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7 Steps In Six Months Could Save AOL

February 27, 2003
Related Topics: Mergers and Acquisitions, Featured Article
The most important feature in the success of a merger or acquisition is oftenthe one that goes unnoticed. That is the case at AOL Time Warner. LeslieGaines-Ross, who wrote CEO Capital: A Guide to Building CEO Reputation andCompany Success and is a former Time Warner employee, estimates that 60 to 75percent of AOL’s colossal problems--including its $99 billion loss lastyear--were related to workforce- management issues.

With that in mind, chairman Richard Parsons should start focusing onworkforce management now. In an extensive study of the opinions of the businessmedia, government officials, financial analysts, and investors, Burson-Marsteller found that a company leader has approximately eight months to win thesupport of employees. Parsons has about six months left.

Here are some workforce management steps that Parsons--or anyone in a toughposition like his--should take:

Hold on to your best employees.
    Competitors can sense that this is an ideal time to pick off your bestemployees. These employees want one or more of the following: more money, moreresponsibility, more training, and more flexibility. Ask managers tospecifically determine what they want, and then find a way to provide it. SyedAli Abbas has worked on integrating workforces following both mergers andbreakups and is a member of AT&T’s international human resources team.From his office in India, he says that it’s urgent for AOL Time Warner toidentify the people who are critical to the future success of the company andthose who are not. Speaking for himself and not as a company spokesman, hedeclares, "The former must be retained at practically all costs."

Don’t integrate the company.
    Business gurus spout clichés about "integrating the two cultures" and"bringing the company together." Don’t. "Why would you possibly want tointegrate the cultures?" asks Jim McKay, M&A engagement leader for WatsonWyatt. McKay says that the target markets and business models of, say, HBO, Fortune, and AOL are so different that trying to get employees to act more likeone another is ridiculous.

Decide why your employees should show up at the office in the morning.
   Mary Foley started at AOL as a customer-service rep, and by the time sheretired rich at age 33, she headed up training for 12,000 AOL employees, a jobthat included developing competencies for the company’s senior leadership.Foley says that AOL Time Warner must have an "adrenaline-inspiring mission."It doesn’t have one now. If you can create a clear, concise, bigger-than-lifemission, and focus on nothing but that, she says, employees will rally around itinstead of griping. If you’re not sure whether you’ve succeeded indeveloping this mission, says Roger Stotz, vice president of Maritz Inc., askyourself three questions: Who are we? What do we stand for? What will we fightfor?

Don’t hire a ghostwriter.
    When you update employees by e-mail on company progress, don’t have someoneelse write it for you. If you speak to people personally and honestly, says DaveOpton, CEO of the job site ExecuNet, you are communicating that you care aboutthem.

Listen to bad news.
Gaines-Ross says one of the hardest things that CEOs have to do is to find away to hear what they don’t want to hear. Many of those who work closely withthe boss don’t want to sound negative. The unfortunate result is that the CEOis shielded from what employees are really thinking. Set up an e-mail box(something like to receive employees’ messages ofrestlessness, dissension, and obstacles to success. This will ensure that you’renot insulated from the challenges that they’re facing.

Dwell on the past.
    When a new chairman or CEO arrives, employees think it is some sort ofrepudiation of what has previously gone on, and that everything must now change.Not true. Chris Pierce-Cooke, now a vice president of Right Management, was thehead of human resources for Westpac, an Australian bank, in the early 1990s. Hesays that the bank was having problems at the time--including a run of badloans. Bob Joss was brought in as CEO, and made employees and recruits feelproud of Westpac’s heritage as Australia’s first bank. By celebrating thebest of the past and combing the world for recruits who wanted to be a part ofit, Westpac went from being the fourth-ranked bank in Australia to the second.

Rip down your door. Literally.
    To show your management and employees that your door is open for their input,unscrew it and drag it through the hallway and out the front door. You mightthink this is merely a reputation-building gimmick. It is, and that’s OK.Burson-Marsteller says that 88 percent of decision-makers are more likely torecommend a company as a good place to work if the CEO has a good reputation.Start unhinging the door.

Workforce, March 2003, p. 72 -- Subscribe Now!

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