Magazine article Personnel Journal

HR Guides Restructuring

Magazine article Personnel Journal

HR Guides Restructuring

Article excerpt

On October 1992, Beheads, Maryland-based Marriott Corp. made a surprising announcement. By the end of 19993, the company would reorganize itself into two separate, publicly traded entities. Marriott's thriving hotel-management division would become Marriott International, a company that would concentrate on operating hotels, resorts and food services. Marriott's debt-laden real-estate operations would become Host Marriott, a company that would retain ownership of the company's lodging properties, retirement communities and airport and toll-road concessions.

There was a time when making such a radical change would have been a nightmare for the company's top human resources executive. This, however, wasn't the case for Clifford Ehrlich, who is senior vice president of human resources for Marriot International. As a member of the hotel giant's executive staff and finance committee, Ehrlich was involved in the first meeting in June 1992 in which executives discussed splitting the company. "HR has always taken on a high level of importance at Marriott because as a service organization, employees largely are our product," says Ehrlich, who is No. 98 on the PERSONNEL JOURNAL 100 list.

Once management decided to move ahead with the reorganization, the planning process began immediately. Ehrlich met with his most senior HR staff members to develop a preliminary list of issues the department had to address to ensure that the reorganization was "seamless" for employees. As Ehrlich recalls, performing existing HR responsibilities while effectively building the architecture for two new companies that would be created with the stroke of the pen at midnight on October 81 1993, was a difficult process. Despite the extra work involved, Ehrlich hired no new staff members and relied on consultants to resolve one issue--employee and executive stock plans.

The creation of an HR task force helped Ehrlich and his senior staff members address the 13-page list of projects that had to be completed before the reorganization. The list included some issues that were relatively easy to resolve, such as disability plans. Marriott is a self-insured company. The HR staff had to determine whether or not the small employee population of Host Marriott was suitable for self-insurance. Other issues, such as Social Security taxes, were more difficult to resolve. Because the new companies were being created toward the end of the year, the HR staff had to determine if employees who had reached their Social Security limit had to continue taking out taxes. …

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