Reality HR: Tom Lucas, Adecco, on Successful Mergers

HR.com spoke to Tom Lucas about the successful merger between Adecco and Olsten.
 
Tom Lucas was head of HR at Adecco when the decision was made to purchase Olsten Corp. While many mergers have problems that drag on for years, the merger between Adecco and Olsten was quick and successful.

Quick, clear and consistent communication are key to merger success.

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HR.com: Working through a merger is one of the biggest challenges for HR managers. I'm sure readers would be interested to know how you handled it.

TL: We did some unique things that made it successful and quick. This was despite the rather unusual fact that we decided to move Adecco´s business systems and headquarters in Redwood City, Calif., to Olsten's corporate headquarters in Melville, N.Y. As head of HR for Adecco my responsibility was to identify what we should be doing from an HR standpoint.

HR.com: Take us back to the beginning. How did you start?


TL: The merger was announced officially in August 1999. We understood that it would not be an immediate takeover because there were a number of SEC filings that had to be done. One of the first things we did right was communications. We decided very early that as soon as we knew something was true we would make the announcement.

HR.com: Tell me more about your approach to communications.

 
TL: Lots of times people talk about acquisitions or mergers-and we made this mistake ourselves at the beginning - in terms of, "it´s a merger of equals;" "we are going to be best-of-breed and choose the best practices."

The truth is, it´s never like that. Someone is always the dominant buyer and it´s that management team that will actually be making the decisions. The really critical thing for anyone doing mergers and acquisitions is to clarify very quickly the major issues. For instance, we announced that we would be moving our corporate headquarters and committed to people that within two weeks they would have a package communicated to them by their managers. And we did that.

That obviously put quite a burden on us to make a whole lot of decisions about how long we were going to need people and what kind of functions would go sooner versus what kind of things would go later. We created a program that would keep people happy both in Redwood City and in Melville, so they didn´t hit the streets looking for new jobs. We took some risks in terms of making commitments, but we did the best that we could based on our judgment.

As it turned out, we made the right types of decisions. Again, we kept very focused on communicating what we knew when we knew it as quickly and as clearly as we could. Within two months of that announcement we named the key senior people who would be responsible for the major functions, which of course included a few Olsten people, but mostly Adecco people who would end up relocating. We made sure people understood who the decision-makers would be during the integration.

At that point we got very heavily involved with as much pre-planning and decision-making as possible about what the new organizational structure would look like when the merger was approved. We made the assumption that the deal would go through. This way, we were ready to move as soon as the merger was approved, wasting no time on working together as a single company as soon as we could.

We knew that was crucial to our success. We let them know upfront what we thought was going to be difficult about the merger, what we thought would be the biggest integration challenges, and what the decision-making process was going to be. Very little stayed the same. It wasn´t like Adecco´s programs or Olsten´s programs, it really became the "new" Adecco.

HR.com: For instance...

 
TL: For instance, the benefits plans for the colleagues at Olsten were different enough from the ones at Adecco in California that I created a whole new benefit plan. Every single benefit that we had, every single program that we did, every single policy that we operated on from an HR standpoint was changed, reviewed, republished or re-categorized.

The process I used was doing a lot of listening for a period of time. I let people know I was listening and not deciding. I made sure I got the opinions and viewpoints of as many people as I could.

Ultimately, when it came time to put pencil to paper and make a decision, I crafted something that I thought we could be comfortable with. Would it please everybody? Absolutely not. Would it be a program we could stand by and be proud of? Yes it was.

In mergers and acquisitions the person in charge of the function has to make the final decisions and make them quickly. I was very clear with my people, "In normal day-to-day business you would be much more actively involved in making these decisions, but we simply do not have the time or luxury to do that. Let´s work it this way: we´ll do as much as we can collaboratively, but ultimately the decision will come from me." That´s what we did in all of our departments and it worked very, very well.

HR.com: Were there other interesting aspects of managing this integration?


TL: There is an incredible amount of excitement around being able to create your own ship. For the people who had the opportunity to be involved in that decision-making process I can´t think of anything more exciting.

Of course, anything that´s professionally satisfying is usually extremely high risk and has the potential to fail. It´s almost like a survivor game. You´re going to be tested to your professional limits and to your personal limits in terms of the amount of work, decision-making, straightforward thinking and clear communication you have to make. The whole time you keep your fingers crossed behind your back.

I think the other part of it is making absolutely sure that everyone knows what their place is and their role is. That means if you gotta go, you gotta go. We were very quick to make sure everybody knew where he or she stood.

HR.com: How did you make these decisions of whom to keep and whom to let go?


TL: We based it primarily on talent, performance, commitment and desire to do a good job.

HR.com: And how did you assess these qualities?

 
TL: By spending time with them, talking to them. People who came with me from Redwood City were reviewed the same way as people I inherited at Olsten. Are they the right people for this new company that´s going to be twice as big and have these kinds of challenges associated with it? The person who got that position would be the one who had the best skill set from either company, or the person who had the best dedication and availability. You had to be willing to trust your managing instincts as much as your analytical process.

HR.com: Were these decisions made by each function head?

 
TL: We asked people to make their decisions based on performance and interviews. The biggest chore from day one was to interview every person. We did not play games. We didn´t string people along so they would stay three to six months longer just in case this other person didn´t work out. We told the person what their future was, and if we wanted them to stay for six months because they had some special skill we needed, then we told them so.

HR.com: How many people actually went with you from Redwood City?

TL: Most people chose to move to California, not away from it. I know Long Island wasn´t on the map of where I thought I´d want to go live. But surprisingly, we were able to move about 40 management staff out of maybe 150 we realistically considered moving. It was a real testimony to their belief in the company and in what we were trying to get accomplished. Among our senior management almost all chose to move.

HR.com: Were there systems issues?
 
TL: One of the key reasons we purchased Olsten is that they had just converted to a PeopleSoft centralized payroll system and a nationwide database-which no one else had. That was very desirable for us. We ended up integrating and converting our back office and front office to the systems we acquired. Those systems were upgraded and revised to be able to support the new business. That on its own was a massive effort.

HR.com: How long was it from the time the merger was announced until you felt it was over and you were once again running forward with business?
 
TL: We completed the closure of our office in California, the restructuring of the corporate headquarters in Melville, the integration and conversion of all of our systems within one year of announcing the merger. I don´t want to brag about it, but I´ve never heard of anyone doing this before. We´ve been highlighted by a number of consulting firms on how quickly and successfully we did it.

HR.com: A merger is so daunting that it´s good to hear a story that came out well.
 
TL: Yes. I keep coming back to communications. We were consistent, we were on top of it, and were always pushing it. Those who stayed with the merged firm got behind us 200% because they believed in us and got excited about the new firm.

I think the hardest job I ever did was the year following the finalization of the merger, because I had to be all things to all people. I was the final decision-maker on everything, and we changed everything in HR from top to bottom. If we were going to tackle some of the problems, our thought was that we may as well tackle all the problems both of the companies had had for years and fix them. Now that it´s done, it´s wonderful.

Tom Lucas is senior vice president of Human Resources for Adecco USA. He oversees compensation, benefits, employee relations, recruiting, training and organizational development for the Adecco family of companies in the United States. As part of the executive management team for Adecco USA, Tom participates in setting the direction of the company and advising senior management on a broad range of human resources issues. 

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