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Even with the wealth of expertise available, creating a single e-HR system for the merged Hewlett-Packard/Compaq group was a major challenge. Trevor Clawson reports

When the Hewlett-Packard/Compaq merger was announced in September 2001, HR staff at the enlarged HP group knew they had a massive job on their hands. Corporate marriages dont come much bigger than this: a $25 billion (15.7 billion) deal that created a company with more than 145,000 staff worldwide, 12,000 of them in the UK and Ireland. This meant culture change on a large scale.


Although the union was confirmed by shareholders in May of this year, the enlarged Hewlett-Packard will not become a legally merged entity until 2003 at the earliest. In the meantime, human resources managers have been wrestling with the challenge of inducting staff into what is essentially a new organisation, with its own set of goals, strategies and values. Behind the grandiose visions of the top management team, there are lots of little things that have to be done right. And central to the whole process is an e-HR programme based around an employee portal. Although the two companies had technological expertise in abundance, getting e-HR right proved a mammoth task.


When the merger was first proposed, the boards of Hewlett-Packard and Compaq promised to create a computer hardware and services giant that would be the worlds leading provider of PCs, PDAs, servers and imaging equipment. To achieve this, they planned to structure the merged venture around four main business groups Enterprise Systems, Imaging and Printing, HP Services, and Personal Systems.


But building these divisions was always going to be fraught with difficulties. As analysts pointed out, there was a considerable degree of overlap between the two companies, both of which had been competing fiercely for market share in the same sectors. New teams were created by drawing personnel from both the old HP and Compaq, to make savings by eliminating duplication. Inevitably the workforce has suffered. Out of the 10,000 strong workforce on the UK mainland, 1,400 have already lost their jobs or will do so in the near future.


Those who remain are also in uncertain territory, working with unfamiliar colleagues and managers within the new corporate structure. Of the four main business groups, Imaging and Printing is largely comprised of staff from the old Hewlett-Packard while Compaq workers make up the lions share of the Personal Systems units. However, even in these groups, new teams are being formed. In the other business units the mix of former Compaq and HP workers is something close to 50/50. So how did the group set about creating teams that could work efficiently in a changed corporate environment?


As soon as the merger was announced, HR managers from both companies were pulled together. The first priority for HR was to help design the shape of the new organisation, says human resources general manager Mike Taylor, (formerly director, organisation effectiveness and development EMEA, Compaq). You have to select the new teams and deal with those who are not selected.


In any organisation, such a process is always going to generate uncertainty. Taylor stresses that it was important not only to treat those who were not being retained with respect and dignity but also to ensure that the new company was seen to be acting fairly. He was also keen to make certain that those who were selected would know as quickly as possible exactly what they would be doing within the merged organisation.


In this respect, it was vital to have a good communications system from day one, with former Compaq and HP employees having the same information available to them through the same network infrastructure. The key to this was the employee portal developed and introduced at the old Hewlett-Packard in 1999 that enabled staff to access e-HR. It was decided to use this portal as the model for the enlarged group.


It wasnt a difficult decision to make, says Taylor. Prior to the merger, Compaq had nothing to compare with the HP portal. We have a policy dubbed Adopt and Go, says Taylor. That means we look at the existing solutions available at Compaq and HP and adopt the best.


Adopt and Go seems to be common sense more than anything else, and the employee portal had already delivered savings of $50 million to the old HP against an investment of $20 million. At least some of the cost reductions had come through a 30% cut in human resources staff in the UK the HR admin headcount fell from from 28 to 10 in the two years from October 1999 to November 2001. But with cost savings like these it wasnt difficult to persuade top management of the advantages of introducing the HP model across the enlarged group. To get buy-in at board level you usually need a financial argument, says Taylor. In this case buy-in wasnt an issue. The board had already bought in.


Nevertheless, creating a single infrastructure for two global companies was a considerable technical undertaking and one that is still ongoing. On the plus side, managers were helped by an eight-month time lag between the announcement of the merger plan and its confirmation after a vote by shareholders. This created a breathing space for planning.


With 135,000 servers around the globe to link together, HP and Compaq technicians faced an enormous integration exercise. To complicate matters, the merger partners were using different versions of the same software and, while there was broad compatibility, many glitches had to be ironed out. PeopleSoft applications formed the backbone of the e-HR systems in both Compaq and HP, for example, but the two firms were using different versions.


Given the collective expertise within Compaq and HP, it isnt surprising that the integration work was largely carried out in-house, a fact that undoubtedly helped move the project ahead quickly. By the time the merger was confirmed, the basis of a common infrastructure had been put in place. The hard work seems to have paid off. As a former Compaq employee, I was able to come in on the first day, plug in my laptop and access the system, says Taylor.


With the portal up and running, the priority for the HR team was to keep staff informed about the merger and what it would mean for the company and each individual. What we were able to supply on day one was surprisingly comprehensive, says Taylor.


What most HP and Compaq staff were concerned about, however, was whether or not they would still have a job. The portal was therefore also a useful means of providing updates on vacancies and details of how the selection process was being carried out.


The purpose of this constant flow of information was not simply to keep staff and their representatives up to speed with developments although that was obviously important but also to facilitate the creation of a single working culture. Compaq and HP workers were accustomed to different management styles, they had different vocabularies and there were even variations in their preferred means of communication. HPs was an email culture Compaqs a voicemail one, says Taylor.


The fact that Hewlett-Packard was obviously the dominant merger partner with 64% of shares in the merged group going to HP stockholders and just 34% falling to Compaq investors could have added to the difficulties of creating a new culture. But Taylor is at pains to point out there was no question of HP managers riding roughshod over their Compaq colleagues.


In terms of culture, both organisations had great strengths, he stresses. HP had a great reputation for the way it dealt with people. Compaq had a reputation for speed of decision-making and drive.


Indeed, Taylor argues that turning the new company into a larger version of the old HP would have been counterproductive. One common mistake in a merger is that you create the same organisation, only bigger. This, he stresses, is a new organisation with new values.


These new values were encapsulated in a seven-point mission statement covering areas such as customer service, performance and achievement, corporate agility and business integrity. The statement was posted online, but it was also important that the new teams got to know each other and their place in the company.


With that in mind Hewlett-Packard launched an induction initiative called Fast Start. Within 30 days of new teams being appointed, managers and staff were brought together, with the aim of reviewing the strategy, structure, brand and culture of the new HP and agreeing the working practices that will take the company forward.


While directly addressing the fallout from the merger, the employee portal also has a self-service element. This allows staff to update their personal details, make travel arrangements, access HR forms and book themselves on to training courses.


Compaq was further advanced in one particular aspect of self-service namely the increasingly fashionable area of flexible benefits provision. Compaq operated a flexible benefits system, which was all done online, says Taylor. For instance, staff could opt to take extra holidays in exchange for a lower salary.


In keeping with its policy of adopting the best from both companies, the new HP is embracing flexible benefits. Access to information and how it works will be built into the portal. This is part of a wider process of bringing compensation and benefits packages into line across the enlarged group.


The move to a self-service system has had the added bonus of removing much of the administrative burden from the HR department. Responsibility has now shifted to staff who have required a certain amount of training and technical support, Taylor admits. But the need for offline back-up tends to diminish, he stresses, as end users get used to the new procedures. You do need to train people to help them get what they want from the portal. When we set it up, we offered telephone support. HP staff hardly ever use the support lines. We would expect usage by Compaq staff to drop off as well.


When the employee portal was introduced by the old HP, the company was attempting not just to cut costs but also to put the groups vast IT infrastructure at the disposal of employees and create a consistent communications system. And in the post-merger world, Taylor argues, the system is delivering genuine benefits to staff and managers.