Issue link: https://www.e-digitaleditions.com/i/276151
[ 10 ] HRO TODAY MAGAZINE | MARCH 2014 Cover Story "My first goal from a cultural standpoint was to understand the different characteristics in the ways both airlines operated," Fiedelman says. "It was critical to isolate the similarities and the differences to ensure a smooth transition. This was not easy due to the many differences between the companies, including their respective sizes and different approaches to business." Fiedelman says she had two constituents to satisfy from an integration standpoint—front-line employees and customers. "We needed to be sure our customer-facing people at the airports and on our planes embraced the merger's key messages and value proposition," she explains. "Customers needed to now that the integration of these two airlines would not affect their experience, which would actually improve." Bad Marriages Picking Valentine's Day to announce the merger might be the needed bit of matrimonial luck. Mergers, whether of the human or the business kind, are tough to hold together. Several research studies conducted over the decades indicate that the rate of failures is at least 50 percent. In more recent surveys, the percentage of companies that failed to achieve the goals of the merger reached 83 percent, according to the Financial Times. Reasons for failed mergers include parties failing to acknowledge shortcomings during the due diligence phase, the potential loss of vital talent post-transaction, and the combination of two cultures that simply fail to mesh. The latter is especially problematic, as the integration depends on creating a joint vision and strategy for the combined company, in addition to the specific ways in which decisions will be reached. "Companies think that integration is largely about connecting IT systems, consolidating the financial and accounting systems, and getting the cash to flow in the right direction, but this is just the beginning," notes Snell. "Mergers tend to fail because the most talented people or key senior executives either leave or don't work together productively to drive profitable business growth. We see this happening all the time." Despite this knowledge, many companies fail to address the eventual integration issues "early enough," he adds. "It's unfortunate that these extermely important HR issues around talent and culture often are not even part of the due diligence. They're an after-thought." This is not the case at the new American Airlines. "We recognized at the outset that we were probably two different cultures, with legacy American more structured and focused on trying to get 100 percent of everything right, whereas US Airways was a bit more relaxed—not laid back but just less formal and quicker at making decisions," Fiedelman says. "Theirs was more of a `keep it simple but run a tight operation' type of enterprise." Cultural differences also were evident in the ways the two carriers operated. American Airlines has long flown to and from much of the planet, while US Airways was more of a domestic airline. US Airways' fleet included many similar types of planes, and it flew into three hub cities. Conversely, American's aircraft types ran the gamut and its network was far more complex, given the sheer size of its fleet and the greater number of worldwide destinations, respectively. "One culture represented simplicity, the other complexity," Fiedelman sums up. The goal for both companies was to maintain legacy US Airways's profitability as a much larger, combined airline. This required building more simplicity into the carriers' network, without impairing the premium customer base that legacy American has long enjoyed. As Fiedelman put it, "We wanted to continue to cater to these customers with a premium offering, without having to spend too much money doing it." Working Toward Synergy The post-merger integration effort entailed the development of several integration teams, each led by specific groups of people from both legacy carriers. These various teams report up to the integration management office, which was formed as an umbrella organization spanning the entire integration. Fiedelman leads the HR integration team, which has been guided to date by an external HR consulting firm to ensure neutrality in all decision-making. "We felt they'd be in the best position as an outsider to represent what was the best of each of the carriers, their best practices," she says. "Also, this also made sense from a resource standpoint, as team members still had their day jobs to attend to." Action steps and milestones were established to keep the team focused on meeting key deliverables. A major challenge during the integration process, which continues, is regulatory compliance. While two airlines that merge can combine their senior executive and other administrative teams as soon as the deal closes, the Federal