M&A

HR’s Role in Successful Mergers and Acquisitions

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Catalog # HRFR17OMH8Y

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Legal CaveatThe HR Executive Forum has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and the HR Executive Forum cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the HR Executive Forum is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the HR Executive Forum or its sources, or b) reliance upon any recommendation made by the HR Executive Forum.

DERF 07-1195

Catalog # HRFR17OMH8Y

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HRFR19XP3MB 4© 2008 Corporate Executive Board. All Rights Reserved.

2000Quaker Oats acquired by PepsiCo

1997Snapple sold for $300 million, or 18% of initial purchase price

1996Quaker denies CEO’s annual bonus due to poor company performance

1996Quaker fails to recapture lost market share

December 1995Quaker posts $75 million annual loss

January 1995• Snapple distributors resist

selling Gatorade• Gatorade margins not

comparable to Snapple margins

December 1994• Quaker Oats purchases

Snapple for $1.7 billion• Quaker Beverages

comprises 33% of total revenue

1983Quaker Oats successful purchase of Gatorade

Fall From GraceFor Quaker Oats, mismanaged M&A integration carries severe financial and human capital ramifications

Source: Winer, Barry, Quaker Oats and Snapple, Tuck School of Business, 1996; HR Executive Forum research.

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1995Quaker Oats spends $30 million to streamline Snapple operations

1995• Approxiamtely 50% of

Snapple’s field sales division is laid off

• Many headquarters executives dismissed

1 2 3 4

10 9 8 7

5

6

Financial Impact“From market leader to subsidiary”

• Former leader in beverage market share• Losses exceed $1 billion• Quaker Oats ultimately acquired by PepsiCo

Human Capital Impact“From loyalty to lay-offs”

• Snapple once seen as leader in employee loyalty programs

• Acquisition leads to dismissal of many employees

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Exerting HR’s InfluenceM&A failure is mostly attributed to poor integration management…

Sources of Deal Failure

Corporate Strategy Board Integration–Performance Survey, 2006

…over which HR has significant impact

Percentage of Senior Executives Rating Element Most Critical to Successful Integration

Percentage of Respondents Citing Reason

as Number One Source

of Failure 0%

25%

50%

0%

25%

50% 44%28% 28%

Integration

Value was available, but

errors were made in executing deal

objectives.

Strategy

In hindsight, the strategy was

wrong.

Valuation

You assumed greater value

than was actually available and

paid too much.

Source: Accenture/Economist Intelligence Unit 2006 Global M&A Study; Corporate Strategy Board, Increasing the Certainty of M&A Value Capture, Washington, D.C.: Corporate Executive Board, 2006; HR Executive Forum research.

0%

20%

40%

Clear O

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32% 32% 30%24% 20% 18%

12%8% 6% 4% 2%

Percentage of Respondents

Human Capital Elements, Mean = 30%

Corporate Strategy and Business Development Elements,

Mean = 11%

n = 420.

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Catalog # CLC16U33BD

Title M and A Study Goldbook

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Source: Schmidt, Jeffrey A., “The Correct Spelling of M&A Begins with HR,” Society for Human Resource Management, 2006; HR Executive Forum research.

Easier Said Than DoneHR executives cite target evaluation and integration as critical…

Core HR Capabilities Required for M&A Success

…and yet underperform in these key areas

HR Competency Gaps

Gap Between Performance and Improvement

89%

87%

86%

83%

82%

Ability to evaluate the target quickly

M&A literacy and integration know-how

(32%)

Percent Difference

Ability to Evaluate Quickly

Importance Performance

(31%)

Percent Difference

Importance Performance

Integration “Know-How”

Providing advice on employee sensitivities and attitudes

Motivating and retaining critically needed talent

Planning and leading complex integration projects

n = 450. n = 450.

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Shifting FocusHR at midsized companies can overcome barriers to expose risk and to avoid integration derailment

Source: HR Executive Forum member poll ; HR Executive Forum research.

Holistic Review Risk Exposure Integration Stewardship

Use a series of techniques to capture target information quickly

Leverage analysis frameworks that pinpoint risks and not just differences

Employ monitoring mechanisms that indicate potential derailment before it occurs

! STOPStartHR’s New Mandate

HR M&A Challenges

Lagging Indicators

“We lack the ability to predict integration problems so we’re forced to fight fires.”

HR Director,Biotechnology Company

Unstructured Analysis

“It is hard to do M&A analysis thoroughly.”

HR Director,Business Services Company

Insufficient Time

“We have insufficient time to get a pulse of the organization being acquired.”

Vice President, HRTelecommunications Company

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Source: HR Executive Forum research.

HR’s Role in Successful M&A

I.Engineering Comprehensive

Information Capture

II.Leveraged Targeted

Analysis Frameworks

III.Preempting

Integration Derailment

Opening Day Integration Risk Survey

M&A Progress TrackerDue Diligence Interview Guide

Due Diligence Dashboard

Cultural Alignment Survey

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Imperfect Understanding

Source: HR Executive Forum member poll ; HR Executive Forum research.

…instead, HR must conduct a thorough, directive assessment

Knowledge Gathering Obstacles and Solutions

n = 27.

18%

67%

7% 4% 4%

Pre-

Deal

Assessm

ent

Betw

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Plann

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Manag

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Due D

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Percentage of Respondents

Complete Due Diligence

IT

Finance

HR

M&A Debriefing Synthesize responses to determine additional needs

Establish rapport with target peers

Prepare a rigorous questionnaire

Leverage third-party information

While most Forum members participate in the due diligence phase…

Stage of HR Entrance in M&A Deal

Forum Member Poll

…many fail to conduct full target assessments because of myriad information capture constraints…

Due Diligence Challenges

General Target Information

Benefits Contracts

Legal Issues Pending

Employee Relations Records

• Information unavailable• Wrong questions• Information withheld by target• Incomplete responses

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Getting It RightOpen, in-person communication between Trimble and the target facilitates efficient and comprehensive knowledge capture

Opening Day Activities

Source: Trimble Navigation Ltd. ; HR Executive Forum research.

Memorandum

To: Trimble Senior Leadership Team

From: M&A Team

RE: Opening Day Agenda

Agenda

9:00 a.m. Introduction of Target Company • CEO Overview • Function-Level Presentations

10:00 a.m. Introduction of Trimble (Optional) • Deal Objectives • Function-Level Presentations

11:00 a.m. Open Q&A Session

12:00 p.m. Functional Group Lunch

1:00 p.m. Functional One-on-One Discussions

5:00 p.m. Close of Opening Day

6:00 p.m. Group Dinner

Due Diligence Customization

Insight into the target company efficiently directs HR customization of due diligence efforts.

EmployeesPlease provide a spreadsheet listing the following information for all individuals:• Name• Title• Department

Employment AgreementsPlease furnish a copy of any and all of the following:• Collective bargaining agreements• Union contracts• Change in control or other management agreements

Compensation AgreementsPlease provide all compensation agreements and details governing your organization’s non-salary compensation philosophy

Employee RelationsPlease furnish a copy of the following:• Employee handbooks • Policies • Indemnification agreements

Open Information Sharing

Structured opportunities for target interaction paired with interim analysis and mid-course correction help Trimble establish rapport and facilitate information capture.

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Revealing the TargetIn-the-moment analysis of target helps HR devise a strategy for facilitating access to due diligence information

Acquirer-Target Interactions Across Opening Day

Target Presentation Lunch Discussion Peer-to-Peer Functional Discussion

Interim Step Analysis Tools

Illustrative

321

Target HR

Acquirer HR

Target Finance

Acquirer Finance

Target CEO

Target Assessment Indicators• Leadership team’s enthusiasm and

preparedness for deal• Organizational culture and fundamental

values• Target leaders’ clarity on deal objectives• Instances in which target is not

forthcoming with information• Potential barriers to needed information• Understanding of how, why, and where

the two organizations may clash

Target Company Position

Implications for Due Diligence Strategy for Managing Relationship

Resistant to Deal• Individuals are more likely

to withhold sensitive information

• Rationalize benefit of deal to target company

• Reinforce message through one-on-one discussions

• Pay strong attention to relationship building

Uncertain of Deal• Target leaders may not

fully understand what information is needed

• Communicate deal objectives to help clarify needed information

• Ensure that all are comfortable with the deal

Favorable and Clear View of Deal

• Target is more likely to share needed information when available

• Communication likely to be open and honest

• Discuss acquiring organization’s operations and culture to provide context for integration planning

Information Synthesis and Discussion Redirection

Information Synthesis and Discussion Redirection


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NO CONFLICT

Open CommunicationHR shapes its due diligence framework using information surfaced from target peers to elicit accurate and timely information

Trimble’s HR Due Diligence Checklist (Abridged)

Standard Questions

Customized Due Diligence Checklist (Illustrative)

Adapted to Target

Typical Info Requests

Illustrative

Customized Info Capture

Illustrative

Customized Due Diligence Checklist

EmployeesPlease provide a spreadsheet listing the following information for all individuals:• Name Title Department EXPECT DELAY


Compensation AgreementsPlease provide all compensation agreements and details governing your organization’s non-salary compensation philosophy


Due Diligence Checklist

EmployeesPlease provide a spreadsheet listing the following information for all individuals:• Name• Title• Department


Compensation AgreementsPlease furnish a copy of all of the following documents:• Incentive plan (or variable compensation) such as a sales plan • Employee stock ownership plan• Any other pay arrangements such as “on call” or “lead” pay


Customization #1Description: Expect delay—Target has not institutionalized informationSource: Target presentation

Customization #2Description: Questions Irrelevant—Target does not use these agreement typesSource: Lunch discussion

Customization #3Description: Rephrase—Target does not use same taxonomy for informationSource: One-on-one discussion

Benefits

Brochure

Offer Letter Template

Target ReportEmployeesAgreementsCompensationEmployee

Relations

!

!

!

Employment

ContractBenefits Contract

Target ReportEmployeesAgreementsCompensationEmployee

Relations

…whereas customized due diligence leads to desired results in a single request.

Information obtained through standard due diligence is often inaccurate or incomplete…


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HR DUE DILIGENCE

Target Company: Target Contact:

Conversation Number: of Date:

A. BUSINESS

Federal & State ID#s (please include ID numbers for each state in which you have employees working): Fed # State # Remote EEs: work from home or in business owned facility? Is there an SUI for each state?

B. ORGANIZATIONAL STRUCTURE

# employees ( full-time part-time)

Any temporary employees? any seasonal? Are independent contractors included in numbers?

Satellite offices (if applicable) full addresses needed, how many employees in each office.

Human Resources Contact: Name Title: Tel: E-mail:

C. PAY POLICIES (WORK HOURS/ PAID TIME OFF) Standard work week: hours (pay week begins on what day of the week? Date last pay period began? Ended? Pay check date?)

Pay schedule: (Bi-weekly, Semi-monthly, Weekly?)

Pay period: begins on (day of week) , ending on , paid on

Overtime is paid after) hours/week is comp time offered? To what groups?

Payroll Vendor:

Paid holidays: per year (please list)

No Stone Left UnturnedFirst Advantage’s Interview Guide increases efficiency and comprehensiveness of information capture

First Advantage Due Diligence Interview Guide

Source: First Advantage Corporation; HR Executive Forum research.

vDetailed “Follow-Up” Questions

• Target responds to the requests in black in advance to build a foundation for discussion.

• HR then uses the “red,” follow-up questions to validate and capture more detailed information.

• The type and scope of follow-up questions vary by target

Features of the Guide

• Four-page, “living” guide updated with each deal

• Captures business and HR context (e.g., organizational structure, compensation, EEO, etc.)

• Includes a detailed target document capture checklist

• Designed to send to target counterpart and use in subsequent conversations

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Third Party PerspectiveHR can surface and validate target information via third-party sources

Third-Party Information Sources

Third-Party InterviewsInterviews with key third parties are undertaken to cross-check talent assessments and surface additional talent insights.

Interviewees• Customers• Recruiters• Consultants• Competitors


Supporting Tool

M&A Research Journals• Provide overview of M&A market trends• Glean insight into successes and failures in past deals

Industry Literature Consortia• Provide access to industry journals and periodical literature concerning target• Offer diverse third-party perspectives

Secondary Company Resources• Report on target strategy, operations, and performance data

Fair Disclosure

Third-Party InformationHR reviews third-party information to inform talent assessment and identify critical target talent leads.

Sources• Internet Search• News Articles• Industry Research• Online Blogs

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Information Capture


Analysis Frameworks

III.Preempting







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Post-Deal Outcomes Consistent policies devised HIPO talent engaged through

mentoring and development programs

Equitable compensation for acquirer and target staff

Post-Deal Outcomes Consistent policies devised Attrition of high-potential talent Equitable compensation for acquirer

and target staff

Focus on ImpactRather than focus on merely surfacing differences, HR must

understand the impact that these differences will have on deal success


Due Diligence Outcomes Transactional Analysis Impact Analysis

Implications of Differences Surfaced

• Integration should centered on institutionalizing and streamlining policies

• Compensation must remain consistent across each job level

Lenses Applied

1. Financial Impact

2. Cultural Impact

Implications of Differences Analyzed

• Organization must bridge contradictory performance philosophies and promotion criteria

• Incongruous long-term pay trajectories must be aligned

Category Acqiurer Target

Workplace Policies

•Clearlydefinedpoliciesforworkhours,workplacebehaviorexpectations,andcorrectiveaction

•Nowrittenpolicies

Performance Management

•Reviewsconductedannually

•Extensivetrainingandmentoringprogramsavailable

•Reviewsconductedsemi-annually

•Extensivetrainingandmentoringprogramsavailable

Compensation •Entry-levelengineerpositionsaverage$60,000inbasesalary,with30%bonuspotential

•Entry-levelengineerpositionsaverage$57,000inbasesalary,with20%bonuspotential

Lenses Applied

1. Transactional differences

2. Process misalignment

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Exposing RisksSeagate collects due diligence data and surfaces human capital risks to prepare for integration planning

Seagate’s HR Due Diligence Process

Component #1: Due Diligence Information Collection

Seagate’s HR Due Diligence Requests

Type of Request

Compensation Plans and Costs

Equity Plans and Obligations

Benefits Plans and Costs

Voluntary Turnover, Overall and by Key Employee

Employee Headcount, Management Layers/Spans

Employment Agreements

Severance Policies/Costs

Succession Plans/Executive Risks of Departure

Compliance Risks

Source: Seagate Technology; Corporate Leadership Council ; HR Executive Forum research.

Component #2: Risk Analysis Template

Areas of Review Specific Information Requested by Seagate Received? Low Risk/

High RiskIssues/Exposures/Areas of Risk

(Illustrative)

Base Salary Program

Base Pay Plans Yellow Red Base pay is market competitive. ABC Month merit increase proposed by target at cost of $xxm/quarter. Seagate recommends not to implement.

Variable Pay Plans Red Red No visibility into target’s incentive plan proposal.

Sales Pay Plans Green Green No issues.

Executive Pay Plans/Deferred Compensation

Red Red Have not received deferred compensation plans, so do not know if target is in compliance with new legislation.


Stock plans, omnibus plan document details, ESPP

Green Green No issues, continue implementation of ongoing plan.


Turnover by major site Green Red Target’s overall turnover is much higher than Seagate’s.

Listing of any key executive departures, groups/levels of employees with major turnover.

Yellow Red 20 new executives (VP and above) hired within past 24 months. No information provided on groups/levels of employees with major turnover.

Employee Headcount, Management Layers, and Spans

Headcount by major site, level of employee, and function, organization charts

Yellow Green No issues with headcount below executive level.

Seagate’s Evaluation for Target’s HR Information Pre-Announcement: Highly Confidential

Green: All Info Received/Low Risk Yellow: Partial Info Received Red: No Info Received/High Risk

Component #3: Due Diligence Risk Assessment Reporting

Deal ContactProposed Value of Target

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(Illustrative)

Voluntary Turnover Overall and by Key Employee

Turnover by major site and level of employee for current calendar and prior 1–2 years.

Green Red Target’s overall turnover is much higher than Seagate’s.

Listing of any key executive (VP and above) departures in previous years as well as any groups/levels of employees who have had major turnover.

Yellow Red XX new executives (VP and above) hired within past XX months.No information provided on groups/levels of employees with major turnover.

Succession Plans/ Executive Risks of Departure

Reports of current successor pools for VP and above positions as well as profiles/resumes for all VPs.

Yellow Green Partial information received. No issues anticipated.

Identify which execs are greatest risks of departure.

Red Red No information received and no insight into executive departure risks.

Open Personnel Requisitions

Number and level of open personnel requisitions by country and site.

Green Green XXX open requisitions. However, no major issues.

Employee Survey and 360-Degree Results

Provide reports on any recent employee surveys/360-feedback results that can provide us with an insight into the culture, morale, and opinions of employees.

Red Red No information received.

Seagate’s Evaluation for Target’s HR Information Pre-Announcement: Highly ConfidentialGreen: All Info Received/Low Risk Yellow: Partial Info Received Red: No Info Received/High Risk

Data Hypothetical

Assessing the TargetDue diligence dashboard uses three screens to evaluate and prioritize target information

Seagate’s Due Diligence Dashboard

Illustrative



(Illustrative)

Base Salary Program

Base Pay Plans Yellow Red Base pay is market competitive. ABC merit increase proposed by target at cost of $XXX M/quarter. Seagate recommends not to implement.

Variable Pay Plans Red Red No visibility into target’s incentive plan proposal.

Sales Pay Plans Green Green No issues.


Red Red Have not received deferred compensation plans, so do not know if target is in compliance with new legislation.


Stock plans, omnibus plan document details, ESPP

Green Green No issues, continue implementation of ongoing plan.


Plan documents/contracts for health and welfare, and any pensions/retirement/defined benefits plans

Yellow Green Have not received complete retirement plan documents. However, no issues anticipated.

Costs of benefits plans Green Red Costs are high for U.S. health care plans due to low deductible.

Employee Headcount, Management Layers, and Spans

Headcount by major site, level of employee, function, organization charts

Yellow Green No issues with headcount below executive level.

Seagate’s Evaluation for Target’s HR Information Pre-Announcement: Highly ConfidentialGreen: All Info Received/Low Risk Yellow: Partial Info Received Red: No Info Received/High Risk

Data Hypothetical

Dashboard Coding System

Red:No visibility into target situation; High financial impact or poor organizational fit

Yellow:Partial visibility into target situation

Green:Visibility into target situation; Low financial impact or good organizational fit

Areas with minimal visibility and potentially significant financial impact are considered high risk.

While Seagate only received partial information, this area is considered low risk due to minimal financial impact and organizational fit issues.


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HR Risk Assessment Summary

Areas of Review Risk Assessment

Base Salary Programs ABC Month merit increase proposed by target at cost of $XXX/quarter.

Benefits Plans Costs are very high for U.S. health care plans due to low deductible.

Employee Headcount/Management/Span of Control

XX management layers for manufacturing and nonmanufacturing organizations, compared to Seagate’s.

Employee Survey and 360 Results

We have no information on employee perceptions or performance.


We have not received deferred compensation plans, so do not know if target is in compliance with new legislation.

Information at WorkAssessment results direct deal valuation and integration planning

Seagate’s HR Risk Assessment Summary

Illustrative

Informing Deal Valuation Informing Integration Planning

Risk Assessment Presentation to Senior Leadership Team

Key Human Capital Risks to Deal Valuation• Pensions and insurance• Compensation and benefits plans• Pending lawsuits• Union and employment contracts

Integration Planning Stage

Key Human Capital Issues for Integration Planning• Talent retention• Cultural alignment• Leadership transition• HR and organization policies

Seagate’s HR deal team creates a summary of valuation and integration risks directed by the data analysis in the Due Diligence Dashboard.


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Supporting Tool

Areas of Review Specific Information Requested by Seagate Received? Low Risk/ High Risk

Issues/ Exposures/ Areas of Risks

Base Salary Program

Base pay plans: Eligibility criteria, participation numbers, targets, historical payouts, future obligations/costs, timing/cycles.

Variable pay plans (including any retention policies/plans): Eligibility criteria, participation numbers, targets, historical payouts, future obligations/costs, timing/cycles.

Sales Pay Plans: Eligibility criteria, participation numbers, targets, historical payouts, future obligations/costs, timing/cycles.

Executive Pay Plans/Deferred Compensation: Eligibility criteria, participation numbers, targets, historical payouts, future obligations/costs, timing/cycles.


Stock Plans (omnibus plan document/details, restricted stock plan details, stock option plans, ESPP): Eligibility criteria, participation numbers, guideline amounts and vesting criteria for new hires and refresher (ongoing) stock, details and participation rates of ESPP, details of restricted stock in terms of eligibility, current recipients, vesting during a change in control.


Plan documents/contracts by country for health and welfare and any pensions/retirement/defined benefits plans.

Costs of benefits plans.

Voluntary Turnover Overall and by Key Employee

Turnover by major site and level of employee for current calendar year and prior 1–2 years.

Listing of any key executive (VP and above) departures in previous year as well as any groups/levels of employees who have had major turnover in previous year.

Employee Headcount, Management Layers/Spans

Headcount by major site, level of employee and functional organization. Organization charts for top levels and for all other levels available.

Management layers from CEO to lowest level layer that supervises people and average manager spans of control.

Listing of any expatriate employees, terms, costs.

Green: All Information Received/ Low Risk Red: No Information Received/ High RiskYellow: Partial Information Received

Seagate Due Diligence Dashboard


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Supporting Tool

Areas of Review Specific Information Requested by Seagate Received? Low Risk/ High Risk

Issues/ Exposures/ Areas of Risks

Employment Agreements

Listing of any executives with employment agreements or offer letters with details on the contractual obligations related to unpaid bonuses, stock options/restricted stock, change in control terms, etc.

Explanation of types of employment contracts by country (e.g., contract labor terms/costs/risks).

Severance Policies/ Costs

Severance policy details (pay, policy caps, outplacement costs) by country and level of employee.

Union Contracts/ Labor Risks

Listing of details of any union/ collective bargaining contracts, annual costs, and risks in Singapore and China.

List any current labor disputes, pending labor court cases or formal grievances by issue type, country, level of employee involved.

Succession Plans/ Executive Risks of Departure

Reports of current successor pools for VP and above positions as well as profiles/résumés for all VPs.

Identify which execs are greatest risks of departure.

Compliance Risks

Minimum hiring age policies.

Overtime policies/practices.

Immigration policies/risks.

Open Personnel Requisitions

Number and level of open personnel requisitions by country and site.

Employee Survey Results or 360-Degree Results

Provide reports of any recent employee surveys/ 360-degree feedback results that can provide us with an insight into the culture, morale and opinions of employees.

Seagate Due Diligence Dashboard (Continued)

Green: All Information Received/ Low Risk Red: No Information Received/ High RiskYellow: Partial Information Received


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Applying a Cultural LensSterling leverages simultaneous traditional and cultural screens of target information

Traditional Analysis

Traditional Finding• Threats for the business• Liability exposure

Cultural Insight• Authoritative versus egalitarian

decision-making processes

Traditional Finding• Size of benefit obligations• Cost per employee

Cultural Insight• Paternalistic approach to employees• Low tolerance for risk

Source: Sterling Financial Corporate; Corporate Leadership Council ; HR Executive Forum research.

Organizational Culture Indicators

• Readiness for change

• Resistance to change

• Importance of teamwork

• Importance of learning and development

• Importance of diversity

• Importance of relationship management

• Tolerance of risk

• Quality of internal and external communications

Target Due Diligence Documents List

Illustrative

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Cultural Analysis

Employee Compensation and Benefits Plan Areas of Review

• Structure of compensation system• Type of benefits and perquisites

Executive Meeting Minutes Areas of Review

• Formality of document• Size and number of documents• Explicitness of decision and guidance

Target Due Diligence Documents Employee compensation and

benefits plans Executive meeting minutes Affirmative action plan Code of conduct Communications regarding audits/

findings Employee handbook Personnel policy manual Open positions now being

recruited Status of employees on disciplinary

action

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Culture as a Leading IndicatorSterling assesses the magnitude of cultural gaps using a cultural indicators scorecard…

Cultural Indicators Scorecard

…which helps HR to facilitate quick responses for mitigating cultural challenges

Responses to Cultural Conflict

Illustrative

Mitigate through contract structure

Walk away from deal

Integration team works with Learning and Development personnel to craft training and communication materials that address the differences between the two cultures.

The focus is on building on common strengths, open communication, and managing change.

Fit Relative to Sterling Financial

Organizational Culture Indicator Low Medium High

Importance of teamwork XImportance of relationship management XQuality of communications across all levels XReadiness for change XResistance to change XImportance of diversity XImportance of learning and development XTolerance of risk X

How to Assess Risk

The HR due diligence team rates cultural fit for each cultural indicator and then further analyzes areas of “low” and “medium” fit that could add additional time or cost during integration if the deal closes.

Early in discussions, senior executives show opposition to adopting a new culture.

During integration planning, midlevel executives resist network-building with Sterling counterparts.

Post-announcement, employees resist initial training about Sterling’s product offerings and vision.

Source: Sterling Financial Corporate; Corporate Leadership Council ; HR Executive Forum research.

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Attribute Statement A Assessment Statement B Impact of Differences

Implications for Integration Planning

Employee Motivation

Work-Life Balance

“Employees like working here because it affords them the chance to cultivate interests outside the office.”

Acquirer:

Target:“Employees like working here because it’s a high-performance culture based on achievement.”

Stability and Innovation

“Employees like working here because the company challenges established ways of doing things.”

Acquirer:

Target:“Employees like working here because it’s stable.”

Personal Development

“Employees like working here because they have the chance to develop personally and professionally.”

Acquirer:

Target:“Employees like working here because they get to be part of shared achievement.”

Internal Communication Patterns

Confrontation Style

“In cases of underperformance, the company tends to be direct and confrontational, emphasizing the need to quickly get up to the company’s standards.”

Acquirer:

Target:

“In cases of underperformance, the company tends to be patient, emphasizing the need to coach the underperformer to higher productivity.”

Medium of Communication “Most communication happens in person or over the phone.”

Acquirer:

Target:“Most communication happens through e-mail.”

Information Dissemination

“The company is quick to tell employees news—good and bad—about how it is meeting its challenges.”

Acquirer:

Target:“The company tends to exercise caution in sharing information.”

Methods of Decision Making

Power Distribution “The company’s decisions tend to be made unilaterally.”

Acquirer:

Target:“The company’s decisions tend to be based on arriving at consensus.”

Entrepreneurship “Employees would say that they have a chance to quickly put their new ideas to use.”

Acquirer:

Target:“Employees would say that their new ideas are subject to extensive vetting.”

Centralization “Key decisions tend to be made by senior management.” Acquirer:

Target:“Key decisions tend to be made by employees throughout the company.”

Time Horizon Emphasis

“The company tends to emphasize the long-term over the short-term in order to cultivate trust in customer relationships and invest for future growth.”

Acquirer:

Target:“The company tends to emphasize the short-term over the long-term in achieving the company’s ambitious performance targets.”

DERF 07-0478

Catalog # FLEX17GW8YT

Title Chi 03 28

Gauging Cultural FitTwenty Questions to Gauge Cultural Alignment

Supporting Tool

Source: Financial Leadership Exchange; HR Executive Forum research.

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23


Attribute Statement A Assessment Statement B Impact of Differences

Implications for Integration Planning

Operating Styles

Collaboration “When things go wrong, employees tend to focus on identifying and blaming the guilty parties.”

Acquirer:

Target:“When things go wrong, employees tend to focus on solving the problem together.”

Process Focus “The company emphasizes getting to the right result.” Acquirer:

Target:“The company emphasizes following the right steps.”

Speed and Quality “All else being equal, the company tries to move quickly.”

Acquirer:

Target:“All else being equal, the company tries to ensure we maintain a high quality bar.”

Reliance on Specialists

“The company tends to rely on generalists, who perform a wide array of tasks fairly well.”

Acquirer:

Target:“The company tends to rely on specialists, who perform a few tasks extremely well.”

Hierarchy “Employees would describe the company as ‘hierarchical.’” Acquirer:

Target:“Employees would describe the company as ‘flat.’”

Company Philosophy

Role of Tenure “In giving out promotions, the company tends to quickly reward strong performance.”

Acquirer:

Target:“In giving out promotions, the company tends to emphasize the need to have a track record of achievement and tenure.”

Diversity “Employees with divergent social/political views and backgrounds all feel equally at home at the company.”

Acquirer:

Target:“There are employees of some views and backgrounds who probably would not feel at home in the company.”

View of Change “The company tends to embrace organizational change as full of new opportunities.”

Acquirer:

Target:“The company tends to shy away from change given the turbulence it can create.”

View of Risk “The company encourages employees to take calculated risks.” Acquirer:

Target:“The company encourages employees to rely on tried-and-true approaches.”

View of External Stakeholders

“In making decisions, the company would probably make a lower-ROI decision in order to address environmental or community concerns.”

Acquirer:

Target:

“In making decisions, the company would probably drive toward a high-ROI decision with little attention paid to environmental or community concerns.”

DERF 07-0478

Catalog # FLEX17GW8YT

Title Chi 03 28

Gauging Cultural Fit (Continued)Twenty Questions to Gauge Cultural Alignment

Supporting Tool

Source: Financial Leadership Exchange; HR Executive Forum research.

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24




Information Capture


Analysis Frameworks

III.Preempting







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Reacting in the MomentStrict adherence to integration plans limits HR’s ability to react to unforeseen risks whereas regular monitoring of progress cues HR to preempt derailment

Typical M&A Integration Stallpoints

Establish new organizational structure Identify leaders for newly formed business units Redefine role criteria to fit new organizational

structure

Calibrate base pay for all job levels Set performance review and promotion criteria Create and launch integrated formal review

process

Coordinate cross-company social activities to foster sense of community

Extend development opportunities to designated HIPOs

Establish new organizational structure Identify leaders for newly formed business units Redefine role criteria to fit new organizational

structure

Calibrate base pay for all job levels Set performance review and promotion criteria Create and launch integrated formal review process

Coordinate cross-company social activities to foster sense of community

Extend development opportunities to designated HIPOs


Engagement and Retention of Key TalentRewards and Performance ManagementOrganizational Design

Engagement and Retention of Key TalentRewards and Performance ManagementOrganizational Design

Integration Execution Dashboard

Date: 12 March 2006 Leader: Mary Graham Project: HR RJC M&A

Task Owner Task Milestones

Delivery Risk

Task Progress

Action Steps

Retention:Execute retention plan for key management talent

Local HR

Anticipated Start: March 3

HighModified completion date 22 April

Execution risk identified and reported to integration team. Conducting HIPO engagement survey to create retention plan with corporate HR

Actual Start: March 3Anticipated End: March 18Actual End:

Not on Track

Staffing:Review processes, resources, and tools

Local HR


MediumModified completion date 10 April

Target company tracks different recruiting metrics causing a delay to beginning analysis. Have established a taskforce to standardize metrics


Not on Track

Cultural Integration: Understand work philosophy and values

Corporate HR


Normal Completed

Cultural integration analysis completed March 10

Actual Start: March 5Anticipated End: March 12Actual End: March 10

On Track

Training and Development : Design change management program for the line managers

Local HR


Normal On Track

Proposal for training curriculum currently with CU. Final confirmation on track for approval 22 March

Actual Start: March 5Anticipated End: March 30

Actual End:

On Track

HRIT Systems: Identify gaps in HR related study

Corporate HR


Normal On Track

Gap analysis on track for completion on 15 MarchActual Start: March 8

Anticipated End: March 21Actual End:

On Track




Delivery Risk

Task Progress

Action Steps


Local HR





Not on Track


Local HR





Not on Track


Corporate HR


Normal Completed



On Track


Local HR


Normal On Track



Actual End:

On Track


Corporate HR


Normal On Track



On Track

Course-Corrected M&A Process

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26


How Are We Doing?Danske Bank surfaces and responds to integration derailment indicators through periodic integration performance assessments

Danske Bank’s Integration Risk Management Process

Danske Bank Insights• Execute survey when transaction noise has fallen and there is opportunity to identify and respond to risks.

• Prioritize risks that have greatest impact on integration success, decide next steps, and assign responsibility.

• Revisit affected elements of the integration plan and its execution to assess the need for adaptation.

• Refocus integration resources on tackling high-impact human capital risks.

1

23 Spot Check Survey Risk Prioritization Dashboard

Integration SurveySatisfaction

I feel motivated in my job. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I am willing to make an extra effort if necessary . . . . . . . . . . . . . . . . . . . . . . .I would recommend others to seek employment at/in Northern Bank . . . . . . . . . . .

ImageNorthern Bank has a good image . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I am proud to tell other people that I work for Northern Bank . . . . . . . . . . . . . .Other people consider Northern Bank to be a good place to work . . . . . . . . . . . .

Senior ManagementYour overall perception of senior management . . . . . . . . . . . . . . . . . . . . . . .Senior management’s ability to make the right decisions . . . . . . . . . . . . . . . . . .Senior management’s ability to inform employees . . . . . . . . . . . . . . . . . . . . . .

Line ManagerYour overall perception of your line manager . . . . . . . . . . . . . . . . . . . . . . . .The professional skills of your line manager . . . . . . . . . . . . . . . . . . . . . . . . .The managerial skills of your line manager . . . . . . . . . . . . . . . . . . . . . . . . . .

CooperationThe professional co-operation with your colleagues. . . . . . . . . . . . . . . . . . . . .The general atmosphere among your colleagues. . . . . . . . . . . . . . . . . . . . . . .In my unit we are good at learning from each other . . . . . . . . . . . . . . . . . . . . .

Integration ProgressI welcome and encourage change in Northern Bank. . . . . . . . . . . . . . . . . . . . .I know where to go for information during change initiatives if I need it . . . . . . . . . .I am comfortable going to this source for information . . . . . . . . . . . . . . . . . . .I know and understand the future development of Northern Bank . . . . . . . . . . . . .I understand the structural changes planned in my location/area . . . . . . . . . . . . . .I feel that the frequency of communication I received met my needs and expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I feel that the quality and detail of communication I received met my needs and expectations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I am highly motivated to make the future changes implemented by Northern Bank a success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I believe the future changes communicated to date will be good for further development of Northern Bank . . . . . . . . . . . . . . . . . . . . . . . . . . .I believe the future changes communicated to date will be good for my career . . . . . .I believe the future changes communicated to date will be good for our customers . . . .

Strongly Disagree

Strongly Agree

Don’t Know

Strongly Disagree

Strongly Agree

Don’t Know

Very Poor

Very Good

Don’t Know

Very Poor

Very Good

Don’t Know

Very Poor

Very Good

Don’t Know

Strongly Disagree

Strongly Agree

Don’t Know

Acquired Company (1-100)

Danske Bank

(1-100)

Benchmark or

Expectation

Gap Significance

Impact on Integration Target Next Steps Responsibility

Employee CommitmentOverall Satisfaction 51 77 69 High MediumMotivation 62 80 71 Medium MediumDiscretionary Effort 48 69 67 High High 60 Find appropriate engagement lever SVP HRIntent to Stay 52 75 72 High High 65 Find appropriate engagement lever SVP HRRecommend a Friend 57 72 70 Medium Low

ImageOverall Image 60 73 67 Medium LowInternal Image 59 77 61 Medium MediumExternal Image 65 70 69 Low Low

Target Senior ManagementPerception of Senior Executives 63 81 75 Medium High 69 Collect more information HR Business PartnerAbility to Make Right Decisions 55 77 74 High MediumAbility to Inform Employees 45 85 69 High High 79 Collect more information HR Business Partner

Target Line ManagerPerception of Line Manager 41 79 69 High MediumLine Manager Skills 49 82 75 High MediumAbility to Inform Employees 44 81 72 High High 75 Reassess scripting for line managers Communications Head, HR Integration LeadCooperationColleague cooperation 66 85 76 High High 72 Team building techniques HR Business PartnerAtmosphere 54 71 67 Medium MediumColleague Interaction 64 69 68 Low HighRespect 65 70 66 Low MediumLearning 69 75 71 Low Low

Integration ProgressOpenness to Change 44 NA 67 High High 63 Discussion forums on change benefits Communications Head, HR Integration LeadInformation Access 56 NA 65 Low MediumUnderstand Changes 52 NA 61 Low HighCommunication Frequency 45 NA 64 Medium High 60 Increase volume of communications Communications Head, HR Integration LeadCommunication Quality 43 NA 66 High High 61 Reassess formal communications Communications Head, HR Integration LeadPersonally Support Changes 55 NA 62 Low MediumChanges Positive for Organization 51 NA 64 Medium High 62 Discussion forums on change benefits HR Business PartnerChanges Positive for Individual 58 NA 63 Low HighChanges Positive for Customers 60 NA 66 Low High

SatisfactionI feel motivated in my job. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I am willing to make an extra effort if necessary . . . . . . . . . . . . . . . . . . . . . . .I would recommend others to seek employment at/in Northern Bank . . . . . . . . . . .

ImageBusiness Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Integration and Migration Project is a High Priority Within My Business Unit . .I feel there are opportunities for me to become involved in the changes in National Irish Bank . . . . . . . . . . . . . . . . . . . . . . . .

Integration ProgressI know where to go for information during change initiatives if I need it . . . . . . . . . .I am comfortable going to this source for information . . . . . . . . . . . . . . . . . . .I feel that the portal delivers information in a way that keeps me up to date . . . . . . . .I know and understand the future development of Northern Bank . . . . . . . . . . . . .I understand the structural changes planned in my location/area . . . . . . . . . . . . . .I am highly motivated to make the future changes implemented by Northern Bank a success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I believe the future changes communicated to date will be good for further development of Northern Bank . . . . . . . . . . . . . . . . . . . . . . . . . . .

Strongly Disagree

Strongly Agree

Strongly Disagree

Strongly Agree

Very Poor

Very Good

Don’t Know

Don’t Know

Don’t Know

Source: Danske Bank; Corporate Leadership Council ; HR Executive Forum research.

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27


Danske Bank Integration Survey1

SatisfactionI feel motivated in my job. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I am willing to make an extra effort if necessary . . . . . . . . . . . . . . . . . . . . . . .I would recommend others to seek employment at/in Northern Bank2 . . . . . . . . . .

ImageNorthern Bank has a good image . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I am proud to tell other people that I work for Northern Bank . . . . . . . . . . . . . .Other people consider Northern Bank to be a good place to work . . . . . . . . . . . .

Senior ManagementYour overall perception of senior management . . . . . . . . . . . . . . . . . . . . . . .Senior management’s ability to make the right decisions . . . . . . . . . . . . . . . . . .Senior management’s ability to inform employees . . . . . . . . . . . . . . . . . . . . . .

Line ManagerYour overall perception of your line manager . . . . . . . . . . . . . . . . . . . . . . . .The professional skills of your line manager . . . . . . . . . . . . . . . . . . . . . . . . .The managerial skills of your line manager . . . . . . . . . . . . . . . . . . . . . . . . . .

CooperationThe professional cooperation with your colleagues . . . . . . . . . . . . . . . . . . . . .The general atmosphere among your colleagues. . . . . . . . . . . . . . . . . . . . . . .In my unit we are good at learning from each other . . . . . . . . . . . . . . . . . . . . .

Integration ProgressI welcome and encourage change in Northern Bank. . . . . . . . . . . . . . . . . . . . .I know where to go for information during change initiatives if I need it . . . . . . . . . .I am comfortable going to this source for information . . . . . . . . . . . . . . . . . . .I know and understand the future development of Northern Bank . . . . . . . . . . . . .I understand the structural changes planned in my location/area . . . . . . . . . . . . . .I feel that the frequency of communication I received met my needs and expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I feel that the quality and detail of communication I received met my needs and expectations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I am highly motivated to make the future changes implemented by Northern Bank a success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I believe the future changes communicated to date will be good for further development of Northern Bank . . . . . . . . . . . . . . . . . . . . . . . . . . .I believe the future changes communicated to date will be good for my career . . . . . .I believe the future changes communicated to date will be good for our customers . . . .

Strongly Disagree

Strongly Agree

Don’t Know

Strongly Disagree

Strongly Agree

Don’t Know

Very Poor

Very Good

Don’t Know

Very Poor

Very Good

Don’t Know

Very Poor

Very Good

Don’t Know

Strongly Disagree

Strongly Agree

Don’t Know

Pinpointing Derailment RisksDanske Bank assesses employee perceptions

of integration efforts to identify integration risks…

1 Find Danske Bank’s Full Integration Risk Survey in the appendix, p. 113.

2 Danske Bank acquired Northern Bank.

…and prioritizes critical performance risks to determine next steps

HR Steering Committee

Communications Head

Integration Head

HR Business Unit Heads

SVP HR

HR M&A Lead

Risk Analysis ResponseHR focuses next-step action items on areas of medium or high gap and high impact on integration performance.High-impact risks, which have broad integration implications, are escalated by HR.

Acquired Company (1-100)

Danske Bank

(1-100)

Benchmark or

Expectation

Gap Significance

Impact on Integration Target Next Steps Responsibility

Employee CommitmentOverall Satisfaction 51 77 69 High MediumMotivation 62 80 71 Medium MediumDiscretionary Effort 48 69 67 High High 60 Find appropriate engagement lever SVP HRIntent to Stay 52 75 72 High High 65 Find appropriate engagement lever SVP HRRecommend a Friend 57 72 70 Medium Low

ImageOverall Image 60 73 67 Medium LowInternal Image 59 77 61 Medium MediumExternal Image 65 70 69 Low Low

Target Senior ManagementPerception of Senior Executives 63 81 75 Medium High 69 Collect more information HR Business PartnerAbility to Make Right Decisions 55 77 74 High MediumAbility to Inform Employees 45 85 69 High High 79 Collect more information HR Business Partner

Target Line ManagerPerception of Line Manager 41 79 69 High MediumLine Manager Skills 49 82 75 High MediumAbility to Inform Employees 44 81 72 High High 75 Reassess scripting for line managers Communications Head, HR Integration LeadCooperationColleague cooperation 66 85 76 High High 72 Team building techniques HR Business PartnerAtmosphere 54 71 67 Medium MediumColleague Interaction 64 69 68 Low HighRespect 65 70 66 Low MediumLearning 69 75 71 Low Low

Integration ProgressOpenness to Change 44 NA 67 High High 63 Discussion forums on change benefits Communications Head, HR Integration LeadInformation Access 56 NA 65 Low MediumUnderstand Changes 52 NA 61 Low HighCommunication Frequency 45 NA 64 Medium High 60 Increase volume of communications Communications Head, HR Integration LeadCommunication Quality 43 NA 66 High High 61 Reassess formal communications Communications Head, HR Integration LeadPersonally Support Changes 55 NA 62 Low MediumChanges Positive for Organization 51 NA 64 Medium High 62 Discussion forums on change benefits HR Business PartnerChanges Positive for Individual 58 NA 63 Low HighChanges Positive for Customers 60 NA 66 Low High

Danske Bank Risk Prioritization and Response Planning

Questions on integration progress indicate the overall effectiveness of early integration efforts and highlight areas where changes to the original integration plan should be considered.


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28


Progress ChecksDanske Bank monitors the progress of efforts to manage integration risks through a monthly temperature check assessment…

Monthly Temperature Check

…while an integration spot-check survey undertaken six months after deal close assesses the effectiveness of efforts to overcome integration risks

Integration Spot Check Survey

SatisfactionI feel motivated in my job. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I am willing to make an extra effort if necessary . . . . . . . . . . . . . . . . . . . . . . .I would recommend others to seek employment at/in Northern Bank . . . . . . . . . . .

Business UnitThe Integration and Migration Project is a High Priority Within My Business Unit . .I feel there are opportunities for me to become involved in the changes in Northern Bank . . . . . . . . . . . . . . . . . . . . . . . .

Integration ProgressI know where to go for information during change initiatives if I need it . . . . . . . . . .I am comfortable going to this source for information . . . . . . . . . . . . . . . . . . .I feel that the portal delivers information in a way that keeps me up to date . . . .I know and understand the future development of Northern Bank . . . . . . . . . . . . .I understand the structural changes planned in my location/area . . . . . . . . . . . . . .I am highly motivated to make the future changes implemented by Northern Bank a success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .I believe the future changes communicated to date will be good for further development of Northern Bank . . . . . . . . . . . . . . . . . . . . . . . . . .

Strongly Disagree

Strongly Agree

Strongly Disagree

Strongly Agree

Strongly Disagree

Strongly Agree

Don’t Know

Don’t Know

Don’t Know

Integration spot-check survey retests previously identified high-impact risks to identify effectiveness and impact of HR actions.

HR Steering Committee

Temperature Check Input• Update on execution of

integration survey next steps• Direct employee feedback on

integration execution• Key messages on acquisition and

integration from exit interviews• Changes in recruitment, attrition,

and sick leave metrics

Objectives• Ensure integration execution is

on track• Update execution strategy based

on employee feedback• Ensure that communication plan

is targeted at employee concerns• Identify and respond to any

escalation in retention risk

New questions based on output from the initial integration survey and the temperature check assessment.


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Satisfaction

Please rate your overall satisfaction as an employee.

1. How satisfied are you overall as an employee? .................................................................................

2. Imagine a place of work that is perfect in all aspects. How close to this ideal do you consider your current job to be? .................................................

Overall assessment

Please indicate to which extent you agree or disagree with the following statements concerning Northern Bank:

3. I feel motivated in my job .........................................................................................................................

4. I always look forward to going to work ...............................................................................................

5. I am willing to make an extra effort if necessary ...............................................................................

6. I believe my colleagues think I do a good job ......................................................................................

7. If the conditions were to change for Northern Bank, I would be open to changes that would affect me .............................................................................

8. I would like to be working for Northern Bank in two years’ time .......................................................................................................................................

9. I rarely look for other jobs ......................................................................................................................

10. I feel that I have many alternative job possibilities if I were to leave Northern Bank ...........................................................................................................

11. I would recommend others to seek employment at/in Northern Bank ..................................................................................................................................

Please indicate to which extent you agree or disagree with the following statements concerning the Danske Bank Group:

12. I would like to be working for the Danske Bank Group in two years’ time ...............................

13. I would recommend others to seek employment with the Group ...............................................

Strongly Disagree

Strongly Disagree

Very Dissatisfied

Very Far From

Strongly Agree

Strongly Agree

Very Satisfied

Could Not Be Closer

Don’t Know

Don’t Know

Don’t Know

Don’t Know

Integration Risk Survey

Supporting Tool


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Image

Please rate the image of Northern Bank. “Image” is the reputation that Northern Bank enjoys in the world around you. Please indicate to which extent you agree or disagree with the following statements:

14. Northern Bank has a good image ..........................................................................................................

15. I am proud to tell other people that I work for Northern Bank ..................................................

16. Other people consider Northern Bank to be a good place to work ...........................................

Senior Management of Northern BankThe following questions concern your rating of the senior management of Northern Bank. “Senior management” is the person/persons who make the strategic decisions for the area. Please rate the overall leader on the basis of your impressions and views—also if you do not have any concrete examples or direct contact with him/her/them.

17. Your overall perception of senior management ................................................................................

18. Senior management’s ability to make the right decisions ................................................................

19. Senior management’s ability to inform employees ............................................................................

20. The ethics of senior management ..........................................................................................................

Line ManagerPlease indicate to which extent you agree or disagree with the following statements concerning the Danske Bank Group:

21. Your overall perception of your line manager ....................................................................................

22. The professional skills of your line manager........................................................................................

23. The managerial skills of your line manager ..........................................................................................

Please indicate to which extent you agree or disagree with the following statements:

24. I have received sufficient information from my line manager since the sale of Northern Bank was announced...............................................................................

25. My line manager keeps me updated with changes as they affect me/my location ................................................................................................................................

26. My line manager is committed and supportive of the implementation of the changes communicated over recent weeks .............................................................................

Strongly Disagree

Very Poor

Very Poor

Strongly Disagree

Strongly Agree

Very Good

Very Good

Strongly Agree

Don’t Know

Don’t Know

Don’t Know

Don’t Know

Full Integration Risk Survey (Continued)

Supporting Tool


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Cooperation

Please rate cooperation at your place of work. Cooperation is a broad term and consists of cooperation within your unit as well as cooperation between your unit and other units in Northern Bank and the Danske Bank Group.

27. The professional cooperation with your colleagues ............................................................

28. The general atmosphere among your colleagues .................................................................

29. Social relations and interaction with your colleagues .........................................................


30. I feel that the colleagues in my unit respect each other .....................................................

31. In my unit we are good at learning from each other ...........................................................

Conditions of Work

Please rate your conditions of work. Consider the aspects that concern your daily work, your salary and benefits, and your professional and personal development.

32. Your job objectives and the contents of your work ............................................................

33. The physical working environment at your place of work .................................................

34. The workload/pressure (if the workload/pressure is a problem give a low rating).....

35. Your salary (including supplements and bonus) compared to what you could get in a similar position elsewhere ............................................................

36. Your benefits (holidays, flexible working hours, pension, clubs and other benefits) compared to what you could get in a similar position elsewhere ....................................

37. Your job security ..........................................................................................................................

38. Your opportunities for professional and personal development ......................................

39. The attention given to your professional and personal development ...............................

Very Poor

Strongly Disagree

Very Poor

Very Good

Strongly Agree

Very Good

Don’t Know

Don’t Know

Don’t Know

Integration Risk Survey (Continued)

Supporting Tool


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Integration Process


40. I welcome and encourage change in Northern Bank ..........................................................

41. I know where to go for information during change initiatives if I need it ......................

42. I am comfortable going to this source for information .......................................................

43. I know and understand the future development of Northern Bank ........................................................................................................................

44. I understand the structural changes planned in my location/area ......................................................................................................................

45. I feel that the frequency of communication I received met my needs and expectations ..............................................................................................

46. I feel that the quality and detail of communication I received met my needs and expectations ............................................................................

47. I am highly motivated to make the future changes implemented by Northern Bank a success ............................................................................

48. I believe the future changes communicated to date will be good for further development of Northern Bank ...............................................................

49. I believe the future changes communicated to date will be good for my career ...............................................................................................

50. I believe the future changes communicated to date will be good for our customers .......................................................................................

Strongly Disagree

Strongly Agree

Don’t Know

Integration Risk Survey (Continued)

Supporting Tool


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33


DERF 06 4926


Title

Assessing Execution RiskABN AMRO’s dashboard monitors integration execution and helps to proactively responds to integration milestone delivery risk

Integration Execution Dashboard*




Delivery Risk

Task Progress

Action Steps


Local HR





Not on Track


Local HR





Not on Track


Corporate HR


Normal Completed



On Track


Local HR


Normal On Track



Actual End:

On Track


Corporate HR


Normal On Track



On Track

* All names and data are fictional.

Source: ABN AMRO Holding N.V. ; Corporate Leadership Council ; HR Executive Forum research.

Milestone TrackingThe HR integration leader tracks task milestones on critical integration tasks and assesses whether the team is on track to meet the predetermined deadlines.

1

Course CorrectionThe HR integration leader formulates corrective action steps where necessary to respond proactively to delivery risk.

3

Risk AlertsThe HR integration leader uses the dashboard to report key integration business risks to the Project Integration Team.

2

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34


M&A Management Tips

Information Capture Due Diligence Analysis Integration Management

Conduct an in-person meeting with your target counterpart as building rapport can expedite information capture.

HR should not only send a questionnaire and document checklist to the target, but also follow up to confirm responses and gather more detail.

In discussions with the target contact, pull up and conduct informal, in-the-moment synthesis to ensure the conversation continues in a productive direction.

Leverage third-party information to fill in gaps and validate previously captured information.

Use several screens when evaluating information including visibility, financial impact, and cultural fit.

Cultural indicators are not “one-size fits all,” therefore invest in identifying indicators that accurately define your organization.

Complete visibility is not always necessary for thorough analysis; press hard for information that will help assessing impact, not just differences.

Analysis templates can help surface risk but can also be valuable reporting tools for communicating those risk areas to the integration team.

Integration execution progress does not equate to quality; therefore, imbed assessment mechanisms in the integration plan that assess both criteria.

Using integration performance “snapshots” shortly after instituting changes can quickly capture areas of underperformance.

Track any HR integration milestones within the context of the cross-functional integration plan.

Request similar integration dashboards from other functions to identify conflicts across integration planning efforts.


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HR Executive Forum

Member Driven Research Agenda and ServicesConstant and Unlimited Support for Member Organizations

First Quarter 2008

WebinarsEmployment Branding—Part I24 January 2008

Developing the next Generation of Leaders24 January 2008

Engaging Managers in Compensation Discussions 12 February 2008

Employment Branding—Part II27 February 2008

Accelerating Recruiter Performance28 February 2008

M&A6 March 2008

Boosting the Effectiveness of Frontline Management 18 March 2008

Design and Execution Center ReleaseEuropean Benefits within Benefits Toolkit26 March 2008

Annual Executive RetreatBuilding the HR-Line Partnership27 March 2008, Chicago

Benchmark MetricsNew Hire BenchmarksMarch 2008

Webinars Developing an Onboarding Program3 April 2008

Attracting Critical Talent 22 April 2008

Growing the Next Generation of Leaders23 April 2008

Succession PlanningMay 13, 2008

Developing an Onboarding (Induction) Program21 May 2008

Maximizing ROI of Total Rewards Packages 4 June 2008

Performance Management17 June 2008

Leadership Development in China 19 June 2008

Design and Execution Center ReleaseUK Europe HR 101 14 May 2008

Annual Executive RetreatsBuilding the HR-Line Partnership 23 April 2008, California7 May 2008, Atlanta

Attracting Critical Talent4 June 2008, London25 June 2008, Virginia

Succession Management 12 June 2008, Chicago

WebinarsSuccession Management16 July 2008

Managing Recruiter Effectiveness20 August 2008

Growing the Next Generation of Leaders24 September 2008

Design and Execution Center ReleaseEuropean HR Benchmarking Data30 July 2008

Line Manager ToolkitJuly 2008

Annual Executive RetreatsGrowing the Next Generation of Leaders 9 September 2008, Toronto

TBD August 2008, Australia

Benchmark MetricsTurnover Cost CalculatorSeptember 2008

WebinarsBuilding HR Line Partnerships15 October 2008

Boosting Effectiveness of Frontline Management19 November 2008

Driving Employee Engagement and Retention4 December 2008

Design and Execution Center ReleaseRecruiting in Europe within Recruiting Toolkit21 October 2008

HR Training ToolkitNovember 2008

Annual Executive RetreatTBD

Second Quarter 2008 Third Quarter 2008 Fourth Quarter 2008

DERF 07-4594

Catalog # HRFR18WHXNX

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HRFR19XP3MB

w w w . h r e x e c u t i v e f o r u m . c o m

HR Executive Forum

Washington, D.C. • Chicago • San Francisco • London • New Delhi • Sydney

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M&A

Business

Transcript of M&A