Merger, Culture, and HRM The Marel and Stork CaseIngiRunarEdvar.docx

Merger, Culture, and HRM: The Marel and Stork Case
IngiRunarEdvardssonandGudrunBertaDanielsdottir
Introduction
This case focuses on the merger of Marel and Stork in 2008 and
its effects on human resources. The two companies had different
organizational structures, in addition to which their
organizational cultures and HRM policies were quite dissimilar.
Moreover, the two companies grew out of different national
contexts. Marel developed in Iceland in an environment
characterized by liberal labor legislation, strong optimism,
informality and short-term orientation. Stork grew out of the
Netherlands, with stricter labor legislation, more formality and
a long-term orientation. How does one integrate such different
traditions? This is the great dilemma facing the managers of the
newly merged company. Which HRM policy should rule in the
merged company? That of Marel or Stork? Or is there a need for
an entirely new HRM policy in the united company? How will
the merger affect recruitment processes, training of personnel,
decision-making and the implementation of incentive schemes?
The integration of the two companies did not start immediately
in May 2008. At the beginning both companies were run
separately. Preparation work for the integration started soon
after the acquisition, but it was delayed due to the financial
crisis in October 2008. The integration work started in late
2009.
Marel is a private global market leader of advanced equipment
and systems for the food processing industry. Marel is proud of
its multinational heritage. The company traces its roots as far
back as the 1930s and across several countries, including
Iceland, Denmark, France, Germany, the Netherlands, United
Kingdom and United States. The Icelandic part of the company,

from which the Marel name originates, was established in
Iceland in 1983 and has grown rapidly on the basis of a dynamic
organizational culture and simple hierarchy. Marel has escalated
its sales and revenues through the acquisition of three rival
companies since 2006, one each in Denmark, the Netherlands
and the UK. The focus of this case will be on the May 2008
acquisition of the Dutch company Stork Food Systems, which
had been part of Stork B.V., a 132-year-old Dutch
conglomerate. Both Marel and Stork were highly successful
companies but the different cultures and national backgrounds
made the merger challenging in many respects. The aim of
Marel is to fully harness the potential synergies from the
integration of the two companies and to present one common
“face” to the customer.
Comparison of the Two Organizational Settings
Both companies operated in the same industry before Marel
acquired Stork in May 2008. The external environment of the
two companies differed due to different regulations, labor
markets and national cultures. Marel’s organization was based
on a decentralized matrix structure where teamwork was
emphasized, while Stork was more centralized with an
organizational structure based on process flow. Both companies
had extensive global sales networks. Marel operated
subsidiaries overseas and also had a network of agents, whereas
Stork operated with a network of agents.
Historical Background of Marel in Iceland
Marel was formally established in Reykjavik, Iceland, on March
17, 1983 by a group of 22 companies, mainly Icelandic fish
processors. The history of Marel goes back even further, to
1977, when two engineers at the University of Iceland began to
explore the possibility of developing and manufacturing scales
intended to improve weighing accuracy and efficiency in the

fish processing industry.1 In the beginning, the company
employed fewer than ten employees. Most came from one of the
founding companies, Framleiðni hf, and from the Faculty of
Science at the University of Iceland. In 1987, the number of
employees had risen to around 50 but was subsequently
decreased to 30 and stayed that way until 1990 when Marel
began to recruit again.2
Early on it was recognized that the Icelandic fish industry
would not suffice as the primary market for the company’s
products. Management therefore looked to Norway, mainly
because the processing procedures there were similar to those
employed in the Icelandic market. In 1983, the first Marel scale
was sold to Norway through an agent and in 1985 a sales office
in Canada was established. At the same time, a new product was
launched—a marine scale that made on-board processing more
accurate. The company also added Russia to the list of countries
it sold to. Until 1992, the marine scale and graders were the
main source of income for Marel but the company was close to
stagnating in terms of growth. In 1992, Marel began selling
flow lines to the fish industry, which revolutionized the
handling of fish products.
In the late 1980s, Marel began to transfer knowledge
accumulated in the fish industry to the poultry industry with the
development of a concept similar to the fish industry flow lines.
The research and development required for this transfer of
knowledge took a few years and in 1995 the company was ready
to establish a subsidiary in the US, which, at the time, was the
largest market for poultry in the world. In 1996, the company
took another major step when it began to sell equipment to the
red meat industry. In 1997, Marel acquired the Danish company
Carnitech A/S, which was comparable in size and turnover to
Marel. The numbers of employees doubled to approximately
250.
Today, Marel’s main product categories include weighing,

grading, batching, portioning, inspection, processing lines and
integrated software solutions. From early on, it was recognized
that innovation and teamwork would be the driving force for
Marel. The organizational matrix structure that the company has
built on through the years has been characterized by a minimum
level of hierarchy combined with a dynamic and creative work
culture.
Historical Background of Stork
The history of Stork spans more than a century. Its formal
founding date is said to be September 4, 1868 when Charles
Theodor Stork moved his textile manufacturing business to
Hengelo to combine the many activities under his own name.
Charles Theodor Stork was an entrepreneur in more than one
sense of the word. He still holds the record as the youngest
entrepreneur in the Netherlands in the Guinness Book of
Records. His ambition was to be a textile manufacturer and at
the age of 13 he borrowed money from his father to buy three
looms and established Weefgoederenfabriek C.T. Stork &
Co.3 In this case, we are focusing on Stork Food Systems,
which was acquired by Marel in 2008.4 There are three major
brands within Stork Food Systems: Stork PMT, Stork Titan and
Townsend.
Stork PMT
Stork became involved in the poultry processing industry back
in 1963. At that time, when the company was expanding its
existing production facilities in Boxmeer, it acquired a local
engineering company called De Wiericke. The acquisition meant
that Stork now owned this company’s activities, which included
poultry processing installations. This was around the time that
the European poultry processing industry was on the brink of
automation, so Stork seized the opportunity and a poultry
division was born. The poultry sector grew rapidly. In 1975, the

subsidiary became independent and was named Stork PMT
(Poultry processing Machinery and Technology). A year later,
Stork PMT decided to expand into the US market, by acquiring
Gainesville Machine Company, which it then renamed Stork
Gamco.
Stork Titan
Stork Titan’s story begins at the end of the 1950s at
Machinefabriek Kruijer in Amsterdam. This is where the so-
called Titan machines were made for the production of
meatballs. Ownership of these machines moved around in a
series of acquisitions and finally ended up at Gebroeders
Nijhuis, which renamed the company Titan International. By
1988, Stork had been involved in the poultry processing
industry for several years and knew that there was more to
poultry processing than killing, eviscerating and portioning. It
acquired Titan International in order to gain an entrance into the
attractive convenience food market.
All the activities of the renamed Stork Titan were transferred to
Boxmeer in the Netherlands. To be able to properly
accommodate Stork Titan there, Stork had to build the necessary
facilities, including a production shop and a fully equipped test
center. The new space was used by Stork Titan to expand its
product range into the current range of forming machines,
coating systems and ovens.
Before the merger, Stork PMT was a global market leader and a
trend-setting company in poultry processing equipment and
systems. Stork Titan is a relatively small player; however, the
company has been very busy marking out a distinct profile for
itself. Stork PMT and Stork Titan share the Boxmeer premises.
Stork PMT also has a second site, in Dongen, where it
manufactures specific parts.

Stork Townsend
Townsend, originally an American company, was founded in
1946 by Ray Townsend, who built the world’s first pork
skinner. The 1950s saw the introduction of the membrane
skinner and the automated pork belly skinner, as well as the
expansion of sales into Europe. In the 1960s, business in Europe
prospered. Offices were opened in the UK and the
Netherlands. The organization developed further and expansion
continued in Europe, with offices being opened in Germany,
France, Italy and Spain. In the 1980s, Townsend expanded its
network of agents into 35 countries in Asia, Africa and Latin
America. In the 1990s, Townsend moved into Russia. Townsend
Engineering was acquired by Stork Food Systems in 2006.
Historical Background to the Case
At the beginning of 2006, Marel in Iceland introduced a two-
phased growth strategy designed to establish the company as the
market leader over a period of 3–5 years. The goal was to first
triple turnover to €500 million through strategic acquisitions. In
phase two, a turnover of €1 billion was to be reached by 2015
through strong organic growth and smaller bolt-on acquisitions.
When the strategy was presented at a meeting of Board of
Directors in February 2006, the market was defined by a large
number of competitors, none of whom had a dominant position.
It was Marel’s view that there would inevitably be consolidation
in the industry, a natural step in the development of any
industry. There were two alternative ways of achieving results:
on the one hand, through economies of scale, and on the other
hand, through specialization and a niche position. It was
decided to aim for growth and a large market share. Economies
of scale were considered necessary in order to be able to
provide customers with the service they need and to be able to
follow them into emerging markets in Eastern Europe, South
America and Asia. Economies of scale and increased market

share were achieved through strategic acquisitions of three
companies: AEW Delford in UK in 2006; Scanvaegt in Denmark
in 2006; and Stork Food Systems in the Netherlands in 2008.
With support from shareholders, Marel completely transformed
the landscape in the industry and the company’s market share
grew from 4 percent to 15 percent over the next four years
(Marel, Advance with Marel, n.d.).
Figure 8.1 Marel expected growth
At the time that the new strategy was announced, the industry
was expected to grow at an average annual rate of 5.6 percent
between 2006 and 2011. The growth of Marel has been
substantially higher than that and is expected to continue to
exceed the growth of the market for the next few years
(see Figure 8.1, Thordarson, 2006).
HRM in Iceland and the Netherlands: Historical Perspective and
Current State
Labour Markets and Regulation
The Netherlands adheres to the so-called “Rhineland” model,
characterized by a regulated market economy with a
comprehensive system of social security. Iceland is more
closely linked to the Nordic welfare model. In Europe, a
corporatist cooperation between the state, employers’
organizations and labor unions is common in order to secure
stable economic growth and harmonization of interests. As well
as being substantial employers in their own right, the European
states take an active part on the labor market in the form of
unemployment benefits or active labor market policies. Another
core feature of European states is the legislative status and
influence of unions. Most European countries have legislation
requiring employers over a certain size to recognize unions for

consultative purposes (Gooderham, Morley, Brewster and
Mayrhofer, 2004).
There are some notable differences between the HRM practices
of Iceland and the Netherlands. First, the union density in
Iceland is far higher than in the Netherlands. In 2012, 82.6
percent of employees in Iceland were union members, compared
to 17.7 percent in the Netherlands (OECD labor force statistics,
2015). However, the bargaining coverage (the numbers of
workers that the unions negotiate for) is far higher in Holland,
or 88 percent (Gooderham et al., 2004). Second, employee
involvement is much more widespread in the Netherlands where
91 percent of firms have works councils present (Dietz,
Hoogendoorn, Kabst and Schmelter, 2004). Such employee
involvement is absent in Iceland (Edvardsson, 1992). Third, the
labor legislation in Iceland is far less restrictive than in the
Netherlands. On a comparable scale ranging from 0–6, the
“strictness of employment protection” in Iceland was 1.73 in
2013, compared to 2.82 in the Netherlands (it was 3.08 until
1998). The “strict-ness of employment protection” rating
measures the procedures and costs involved in dismissing
individuals or groups of workers and the procedures involved in
hiring workers on fixed-term or temporary work agency
contracts.5 Iceland was close to the United Kingdom, which is
among the lowest countries, while Indonesia was the highest in
2008 with a score of 4.24 (OECD labor force statistics, 2015).
The Netherlands is a founding member of the European Union,
while Iceland has belonged to the European Economic Area
since 1994. Many aspects of HRM are affected by the Social
Chapter of the Maastricht Treaty, such as working hours,
working conditions, consultation, equal opportunity, social
security, dismissals, employee representation, etc. (European
Union, 2010).
The labor markets in Iceland and the Netherlands function in

many respects quite well. The employment rate, or the
percentage of people between the ages of 15–64 who are
employed, was 84.1 percent in Iceland in 2015 and 74.1 percent
in Holland. Both are close to the high end of the spectrum in an
international context. Similarly, the unemployment rate was
rather low in Iceland and the Netherlands in 2015, or 4.1
percent and 6.8 percent respectively, and it grew somewhat after
the financial crisis in late 2008. Part-time employment is far
higher in the Netherlands than in Iceland, 57.9 percent
compared to 33.6 percent (OECD labor statistics, 2015).
National HRM Practices
In general, HRM practices in Icelandic and Dutch firms are
similar, according to the 2003 Cranet survey (see Table 8.1).
The table reveals that the majority of firms in the survey have a
written HRM policy, and HRM managers sit on the board of
management and are involved in the development of corporate
strategy. The only difference is that performance-related pay is
far less common in Icelandic firms than in other European
firms.
National Culture
National culture, or the “software of the mind” (Hofstede,
2003), affects how people relate to each other, their sense of
power and equality, how they feel about competition or
cooperation, and so on. National culture has, then, a direct
impact on organizational cultures and management. Hofstede
(2003) has identified four dimensions of culture, and his
standardized measurement shows that the Netherlands and the
Scandinavian countries scores similarly on these dimensions;
they score low on “power distance”, they score quite high on
“indi-vidualism”, low on “masculinity” and moderate or low on
“uncertainty avoidance”.

Iceland was not included in Hofstede’s study, but Eyjolfsdottir
and Smith (1997) did use his concepts in their analysis of
Icelandic management culture. They conclude that Icelandic
culture is characterized by egalitarianism, low power distance,
individualism, femininity, and low uncertainty avoidance.
Moreover, they argue that Icelanders have developed a strong
optimism as a reaction to the adverse natural conditions of the
country; they have a positive outlook, which is reflected in their
happiness and lack of reliance on rules in decision-making.
Eyjolfsdottir and Smith also mention the “action-poet”
mentality in Iceland, a mixture of a strong intuitive or artistic
inclination and a tendency to be independent, stubborn and
action-oriented.
Table 8.1 HRM practices in firms in Britain, Denmark, the
Netherlands, and Iceland in 2003 (%)
Britain
Denmark
Netherlands
Iceland
Written HR policy
61.2
68.0
59.4
69.3
HR managers on the main board of management
46.0
53.0
61.0
58.0
HR managers involved in development of corporate strategy …
• from the outset
48.7

52.3
48.3
42.6
• through consultation
30.5
28.7
36.6
28.7
• on implementation
9.0
9.5
11.1
11.7
• not consulted
11.8
9.5
4.0
17.0
Performance-related pay
Management
45
58
45
21
Professional/technical
37
42
42
15
Clerical
32
32

35
11
Manual
25
33
36
18
Source: Bjarnadottir, Oddson, Bragason, Jonsdottir, and
Bjarnason, 2004
From the above, it is clear that the Icelandic and Dutch cultures
resemble each other in many respects. The main differences are
probably related to the unique features of the Icelandic culture,
namely the strong optimism, the “action-poet” and “fisherman”
mentalities, the focus on entrepreneurship, informality in
communications and short-term orientation.
The Operational Context at Marel
Marel is today the global provider of advanced equipment,
systems and services to the fish, meat, poultry and further
processing industries. One of the cornerstones of Marel’s
success is its devotion to innovation and research and
development. The company invests an average of 5–7 percent of
revenues annually, approximately €25 million, in R&D (Marel,
n.d., Advance with Marel).
When Marel in Iceland was established in 1983, a divisional
structure was put in place. It wasn’t until 1997 that the matrix
structure, which is still in place (until the new organizational
structure that has been decided upon is implemented), was
introduced. On the basis of socio-technical theories such as
organizational theory, Stork Food Systems has been transformed
from a functional organization into a process-oriented
organization, using so-called Entire Task Groups. At Stork
PMT, this transformation took place from 1988 to 1991.

Both organizations have increased in size and complexity over
the years. After the acquisition of Stork Food Systems, the
organizational structure of Marel needed to be changed. The
strategic decision was made to follow the market and to base the
new structure on the four industry segments that the company
specializes in – fish, meat, poultry and further processing. The
new structure is based on the model of a network organization
where a Board of Management has the highest authority. The
Board of Management constituted three members after the
merger: Theo Hoen, CEO; Erik Kaman, CFO; and Sigsteinn
Gretarsson, Managing Director of Marel ehf in Iceland. In 2013
a change was made in the management of Marel and Arni Oddur
Thordarson became CEO (Marel n.d.a).
The HRM Context at Marel and Stork
From the beginning, the CEO and Managing Directors of Marel
in Iceland took care of all HRM issues related to their
respective divisions. In early 1999, one of the directors took on
the role of HRM Manager but within a few months, Marel
recruited an HRM Manager from outside the organization. It
was not until then that Marel introduced a formal HRM strategy,
appraisal interviews and formal recruitment procedures.6 It can
be said that until 1999, Marel defined HRM issues as hiring and
firing, salary processing and vacation scheduling.
Human Resources
The employees of Marel have been steadily growing in number
since 1990, especially following the three acquisitions since
2006. Today, the “new” Marel employs approximately 4,000
employees worldwide, the majority of whom are located in
Europe (see Figure 8.2).7
HRM Policy

The first formal HRM policy at Marel Iceland was introduced in
late 1999. At present, its human resource mission states: “We
employ competent employees and provide a supportive,
ambitious work environment that motivates initiative and
encourages employees to make the company vision their own.”
Figure 8.2 Number of Marel employees 2005–2009
Marel’s strategic HRM goals and overall objectives are the
following:
· We recruit competent employees, provide excellent training
and offer opportunities for further education and job
development.
· We maintain excellent cooperation and teamwork throughout
the company.
· We respect different cultures while strengthening shared
values.
· We maintain a good information flow throughout the
organization, ensuring open and honest communication.
· We enable employees to have a healthy work-life balance.
· We support a creative and innovative work environment.
· Our leaders walk the talk, lead by example and are capable of
guiding employees in fulfilling the corporate vision.
The objectives are very descriptive of the company culture and
management style at Marel.

At Stork, a formal HRM mission statement was not defined. The
company defined a set of values and issued a brochure called
“Rules of conduct” which described the ethical principles that
form the basis for the business conduct of all units of the
company and employees. The values were: openness, trust,
freedom, involvement, equality, knowledge, pleasure, dynamics
and respect.
Social benefits for the employees of Stork were a precious topic
for the founder, Charles Stork. In the nineteenth century, he put
a social benefit structure in place. At the beginning, the focus
was on benefits for industrial accidents but was soon expanded
to include a cooperative society for the purchase of groceries, a
health care fund, a widows’ fund and a pension fund. These
funds were financed by contributions from the members of the
association and the company. Today, the Stork pension is still
in operation and is one the oldest pension funds in the world
(Stork, n.d., Social Benefits).
Organizational Culture
From the beginning, Marel has been defi ned as an
entrepreneurial organization. This is reflected in different
aspects of its organizational culture, such as risk-taking. A lot
of time and capital is spent on research and development
without knowing the return on investment (ROI). The
acquisitions of companies that are equal or even larger in size
can also be considered to be an indication of risk-taking.
The entrepreneurial nature is also reflected in another aspect of
the organization culture, namely in the devotion to innovation
that has made Marel into a global leader in its field. The
structure implemented in the manufacturing process in 1997 was
very innovative; it was based on dividing manufacturing into
individual production cells. This structure is still in place at
company headquarters in Gardabaer, Iceland. Still another

relevant feature of Marel’s culture is its competitive
aggressiveness, manifested among other things in the growth
strategy presented in 2006 and the acquisitions that followed
after a careful analysis of about 130 companies. Finally,
autonomy is highly encouraged at Marel and managers have the
freedom to take independent decisions. This feature is
especially encouraged among teams developing new solutions in
cooperation with customers (Ólafsson and Hermannsdóttir,
2009).
Marel’s employees say that the workplace atmosphere is
dynamic and that they are encouraged to take the initiative and
develop their ideas. In September 1999, a new project was
launched at Stork Food Systems – “Chaos, Dialogue and
Dolphin”. The project was prompted by the feeling that
although ten years of organizational restructuring in line with
socio-technical theory had brought about a huge numbers of
improvements, there was still a lack of initiative among
employees. It was also felt that employees were too overloaded
with day-to-day work and that management did not delegate
enough, was too controlling, did not allow people to make
mistakes and could not let go at busy times. In other words, a
lot had been achieved in terms of structure but the corporate
culture had not kept pace.
Socio-technical theory had brought about changes to the
external aspects of the organization (structures, tasks and
competences). The aim of the new project was therefore to
focus on the internal aspects – people and the organization –
and thus to make up for the inadequacies of the socio-technical
theory introduced and to improve inefficient behavioral
patterns.
This organizational modernization was ushered in using chaos
theory as the basis and dialogue as the means. The aim with
these two methods was to develop the culture and to obtain a

joint reference framework within which ideas are given a
greater chance of success, and initiative and creativity are put
to better use. The organizational modernization process
consisted of workshops in chaos theory, dialogue and dolphin
training, and vision conferences. The ultimate aim was to
stimulate a transformation of the organization, a fundamental
modernization.
In short, over the past few years, Stork Food Systems invested a
lot of time and energy in the process-oriented design of the
departments on the basis of profit-center sectors.
The Outcomes for the Comparison Case
On HRM matters it was decided by the managers to retain
management development and performance appraisal in the two
companies, while other aspects of HRM should be integrated.
The HRM managers of Marel – Friso Luimes, HRM Manager in
Boxmeer, and Hrund Rudolfsdóttir, Corporate Director of
Human Resources – are struggling with this formidable
challenge. They have drawn up the HRM house in four layers to
explain the practical dilemma they are facing and what is
needed to complete each layer and move up to the next level.
Using a house as a metaphor helps in prioritizing activities and
providing internal and external stakeholders a clear overview of
what needs to be done and what should be avoided (Figure 8.3).
According to the HRM managers of Marel, the foundation is the
most important layer but a global market leader like Marel
needs the complete house. Both Marel and Stork had moved up
the different layers of the HRM house and were close to
reaching the top layer when the companies were merged into
one. With the merger, the “new” company found itself back in
the foundation of the HRM house. Even though they needed to
start building the foundation again, the HRM managers decided
that the company would keep two important features of the

previous HRM houses, namely management development and
performance appraisal.
Figure 8.3 Prioritizing activities at Marel
The HRM house for the merged company has been defined and
in general is as follows:
Foundation: Personnel Administration & Secretariat
· General support of HRM
· Personnel administration
· Time registration
· Organization of education programs
· Personnel care
· Requests and needs of subsidiaries
· HRM reporting (employee statistics, such as number of
employees, temporary workers, sickness, etc.)
· Transition process
· Orientation
First layer: Compensation & Benefits
· Salary administration
· Salary house, reward systems and policies

· Pension
· Health insurance
· Other compensation and benefits issues
Second layer: Personnel Instruments
· Recruitment (including: trainees, internship, graduates) and
labor market communications
· Purchasing temps together with purchasing department
· Personnel care (individual issues, jubilee)
· Processing appraisal policies (implementation of DEBbie)
· Competitive salary house
· Processing internal transitions
· Career and management development policy, including
education policy
· Exit procedures of employees
· Health and illness management
· Contacts and meetings with working councils and unions
· Internal communications (staff newsletter, intranet, etc.)
· Top layer: Organizational development
· HRM is a part of the management and process teams
(innovation, sales, service and manufacturing)

· Training role vis-á-vis management
· Facilitator of team development
· Organizational development process (based on time, quality
and cost); culture change and development
As can be seen from above, the practical challenges for HRM
are enormous and it will undoubtedly take a few years for Marel
to get to the top layer. The work has already begun and good
progress has been made. HRM is optimistic that good results
will be achieved within the next 36 months.

Merger, Culture, and HRM The Marel and Stork CaseIngiRunarEdvar.docx

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