giants glimpses into each other’s proprietary technologies.
Since the proposed merger is a cross-border alliance, it is especially important to “align their HRM strategy to their A&M strategy” (Aguilera, Denker, 2004, p. 1357). HRM professionals will contribute to decisions concerning staffing, retention, and termination. They will also manage internal conflict between organizational cultures and help the organization exploit synergies. More specifically, in the pre-merger diagnosis, HRM will focus on “ensuring legal compliance, such as about equal opportunity and collective bargaining” (Aguilera, Denker, 2004, p. 1360). In the later stage, the HR professionals will manage many specific integration issues, such as reconsidering differences in compensation between the two merging entities.
The change management process between the two IT companies, Nintendo and Apple, has to be implemented in several stages. The implementation plan will be backed up by contingency planning referring to the possible opposition to the change on the part of the employees. HRM also has an important role to play in what can become one of the most remarkable cross-border alliances in the high-tech industry.
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