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What Mergers and Acquisitions Mean for HR

Via Business 2 Community : Over the years, research regarding merger and acquisition failure rates has time and again brought up numbers anywhere from 50 to 80 percent. Failure to achieve profitability has been linked back to a number of different factors, from deficient research to inadequate communication. It seems too common that these deals follow such stringent NDAs that the only people involved are executive leaders, board members, lawyers and brokers; rarely does Human Resources get involved until the potential for failure is already too high. But from our perspective, HR is key to ensuring a smooth transition and integration. That’s why we’re exploring what mergers and acquisitions mean for HR.

Due Diligence

M&A due diligence typically includes months of scrutinizing financial, legal, operational and strategic data, for the purpose of discerning the nature of the transaction. It’s a foundational but high-pressure process, essential for gaining ultimate approval of the merger or acquisition.

But it’s not the whole story. HR should be playing a pivotal role in the due diligence process. It’s their opportunity to analyze information about employee contracts, benefit plans, compensation structures, retirement plans, insurance, liability and compliance – in addition to conducting a thorough analysis of the target company’s culture and workforce.

HR’s due diligence is vital in a merger and acquisition scenario, because at the end of the day, a company’s most important asset is its people. Rarely is it possible to rebuild a merged pair of companies from the ground up in the case that their employees leave, even if all other aspects of the deal were originally promising. HR’s participation can help ensure that melding the two organizations together occurs effectively and efficiently for all stakeholders involved.

Communication

Since a company’s foundation is its people, it’s safe to assume that effective communication is among the key tools in a successful merger or acquisition. From announcement to integration, each company’s leadership must extend a compelling message that demonstrates confidence and competence in the future transition.

HR should have the clearest view of each organization’s culture and dynamic. This enables them to best communicate the rationale and shared vision for the new company, as well as the integration process, timelines, and general information that will help employees cope with the change. The ultimate goal is to minimize the impact on business continuity and employee performance, making the integration as seamless as possible.

Determine the best avenues for communication depends on the specific message, whether it be via email, group or one-to-one meetings, or company newsletters. Be as transparent as possible, and always provide opportunities for feedback from employees. Successful communication should help each company to identify and address potential problems before they escalate.

Integration

Integration is, of course, the true test of how effective HR’s due diligence and communication have been. It’s a high pressure time for every stakeholder involved, but careful planning can ease the process. It’s starts with employee administration, in addition to creating a comprehensive benefits and compensation program and any new policies that will help guide the new company.

It’s also key to strategize practical ways to merge the different management styles of the two companies, as well as team dynamics, employee attitudes, and overall business- and industry-related perspectives that characterize each workforce.

Smooth and seamless integration is one of the number one ways to retain key employees. Mergers and acquisitions frequently mean altering job descriptions, shifting who reports to who, overseeing newly created teams, and managing employee training and development. It also means, unfortunately, that redundant positions may be eliminated, especially in the scenario of combined teams or departments. HR needs to be sensitive to what this means to existing employees.

What Mergers and Acquisitions Mean for HR

When mergers and acquisitions are successful, there is tremendous opportunity for everyone involved. But getting there takes intensive analysis, planning, and execution. There’s no denying that the role of HR in these scenarios is absolutely vital to a smooth transition.

This is true even in the case of outsourced HR management; in fact, a PEO or an HR outsourcing solution has the potential to take a large burden off your shoulders. At Synergy, our on-site HR reps and experienced team of human resources professionals work closely with clients to ensure success.

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