Many human resource departments use strategy when implementing initiatives or plans to achieve organizational objectives. As a major strategic initiative, in 2005, Procter & Gamble (P&G) reached a deal to purchase the Gillette Company for approximately $57 billion in stock, thereby strengthening P&G’s reputation as a consumer products giant and surpassing Unilever as the world’s biggest consumer products conglomerate. The merger brought together household brands like P&G’s Crest and Tide and Gillette’s Right Guard and Duracell under the umbrella of a single company.
The move provided P&G with more pricing leverage for its products with large retailers like Walmart and with a stronger negotiating position when buying advertising from media companies.
Even though mergers and acquisitions present opportunities for achieving a competitive advantage, they can also be quite disruptive for the people who work for the companies involved. Careful attention must be paid to integrating distinct companies with sometimes different values, norms, policies, and systems. To ensure success, P&G took several steps to calm employee fears and to integrate Gillette employees into the P&G workforce and culture. For instance, P&G gradually introduced Gillette employees to the P&G performance management and reward systems so that they had time to learn P&G’s business strategy and objectives. In addition, although P&G had a reputation for promoting from within, management decided to replace many lower-performing P&G employees with higher-performing Gillette employees. This, in turn, signaled to employees that P&G valued the quality of the people who came from Gillette. Finally, as evidence of P&G’s merger success, P&G met financial targets in the year following the merger.

Case Discussion Questions 

1. What might have been some arguments for and against changing P&G’s usual promotion pattern to give Gillette employees an advantage?
2. If you were an HR manager in a large company that was acquiring a smaller one, how might you apply lessons from the P&G case?
3. How should a company go about communicating its strategy to new employees?