Case: Molson Coors and Acquisitions

1. Using “HR Planning Notebook 12.2,” what do you think were the reasons for the acquisitions
in both cases?
2. Develop the HR plans under these two scenarios: a full integration of Kaiser, the brewery in
Brazil, and the hands-off acquisition of Creemore Springs.
Merger Goals Kaiser Merger Creemore
Springs Merger
Access to new markets Yes No
Growth in market share Yes Yes
Access to new products Yes Yes
Access to management talent No No
Enhanced reputation No Yes
Reduction in operating expenses No No
Access to distribution channels No Yes
Access to new technologies No No
Reduction in number of competitors Yes Yes
Access to new brands Yes Yes

HR Plan Kaiser Merger Creemore Springs Merger

Contingency  Merger coordinator should be  Merger coordination needs to be
Plan Brazilian. shared by Creemore and Molson.
 Contingency plan should outline  Plan should outline the chain of
the chain of command, command, communication
communication methods, methods, procedures, and
procedures, and negotiation skills negotiation skills training.
training.

HR Due  Collective agreements  Collective agreements

Diligence  Employment contracts  Employment contracts
 Executive compensation contracts  Executive compensation contracts
 Benefit plans and policies  Benefit plans and policies
 Incentive, commission, and bonus  Incentive, commission, and bonus
plans plans
 Pension plans and retirement  Pension plans and retirement
policies policies
 WSIB statements, claims,  WSIB statements, claims,
assessments, experience rating assessments, experience rating data
data  Employment policies
 Employment policies  Complaints—employment equity,
 Complaints—employment equity, health and safety, wrongful
health and safety, wrongful dismissal, unfair labour practices,
dismissal, unfair labour practices, certification and grievances
certification and grievances
Transition Team  Appoint a transition team to deal  Appoint a transition team to deal
with: with:
1. Urgency—Merger needs to be 1. Urgency—Merger needs to be swift
swift and managed, which is and managed.
difficult with excessive levels of 2. Information gaps—Need to bring
Brazilian bureaucracy. Molson up to speed on the
2. Information gaps—Language challenges of operating a
issues in Brazil would require microbrewery like Creemore.
interpreters. 3. Stress—Ensure that local experts
3. Stress—Cultural issues need to be with microbrewery skills are
managed to minimize the retained, which will minimize the
paternalistic fear mongering by stress of the transition; it should
Molson management; potential appear like a status quo strategy,
for cultural clash is significant that operations will run normally.
because the merging companies  HR policy review might uncover
come from two different cultures complementary, duplicated, or
and countries; also need to contradictory HR policies for the
ensure that locals are not merger companies.
terminated; unemployment
might be high and jobs might be
more difficult to find.
 HR policy review might uncover
complementary, duplicated, or
contradictory HR policies for the
merger companies.

Selection  The two most critical issues for  The two most critical issues for HR
HR are related to: are related to:
1. Retention—Need to 1. Retention—Need to determine the
determine the employees employees who add value to the
who add value to the company; specialty breweries have
company; this is difficult more specialized tasks and so most
unless there are Brazilian employees should be retained
managers involved who because their positions are not
know their employees. easily filled.
2. Reduction—Need to 2. Reduction—Need d to determine
determine who can be who can be terminated if there are
terminated; this is difficult any administrative duplications.
unless there are Brazilian
managers involved who
know their employees.

Compensation  Merge compensation systems?—  Merge compensation systems?—It

Probably not a good idea because is quite possible that Creemore
of the country differences in wage would merge its compensation
scales; just accept these system with Molson’s but only if
 differences and maintain the Creemore is not unionized;
status quo. making changes to a collective
 Adopt a totally new compensation agreement initially might be
system?—This is a possibility but difficult, especially if there is any
would require a significant perceived unfairness to
amount of time to generate a compensation and job stability.
more equitable system.  Adopt a totally new compensation
 Create a new compensation system?—This might be a good
system?—This is a possibility but idea but would require Molson’s
would require a significant and Creemore to negotiate a brand
amount of time to generate a new collective agreement, which
more equitable system. could be time-consuming and
 Status quo—Keep the costly.
compensation the same so that it  Create a new compensation
reflects the local practices of system?—This might be a good
compensation that are linked to idea but would require Molson’s
Brazilian employment; this is and Creemore to negotiate a brand
probably the best approach to new collective agreement, which
compensation assuming that could be time-consuming and
Kaiser does not have a unionized costly
environment; also this will  Status quo—Probably not a good
prevent any issues with idea since compensation would not
constructive dismissal where the reflect the new status of managers
new compensation package is within the merged company; also
materially different. All new this will prevent any issues with
benefits must be weighed out with constructive dismissal where the
a cost-benefit rationalization. new compensation package is
materially different; all new
benefits must be weighed out with
a cost-benefit rationalization.

Performance  Not knowing—Remedied by more  Not knowing—Remedied by more

communication; this is difficult communication; at Creemore, this
especially with language issues should not be an issue.
to determine.  Not able—The solution is training;
 Not able—The solution is displaced individuals would
training; this is more easily readily identify their need for
remedied for individuals who further training.
were displaced in the merger  Not willing—A strong case for
who need to be trained. performance management through
 Not willing—A strong case for feedback and incentives; this
performance management would not be an issue at Creemore
through feedback and incentives; since the business essentially
this is difficult to determine with remained intact and there
language issues as it reflects shouldn’t be issues of non-
intended non-compliance. compliance.
 Training and  Coaching and counselling—  Coaching and counselling—This is
Development Managers in Brazil would not probably not an issue at Creemore
typically want this type of since there were very few
training and would expect the individuals who were displaced.
employees to change on their  Stress management—This is
own. probably not an issue at Creemore
 Stress management—Managers since there were very few
would also not recognize the individuals who were displaced.
stress of employees.

Labour Relations  As above, Kaiser may have a  Creemore is probably not a

union in Brazil, but it is highly unionized environment and so
unlikely. compliance to a collective
 If a union exists, it will need to be agreement should not constrain
involved. relationships between management
and employees.
 If Creemore does have a union, it
will need to have active
participation with the transition
team.

Case: Outsourcing at Texas Instruments Canada

1. If you were Dawn, what decision would you make and why?
2. What are the advantages and disadvantages of the decision you made?

This is a case about managing the outsourcing decision. Dawn is advised to terminate the existing
agreement with the external provider and search for a new one. It is the most cost-effective
solution. Dawn should address the fact that perhaps there was no monitoring in place, that the
contract was poorly negotiated, and that selecting the vendor was done too carelessly and quickly
to result in a suitable outsourcer. Three main areas must be managed:
1. Selecting the vendor.
2. Negotiating the contract.
3. Monitoring the arrangement.

Selecting the Vendor

• Once outsourcing has been selected, the organization needs to do the following:
• Inform the staff of the affected function.
• Prepare a request for proposal (RFP).
• Invite internal and external bids.
• Establish a team to evaluate these bids.

Negotiating the Contract

• Customize and negotiate the outsourcing contract.
• Set performance standards or penalty clauses for the outsourcing company.
• Establish benchmarks for service expectations.
 – Response time.
– Response cost.
– Customer satisfaction ratings.

Monitoring the Arrangement

• Most frequent causes of outsourcing problems are:
– Poor service definition.
– Weak management processes.
• Establish a relationship to ensure the outsourcer acts in the best interests for the
organization, and has relevant knowledge of the organization.
• Check outsourcing company’s references.
• Demand frequent and accurate reportings.
• Conduct internal and external client satisfaction surveys.

Six Major Reasons to Use Outsourcing:

1. Financial savings
2. Strategic focus
3. Access to advanced technology
4. Improved service levels
5. Access to specialized expertise
6. Organizational politics

Some Questions to Consider:

• Are the anticipated benefits realized?
• What are the risks to service levels?
• What is the effect on employee morale?
• Does outsourcing reduce the value of the organization?