Weekly Wrap: A Lesson from AOL – How Not to Do Merger Layoffs

Sometimes, you can glean some great lessons about HR and people management practices from just reading the news.

Take the recent purchase of the Huffington Post by AOL, for example. Say what you will about the HuffPost (and I have) but one thing is clear: Ariana Huffington did a marvelous job building a business she could then turn around and sell to AOL for more than $300 million. Plus, Huffington now has a new role as content czarina for all of AOL’s websites and media properties. Turned out well for everyone, didn’t it?

Not exactly. It turned out great, of course, for Huffington and her minions at the HuffPost, but not so well for a lot of people who were toiling in the trenches creating content for AOL.

Even though AOL bought the Huffington Post and was the doing the acquiring, when layoffs of the overly large and now-combined staff came down, it was AOL people who got the boot, not anyone from the Huffington Post. As The Wall Street Journal reported:

AOL laid off reporters and editors who worked for its travel site and business, personal finance sites Daily Finance and Wallet Pop. It also cut across its news and politics sites, including Politics Daily, according to people familiar with the matter. Employees who were laid off started packing up their belongings on Thursday…

One person familiar with the matter said AOL had yet to decide whether to shutter any sites. None of the 250 employees who joined from the Huffington Post lost a job, this person said.”

Yes, you read that right. When AOL started slashing staff, no one from the Huffington Post got cut.

In most acquisitions, the lion’s share of the layoffs usually take place among the staff of the company that was just purchased. Now, you can point to times when that is not the case – such as when Hearst acquired the San Antonio Express-News and then turned around and closed (and got rid of the newspaper staff) of its own San Antonio Light – but it tends not to be the way it works. Generally speaking, the acquiring company has the upper hand in these sorts of things, so people at the acquiring company usually win out.

But not this time, and it looks like not only did AOL ditch their own people after this acquisition, but they didn’t handle the layoffs very well either. Business Insider gets the inside scoop from a now ex-AOLer who says:

Managers had no clue if anyone on their teams were getting laid off. They were called into a separate meeting as a diversion, and then those being laid off were called into another and axed in a big group setting.

They pulled 20-30 people into a conference room and told them they “Don’t have roles at aol anymore.” [Severance is] 1 week for every year worked.

It’s really quite appalling.

Managers came back after their meeting to find out people on their teams were gone.

Managers weren’t told beforehand or asked who on their team should go if necessary. And nobody knows how the hell they picked who got laid off, as some of them were absolute top performers in some cases 50-75% of some of the most successful teams/sites AOL has.”

Mergers and acquisitions are never easy, and as someone who has been involved in a few, I know first-hand that the process of combining staffs and letting people go is one of the most difficult parts of the process. But having a rational plan for how you are going to do it that makes sense on some level is essential to getting through it with a minimum of angst and upset.

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Sounds like that wasn’t the case at AOL. Yes, the Huffington Post is certainly one of those disruptive media forces you hear about all the time, but did the disruptions from it have to extend to basic HR and people management practices that are sorely needed at the time of an M&A? Did AOL really need to abandon all of that?

You be the judge but like with so many mergers, the true test of whether this deal made sense won’t be known for years to come. This terribly managed layoff process may be just a bump in the road to a big, new combined company, or, it could be a hint of the struggles and difficulties yet to come.

Only time will tell, but one thing is certain – AOL’s track record at these things isn’t very good. Just ask anyone over at Time Warner.

Of course, there’s a lot more in the news this week than layoffs in the wake of the AOL-Huffington Post merger. Here are some other HR and workplace-related items you may have missed. This is TLNT’s weekly round-up of news, trends, and insights from the world of HR and talent management. Yes, I do it so you don’t have to.

  • Succession planning in a family business. Most family businesses don’t last as family businesses much past the second generation or so, and that’s because family businesses all too often get caught up in family dysfunction.  Succession planning is especially difficult, and that’s why it is so nice to see a success story in this regard, as the Cleveland Plain-Dealer points out: “The J.M. Smucker’s Co. board of directors has promoted two fifth-generation members of the Smucker family to high-profile roles in charge of its biggest brands – a move that brings them one rung higher to someday running the $4.61 billion company. If that happens, the 114-year-old Smucker Co. would be among the very few family-run companies to hand over the reins to a fifth generation.”
  • Temp job boom in Minnesota. The growth of temporary jobs in Minnesota is growing, as is the conversion of many of those temp slots to full-time positions, according to the Minneapolis Star-Tribune: ” ‘It’s starting to really pick up,”’said Vicki Brown, a saleswoman for Jeane Thorne Inc. in Minneapolis. ‘If you talk to anybody in the temporary staffing business, they would all say that. Companies are starting to realize that they have done without for so long that they can’t go on like this.’ Officials at Robert Half International agree … Robert Half’s “temp hiring numbers are up … and our permanent placement hires are up. But our conversion numbers are through the roof,” said Robert Half district director Jim Kwapick. “We believe we will see a doubling of temp-to-hire [fees] in 2011.”
  • HR Tech conference — Viva Las Vegas? I’m not going to tout the annual HR Technology conference here (you can see what I said about last year’s conference in Chicago if you want that), but it’s interesting what conference chair Bill Kutik is doing to let people know that the 2011 event is moving to Sin City. He’s made a video (see below) that not only plugs the conference but also makes it clear that this year’s event in Las Vegas will be very different than last year (or any other year for that matter) in Chicago.

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of TLNT.com. A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and workforce.com, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at johnhollon@ere.net, connect with him on LinkedIn, or follow him on Twitter @johnhollon.


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