In the corporate world where takeovers and acquisitions run rampant, how does HR ensure that companies avoid the pitfalls that besiege mergers, acquisitions and divestitures (MADs)? 

At the recent Human Resource’s Peer Briefings, John Holding, vice-president of human resources for Nortel Asia, spoke at Grand Copthorne Waterfront Hotel on the lessons he learned (some the hard way) while overseeing the joint venture of Nortel and LG in South Korea.

Holding began by citing sobering statistics from the Corporate Leadership Council that highlighted the risks that mergers and acquisitions entail. One slide illustrated the point that only 12% of all M&A transactions were declared by companies as “very successful”.

Holding then delved into his personal lessons, by introducing what both parties stood to gain from the joint-venture (JV) he oversaw. In this case, Nortel was looking for a way to penetrate the Korean market, while LG was looking for a buyer for its infrastructure business.

Holding also went on to add that establishing trust in employees was also a big factor for a successful JV - especially in the situation where the Korean newspapers ran rife with speculations and false rumours.

While several measures were put in place to quell the rumours, one implemented strategy that flopped was an anonymous electronic feedback website that employees could submit questions to. Even though the idea was devised by the Korean leadership team, the feedback website only managed to garner a grand total of one question.

One successful strategy, Holding noted, was assessing each worker’s level of influence over their fellow employees. Workers were then further broken down into three categories based on their feelings towards the JV. Having classified workers as “positive”, “neutral” or “negative”, strategic steps were taken to counter the rumours or to encourage workers, depending on their category they were listed in. 

Holding also touched on the Korean culture and how it was posed as a challenge in the JV. As LG, despite its global brand status, wore the perception of being a local company, the 70 staff of Nortel was reluctant to go from what they perceived as a global company to a local organisation.

Essentially, Holding noted the importance of understanding the corporate and national culture, and how that inevitably meant building rapport through karaoke and hiking with the rest of the Korean staff.

The peer briefing was sponsored by Robert Walters.