SECTION A
Question 1
The Sprint and Nextel Merger: The first two years
In August 2005, the telecom giants Sprint and Nextel announced plans to merge into
a single company called Sprint Nextel Corp. The merger combined Sprint's brand
awareness with Nextel's large federal market, giving the new company a vast portfolio
of customers while opening up a host of new business opportunities. While the
merger's financial/legal side was straightforward, the task of combining the two
companies into one could not have been more difficult. The two telecoms differed on
almost every dimension. Sprint's culture was traditional and bureaucratic; Nextel's was
entrepreneurial and flexible. The firms had different networks, products, technologies,
and processes; their human resources infrastructures and practices were completely
different, as were their ages, business cycles, and customer bases.
From the start, executives at Sprint Nextel knew that the human element would be
crucial to merger success. Employees at both firms were highly talented, experienced,
and motivated, and it was imperative that they remain with the merged firm and
become committed to its success. To make this happen, Sprint Nextel's HR group took
the early lead in implementing the merger. It was charged with taking a systemic look
at the legacy companies to identify their best practices and to develop what would be
best for employees in the merged firm. Equally important, HR needed to ensure that
employees received timely and accurate information about the merger, especially what
changes to expect and how they would affect their work lives.
HR worked closely with corporate communications on the pre-merger announcement
and initial communications program. It started with an inspiring webcast shown to all
employees featuring the CEOs of both firms. This was followed quickly by scheduled
road shows at which executives visited the opposite firm's facilities to meet employees,
discuss the merger, and answer questions. This personal communication was
supplemented with periodic newsletters, webcasts, and online information updating
employees on the merger's progress. Sprint Nextel's intranet included a "rumor mill"
icon where employees could get correct information on questions related to the
merger. The goal of all of this communication was to present a consistent message
about the merger that was up-to-date, accurate, and addressed employees' major
concerns.
An initial worry, for example, concerned the location of the new firm's corporate
headquarters. Nextel was headquartered in Reston, Virginia, and Sprint in Overland
Park, Kansas. Executives and staff at the two locations were concerned about where
the new head office would be located and whether they would need to endure the
hardship of having to move to a new locality. To quell rumors and reduce disruptions
to employees' lives, Sprint Nextel quickly announced that it would retain both company
headquarters, with executive headquarters being located in Reston and operational
headquarters in Overland Park. Only 78 employees wound up having to relocate.
Another concern had to do with the inevitable workforce reductions that follow major
mergers. Because Sprint and Nextel operated in the same industry, duplications and
redundancies in jobs were common when the two firms merged, especially when their
legacy systems and procedures were integrated during implementation. With HR's
lead, reductions were handled with a good deal of personal care and respect to those
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