Executive Summary
In the report the merger project between HP and Compaq is discussed in the context of communication and integration management. The communication needs between the stakeholders of both companies is discussed. This shows the communication adopted by the management of both companies in informing the stakeholders about the merger.
The merger applied the use of Project Management Information System (PMIS) to make information easily available to all stakeholders. The information flowed from the clean team through project managers to the management and then to stakeholders. The PMIS aided in making decisions during the execution of the merger as information was made available to all players.
The merger life cycle is discussed showing how the project moved from one stage to another. The merger went through the germination, growth, maturity, and metamorphosis stages in its life cycle. The life-cycle established a development flow for the merger. The integration management process was established in three different phases; project planning development, project plan execution and integrated change control.
Integration management ensured that the merger followed its development flow. Monitoring and change control was applied in the merger to aid in incorporating changes in the later stages of the merger. Change control enabled the merger to adopt different changes without affecting its development flow. The merger was brought to closure with the new company adopting the name HP.
The closure of the merger also involved the selection of the management of the new company. In any given project, good communication should be established among all the project stakeholders.
In enabling faster decision making in a project, a well PMIS should be adopted. This is because the PMIS enables management of the project budget, schedule, and risks. Projects should also be brought to an end in a way which allows for post-implementation reviews.
Introduction
The project discussed in this report is a merger between Hewlett-Packard (HP) and Compaq companies. The companies by 2001 were not in a position to meet their internal targets due to the economic crisis and the competitive prices in the market at the time (Williams, 2001).
As a way of affording failure and been able to meet targets, the management of both companies so it fit to merger both companies to enable them compete favorably under the prevailing conditions. This report analyses the communications and integration management of the merger between HP and Compaq.
The report discusses how communication was achieved between stakeholders and how Project Management Information System (PMIS) was created and used for communication management within the merger. The report also looks into the merger life cycle, integration management, merger monitoring and how it was closed out.
Project Background
The merger which was the idea of Fiorina, the CEO of HP was to happen in 2001 with HP planning to acquire Compaq. Fiorina had worked hard since 1999 to transform the HP’s old culture and structure. This together with her work of pushing for more focus in services led to an increase of the company stock though the company still failed to meet its targets.
This was evident that the company’s internal strategies were not working any more. Fiorina had to implement her idea of s merger between HP and Compaq as the strategy to help her company meet its targets. The merger was to happen by HP acquiring stock worth $25 billion from Compaq (Aqrawal, 2010).
This would enable HP to own 64 percent while Compaq would still own 36 percent. The merger was expected to be finished by the first half of 2002. The merger was faced with opposition from both stakeholders as well as employees, and the CEO’s of both companies worked hard to convince all parties involved till it was agreed upon.
Stakeholder communications management
Fiorina and Capellas (CEO of Compaq) agreed on the idea of a merger which was proposed by Fiorina as a way to solve the problems which the two companies faced. The two CEO’s did not communicate the merger idea directly at first to all stakeholders. Instead the two CEO’s first presented their ideas to the board of directors of both companies.
After consideration of the benefits to be generated from the merger, the two boards of directors agreed to the idea. The shareholders of both companies came to learn of the merger after it was announced through media mediums. This was faced with opposition from shareholders in both companies (Federico, 2003). This is because they saw it as a creation of a bigger problem than those the companies were experiencing previously.
HP been owned greatly by relatives of its two founders, faced a big opposition from those shareholders. The shareholders believed that the merger was would lead to loss of customers’ loyalty on their respective companies products. Fiorina had now to meet the shareholders and communicate to them the importance of the merger to the company.
After the good communication between the management and the shareholders, the shareholders finally gave in to the idea of a merger between the two companies. This lack of communication management among shareholders had brought about resistance as they were not informed when the idea was being generated.
The employees who also learned about the idea of the merger after the board had passed also opposed the idea. This is because the communication of the merger to the employees was sudden which made them to fear for their jobs (Williams, 2001). The employees did not understand how the merger would take place and the fear of loss of employment made them resist the merger.
The employees of both companies resisted the idea of a merger also because of the cultural differences between HP and Compaq. For instance the employees of Compaq opposed the merger because the HP’s culture to them was strict.
To avoid this opposition from employees the management decided to communicate all information regarding the merger process to the employees. The employees were to be communicated to all news whether bad or good as a way to avoid resistance.
The project teams to facilitate the process of the merger were selected from employees of both companies. These teams were called clean teams as they could meet in clean rooms. The team members adopted a horizontal mode of communication among them. This was possible as the members did not apply their former positions’ authority from their respective companies.
The only vertical communication was to two integration managers selected by both CEOs from the two companies (Fiorina, 2002). The clean teams were to communicate all decisions made to employees whether they affected them negatively or positively.
The stakeholders needed to be informed all that was happening in merger process including changes made, strategies adopted, and cultural decisions made. This mode of communication management to stakeholders ensured reduction of resistance to the merger which was experienced during the initiation of the project.
Project Management Information System (PMIS) 500
Project Management Information System (PMIS) include system tools and techniques which are applied in project management to deliver information PMIS is used by project managers in collecting, combining and distributing information through electronic and manual means (Raymond, 2008). PMIS also enables a good communication between the upper as well as the lower management regarding aspects of the project.
The lower management which includes project managers is able to report the progress of the project to the top management. PMIS enables project managers to plan, execute and bring a project to closure. When project managers are planning a project, they apply PMIS for budget framework. The budget framework is made easy by PMIS as it is its role to collect and make available all information on costs of a project.
Another role of PMIS is to be used in the creation of project schedule and in defining the scope baseline. PMIS thus plays the role of enabling comparison of the baseline with the actual accomplishment of each activity.
Under the closure of a project, PMIS plays the role enabling the review of goals of a project to check if the tasks were accomplished. Thus it’s the role of PMIS to plan schedules, budget and execute work in accomplishing project management.
The PMIS of the merger was created to establish communication from the clean team which was formed to facilitate and implement the merger. The clean team could research both companies’ products, culture, management, as well as technology and carry out a comparison (Piven, 2001). This was through the use of adopt-and-go strategy.
The clean team could the input the information of what was adopted and what was eliminated in the PMIS. This information moved from project managers to top management and the all stakeholders including employees, shareholders and the community. The clean team could the access any changes proposed through the PMIS feedback program.
Through use of change control the clean team could then adapt changes without affecting the development flow of the merger. The clean team through project managers could input information of conflicting decision, for the top management to carry out the decision.
The clean team communicated to employees through PMIS about decision made which affected their products. PMIS also ensured the flow of information from the clean team up to the project managers then to the top managemen the information could the flow to the stakeholders. The feedback flowed back through the same system of the PMIS.
The PMIS can be summarized diagrammatically as shown below:
Project Life Cycle
The HP-Compaq merger underwent through a life cycle with four phases which include; germination, growth, maturity and metamorphosis (Kohli, 2006). The life cycle of the merger was expected to start from September 2001 to the end of first half of 2002. In the germination step/phases the idea of the merger was proposed and initiated.
In this phase Fiorina and Capellas came together and agreed that the only way to achieve their respective companies’ targets was through a merger.
The idea of a merger was proposed to the board of directors of both companies who agreed to the idea. The idea of a merger at this was faced with opposition from stakeholders mainly the shareholders and employees. This phase came to an end with all stakeholders in agreement of the initiation of the merger.
The merger entered its second face of its life with the management of both companies designing project teams to facilitate the execution of the merger (Westland, 2007). The merger was to be done in a way to avoid conflicting interests due to differences in products as well as culture of the two companies. The management initiated use of clean teams which included employees from both companies.
The clean teams were to be used to execute the merger project. In the maturity stage, the clean teams applied different strategies to execute the merger. The clean teams applied the strategy of adopt-and-go method (Levine, 2005). This strategy required that clean teams’ carryout research and make recommendations. These recommendations enabled the clean teams to decide which products or culture to keep and which to eliminate.
In the phase control was also exercised through use of Cultural Integration Team which was formed within the clean teams (Hoopes, 2001). This Cultural Integration Team was meant to help employees to familiarize themselves with both companies and solve conflicts among themselves.
Lastly the project life cycle came to an end under the Metamorphosis phase which included finalization and closure of the merger (Means, and Adams, 2005). In this phase the clean team had chosen what to keep and had eliminated products as well as employees that the new company would no longer need.
The merger came to finalization through the selection of top management and creation of the new company’s organization structure. The products which were adopted from both companies were also given a new logo for the newly formed company.
The merger had its critical success factors which enable and lead to its success. One the merger was well defined in terms of acquisition strategy. This is because the management explained the reasons of the merger as been to enable both companies meet their internal targets under the competitive prices. The critic of the merger creating a bigger problem with the merger was also addressed.
The product road map was clearly defined which was another critical success factor. Another factor in the merger’s success was the uninterrupted focus on customers. The merger also became a success due to planning from day one followed by effective transition to action.
Another factor critical to the success of the merger was adoption of effective communications to stakeholders. This helped in avoiding resistance from stakeholders. Another factor was the focus on employees’ retention even in the loss of the products they produced (LaPlante, 2007). The merger also succeeded due to the factor of cultural differences recognition.
Project Integration Management
Project Integration Management is defined as the management of project scope as a whole. This includes managing the project’s schedules, budgets, risk and contracts to enable a good collaboration between them.
Integration management aids in ensuring that the elements of a project are properly coordinated to enable the achievement of the project’s goals. Integration management enables this through making trade offs between conflicting objectives of the project.
The project integration process of the merger was classified three broad stages which include; project plan development, project plan execution, and integrated change control (Baque, 2003). In the merger plan development, the management which was the process group planned the merger as a reason to solve the constraints which the two companies were facing.
In this phase the merger charter was established to include the purpose of the merger as that to enable both companies achieve their internal targets and compete more favorably. The charter also showed the two project managers selected by CEOs of both companies to link communication between top management and clean teams.
The project management plan was established with clean teams including employees from both companies. The project plan was to integrate the company’s products, management as well as culture (Hill, and Jones, 2009). In the second stage of the integration management, the clean teams executed the merger. The team adopted the strategy of adopt-and-go which enabled them to keep that what was best and eliminate the other.
This made the merger move faster according to set time frame as only research was needed to make decision of what to choose and what to eliminate. The Cultural Integration Team was created to manage the execution process of the merger in collaboration with the team managers. This team ensured no conflicts existed within the clean teams that could lead to failure of the project.
In the last stage of the project integration management, the integrated change control was carried out (Koontz, and Weihrich, 2006). In this stage the Cultural Integration Team was used as a way of controlling differences which existed due to different cultures which both companies adopted previously.
The project managers also ensured a horizontal communication within the clean teams thus preventing changes which could be triggered by the authority the team members had before in their respective companies (DePamphilis, 2009). The two selected managers monitored the clean teams to ensure that the merger did not go out of the plan.
The clean teams tried to retain those employees who lost their jobs though elimination of their products by allocating them to areas which required additional human resource.
The merger was closed with both companies adopting the name HP. In the management Fiorina was made the CEO of the new company while Capellas became the president. The HP shareholders were to own 64 percent of the new HP whiles the Compaq shareholders owned 36 percent.
The structure of the project plan of the merger would show the internal project communication in the project team. The structure of the merger plan would include a steering group which would include both CEOs from both HP and Compaq (Gaughan, 2010). This group will oversee that the project objectives are achieved.
The structure of the merger would also include clean team which was managed by two managers selected from each company. The clean team will include members from both companies which will act as both data providers as well as data users in making decisions.
The merger plan include the following contents; the tasks of all members, the strategy to be adopted in the merger, the network of tasks, the merger’s schedules, as well as resources to be used.
Project monitoring and change control
Change control is the process by which changes in a project are properly and legally integrated to the project’s budget and completion. In any project, change control is very important as it enables to allow for change in project while still maintaining the project plan and goals. Project undergoes many changes during their later stages. These changes are crucial as they can determine the final outcome of the project.
Project change control enables the project team to maintain the proper focus needed for a project’s completion in terms of time and budget. These changes in the later stages are inevitable and therefore require good judgment and execution.
Change control in these later changes helps in streamlining the project to ensure it achieves its objectives. Change control also maintains the project resource control as it gives the proposed changes visibility before implementation. Change control helps to integrate changes into the development flow as it allows for project re-planning and change implementation (Baca, 2005).
In the merger changes occurred within clean teams. These changes were monitored by the project managers together with the Cultural Integration Team. The merger integration process was faced by many problems which were not visible among the clean team. This problems required changes to be made in order for the merger to be implemented successfully.
The clean team applied the strategy of watch-out-for-icebergs where they could watch out for unexpected changes in the process of the merger. Changes were inevitable in the leadership, governance, retention and communications in the process of the merger (Cumming, and Worley, 2009). The Cultural Integration Team aided in monitoring changes within the merger plan been executed by the clean team.
The clean team reported the progress of the merger to the project managers who communicated the information to the top management. This allowed the top management to also monitor the merger’s progress.
Any changes which were to be made by the clean teams were communicated to all stakeholders whether the changes were negative or positive. This enabled the better change control with development flow still remaining as planned.
Project Closure
The merger was closed with the selection of management of the new company which adopted the name HP. Fiorina was selected as the chief executive officer while Capellas was selected as the president. Capellas together with four other members of Compaq’s board of directors were to be incorporated into the new HP’s board of directors.
The shareholders of Compaq were to receive 0.6325 of the new HPs share for each share of Compaq which would total to approximated $25 billion (Carleton, and Lineberry, 2004). The merger was also expected to generate cost synergies which could go up to $2.5 billion annually.
After the merger between HP and Compaq was completed, review was needed. The review was to assess the success of the merger. Technological review for instant was highly required as the companies had combined use of two different technologies in production of computers and their accessories. These technological reviews are important to the new HP as rarely do a technology merger work.
The reviews were also important in assessing the cultural difference between employees of the previous companies. This is because these employees were subject to a new organizational culture different from those in their previous companies. The merger could be abandoned if the technological merger between the two companies failed to work.
The merger post-completion reviews can be carried out through customer response and research of customer satisfaction on products from the new company. This customer review will enable the company understand if the technology merger is working to achieve its set goal. The technology merger was to enable both companies compete effectively.
Customer’s satisfaction review will aid the management to understand if the technology merger is achieving this goal. The company should also apply employees’ review to assess if the cultural merger is adapting to the success of the new HP.
This can be done through employee performance and satisfaction assessment. These reviews will enable the new HP stakeholders to have information on the success of the merger and to take relevant actions on areas reporting failure. The stakeholders will also benefit from these reviews in planning and forecasting of the new HP.
Conclusion
The merger between HP and Compaq is a complex project as it involves a merger between all aspects of both companies. In the merger process it is relevant to communicate the idea of a merger to all stakeholders of both organizations as it is been developed. This is because in HP-Compaq merger there was a lot of resistance mainly from stakeholders who were informed about the merger at its implementation.
The communication to stakeholders adopted by Fiorina during the merger’s implementation was not effective. PMIS plays many roles in the merger by making information available to stakeholders, management and the project team. PIMS aided the clean team as well as the management to execute the merger with the set baseline and development flow.
The life cycle of the merger showed how the project was generated, implemented and closed during the set time frame. Project life cycle enables a project plan to be executed in different phases which allows for easier completion. The merger had critical success factor which contributed to its success. Integration management plays a great role in a project as it allows management of the project’s budget, schedule as well as risks.
The integration management enabled the merger to be carried out without going off the development flow. Project monitoring and change control enabled the merger to adopt different changes even in the later stages without going off the development flow. The merger closure allowed room for reviews to be carried out to assess if the merger project was achieving set goals and objectives.
Recommendations
In a merger between two companies, good communication should be established with the stakeholders of both companies. This is important in gaining their support and avoiding resistance. A project including a merger should have a well developed PMIS to aid in managing of the project budget, schedule, and risks. The PMIS facilitates faster decision making and communication between the stakeholders of a project.
Projects should have a well structured life-cycle which show the different stages of the project and the time frame for their execution. Projects should also have a well developed integration management process which aids in managing the project’s schedule, budget, risks as well as contract.
Projects should also have a well defined monitoring and change control strategies which enables incorporation of changes into the project development flow. Projects should also be closeout in an effective manner to allow for post-implementation reviews.
References
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