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Abbott Hospital’s Acquisition and Human Resource Issues Case Study


Both the Abbott Hospital acquisition and post-acquisition periods were subject to various organizational changes. This acquisition also affected multiple departments within the new organization, some of which became compromised in the process. The acquisition process also brought about some conflicts within various operational and organizational processes, including government and investor relations. After the acquisition was finalized, the most prominent issue was human resource relations, which pitted the Mary Theresa-led team against the former Abbott employees. For instance, there were several problems relating to human resource (HR) management practices. This essay seeks to evaluate the success of the acquisition of Abbott from the lens of strategic human resource best practices. This analysis is mainly conducted in regards to “seven steps to merger success,” as they are outlined by Shepherd (2009), and Tepedino and Watkin’s (2010) guidelines to successful merger and acquisition.

There are several outlying factors in relation to Abbott’s strategic human resource approach. First, the handling of employee relations was not addressed strategically. For example, there was a projection that the public and most hospital employees would react negatively to Sister Mary Theresa’s style of leadership. This warning had also been delivered by Dr. John Coletti, the respective Abbott Administrator. The most prominent issue in this case study is the fact that Sister Mary Theresa sought to impose her characteristic authoritative management style at Abbott. A requirement that Abbott employees be interviewed afresh by staff from Mt. Mercy also indicated that the new administrators did not have goodwill in their subsequent dealings with Abbott’s staff. The decision to put all former Abbott employees on probation also had a significant impression on strategic human resource management. Eventually, Dr. Coletti resigned as a result of the unviable nature of Theresa’s human resource management approach. The new administrator continued to stick to her bureaucratic plan, even as HR and financial challenges continued to mount.

One strategic HR issue that is prominent in this acquisition is the stipulation that is considered a best practice when addressing employee benefits during a merger or acquisition. According to Shepherd, it is important to “encourage senior management to involve HR/benefits pros in talks about the transaction as early as possible, so HR/benefits leaders are well-informed and have enough time to coordinate” (2009, p. 11). In the case of Abbott, the involvement of HR was undertaken in an unsatisfactory manner. For example, at the onset of the acquisition process, Sister Mary Theresa had requested Abbott’s administrator to stay on as the leader of the employees. However, it later turned out that this decision was not meant to involve Coletti in HR talks, but the concession was extended to the Abbott Administrator as a courtesy. This move was a failure on the part of Mt. Mercy Hospital’s administrators, as their communication with Abbott’s employees was inadequate and ill-intentioned. Some of Sister Mary Theresa’s initial moves included interviewing all Abbott staff members and asking them to sign letters of intent concerning their future. By failing to include Abbott’s senior management in the transition process, the transition team made a strategic error. Consequently, this error was the cause of various HR problems in the aftermath of the acquisition.

It is also important to note that the administrators of both Mt. Mercy and Abbott hospitals failed to form a team that would handle and coordinate the entire transition process (Becker, 2001). Managing the transition process is an integral part of the acquisition process. It is important for HR professionals to take key roles in the transition process (Tepedino & Watkins, 2010). In the case of Abbott’s acquisition, Sister Mary Theresa was in charge of the entire transition process. For instance, everything that Sister Theresa did was aimed at delegating her wishes to junior staff. Some examples of Sister Theresa’s delegations include directing the personnel department to keep interviewing staff from Abbott, even though the representative from Abbott had protested. It is clear that Sister Mary Theresa’s actions during the acquisition process were akin to an absorption process. In this case, the transition procedure lacked a process map that could act as a guide. A process map is effective in outlining the responsibilities and roles of all the parties who are involved in the transition process (Shepherd, 2009).

Another important factor in the transition process is conducting a cultural assessment in regards to the acquisition process. Shepherd (2009) points out that a cultural assessment serves the purpose of laying out a strategy for formulating the culture of a newly integrated organization. The reasoning behind a cultural assessment is the understanding that it is difficult to integrate two different corporate cultures. In the case of the Abbott acquisition, it is clear that the administrators of Mt. Mercy hospital outrightly disregarded the prevailing culture within Abbott Hospital. For example, various doctors within the Auston County Medical Society were opposed to the acquisition of Abbott Hospital. As a strategic human resource strategy, Sister Mary Theresa would have spearheaded a thorough cultural assessment. This cultural assessment would have eliminated the HR crisis that resulted from the acquisition, especially the mass resignation of doctors. Tepedino and Watkins (2010) point out the need to look for external indicators with respect to public opinions about mergers and acquisitions. Sister Mary Theresa’s team should have taken the information from public hearings and news’ reports seriously. Consequently, this vital information could have been a central consideration for the transition team and a reliable method of pointing out the deal fever.

Apart from conducting a cultural assessment, Tepedino and Watkins’ article (2010) points out the need to access both talent and culture simultaneously. The article’s section on the assessment of talent and culture indicates that several aspects of talent can be assessed, including leadership, decision-making, communication, and values. In the course of Abbott’s acquisition, staff interviews were conducted without regard for talent identification. Therefore, all staff members from Abbott were put in probation regardless of their abilities. Dr. Coletti is also considered as a talented administrator, but his exit from the newly formed organization does not relate to his abilities and talent. In the end, the Abbott acquisition fails to benefit from the input of any special talents within the old organization (Mello, 2015). Furthermore, the new administrators of Mt. Mercy and Abbott hospitals did not take time to point out any HR-based redundancies within the two organizations.

The acquisition of Abbott hospital raises several issues that are related to strategic human resource management. A subsequent HR tussle pitted the main administrator, Sister Mary Theresa, against the community on one side and Abbott Hospital’s staff on the other side. Sister Mary Theresa’s failure to involve the HR professionals from Abbott laid the groundwork for other problems. Activities such as cultural and talent assessments could have been instrumental in streamlining HR issues in the course of Abbott Hospital’s acquisition.

References

Becker, B. (2001). The balanced scorecard: Linking people, strategy, and performance. Boston, MA: Harvard Business School Press.

Mello, J. (2015). Strategic human resource management (4th ed.). Boston, MA: Cengage Learning.

Shepherd, L. (2009, February 1). Seven steps to merger success: Follow best practices when a merger or acquisition is looming. Employee Benefit News, 23, 11-12.

Tepedino, L. & Watkins, M. (2010, June 2). HR professionals play vital roles in ensuring that deals deliver their intended results. HR Magazine, 6, 52-56.

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IvyPanda. (2020, November 11). Abbott Hospital's Acquisition and Human Resource Issues. Retrieved from https://ivypanda.com/essays/abbott-hospitals-acquisition-and-human-resource-issues/

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IvyPanda. 2020. "Abbott Hospital's Acquisition and Human Resource Issues." November 11, 2020. https://ivypanda.com/essays/abbott-hospitals-acquisition-and-human-resource-issues/.

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IvyPanda. (2020) 'Abbott Hospital's Acquisition and Human Resource Issues'. 11 November.

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