Essay Sampel on Difficulties the HR Faced After Compaq Acquisition

Introduction

Human resource management is a strategic function which should be linked to the overall strategy of the company (Gully & Phillips, 2012). It implies that a company must align its human resource policies to suit its strategies (Schuler & Jackson, 2001). In mergers and acquisitions, the operations, including HR of the acquired company must be integrated with those of the acquiring firm to realize synergies (Schuler & Jackson, 2001). The acquisition of Compaq presented various challenges for HR. First, HP's primary strategy was innovation while Compaq did not have an internal innovation system (Bruner & Buchanan, 2019). Thus, it might have been difficult to realign the HR strategies of Compaq to the vision and strategy of HP. Besides, differences in the organization culture of the two companies might have made it difficult to integrate the employees of Compaq into HP's workforce. Another problem HP's HR might have faced is the difference in the pay structures of the two companies (Ivancevich & Konopaske, 2013). Issues of fairness and equity as employees of the new computer division might have demanded equal compensation across the entire company. When an organization is implementing multiple strategies, it is difficult to link HR to the firm's strategy (Milkovich, Newman & Gerhart, 2013).

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Balancing Low-Cost Mandates and Innovation Aspirations

It is possible to balance between low cost and innovation strategies in an organization. The benefits manager can offer employees additional benefits such as bonus and promotion, among other benefits to encourage innovation (Milkovich, Newman & Gerhart, 2013). The additional benefits should be used to reward employees for successful innovations. Benefits the manager should provide more non-monetary benefits such as retirement matching, gym membership discounts, time off, among other benefits. These benefits are effective in motivating employees to work hard and innovate but also reduce the company's total compensation costs (Milkovich, Newman & Gerhart, 2013).

How to Structure Communications, Controls and New Design Issues

The structure of the merged company can be designed to encourage innovation as well as the company's low-cost strategy. This can be done by establishing an innovation team of employees who will be tasked with identifying innovative plans the company can implement (David, 2013). The organization structure within the innovation team or department should be flat to facilitate communication and encourage employees to take initiatives (De Mello, Marx & Salerno, 2012). Besides, the flat organization structure encourages flexibility and enables the company to adapt to changes in the environment (De Mello, Marx & Salerno, 2012). The organization structure in other departments should be functional and relatively tall to enable strict control (Milkovich, Newman & Gerhart, 2013). Effective control is essential for reducing operating and production costs. The above design will reduce benefits costs by reducing additional benefits for innovation (Child, 2015). Finding innovative ideas is the primary duty of employees in innovative teams or departments. Thus, the company will not be forced to offer large additional bonuses or benefits for them to be innovative. Besides, when the innovative team develops a new product or service, production teams require close control to maintain quality and avoid cost overrun (Child, 2015).

Alternatively, Compaq can be run as a semi-autonomous division. This implies that HP maintains its current structure that supports innovation while Compaq retains its organizational structure that is suitable for the low-cost strategy. However, the companies may not benefit from the synergies due to lack of or insufficient integration.

Challenges of Being a Low-cost Provider and Innovator

Implementing both low-cost and innovation strategies is challenging. The two strategies require different organizational structures which are costly to implement. Besides, the company faces the risk of losing its focus and identity, and this can adversely affect its success. It also involves HR challenges such as motivating employees to innovate with limited resources. A company may also face conflicts between the two strategies thereby complicating the decision-making process.

References

Bruner, R., & Buchanan, A. (2019). The Merger of Hewlett-Packard and Compaq (a): Strategy and Valuation. SSRN.

Child, J. (2015). Organization: Contemporary Principles and Practices. John Wiley & Sons.

David, F. (2013). Strategic Management. Old Tappan: Pearson Education UK.

De Mello, A., Marx, R., & Salerno, M. (2012). Organizational structures to support innovation: how do companies decide?. Review Of Administration And Innovation - RAI, 9(4). doi: 10.5773/rai.v9i4.623

Gully, S., & Phillips, J. (2012). Staffing to Support Business Strategy. Chicago: Society for Human Resource Management.

Ivancevich, J., & Konopaske, R. (2013). Human resource management. New York, NY: McGraw-Hill Irwin.

Schuler, R., & Jackson, S. (2001). HR issues and activities in mergers and acquisitions. European Management Journal, 19(3), 239-253. doi: 10.1016/s0263-2373(01)00021-4

Milkovich, G., Newman, J., & Gerhart, B. (2013). Compensation. University of Oregon, John Henry Nash Fine Arts Press.