Managing Human Resources in Mergers & Acquisitions

If you have not been involved in a corporate merger or acquisition, current economic conditions and trends indicate that the chances of you experiencing one is increasing. When a company chooses to merge with or acquire another company to boost financial performance or ensure long-term growth, the role of the Human Resources professional is vital and identified as one of the strongest influences in the ultimate outcome of the process. According to Harvard Business Review, an estimated 70-90% of all mergers and acquisitions fail to achieve their anticipated strategic and financial objectives. “This rate of failure is often attributed to various HR-related factors, such as incompatible cultures, management styles, poor motivation, loss of key talent, lack of communication, diminished trust and uncertainty of long-term goals. “ (Source)

While executives access in fine detail the financial and business aspects of a potential merger or acquisition, the synergies and challenges that will exist on the people side of the business are often examined at a higher level. HR professionals are uniquely challenged in working out the details to ensure the business transaction’s success.

Taking into account the unique set of challenges that mergers and acquisitions bring, there are three key areas in which HR leaders must execute to help ensure a successful transition:

• Get to know the other company. From the very beginning of the process, when due diligence begins, set out to preserve the underlying value of both businesses by considering the synergies of each. Gain an understanding of the other company’s culture, identify potential challenges and develop possible solutions to each. This goes beyond comparing policies and procedures, insurance and benefits. To truly integrate the workforce, one must perceive what can motivate employees to weather this major change for the long haul. The foundation for achieving team cohesiveness lies in creating a synergistic culture.

 

• Focus on retention and engagement. This is another key in positioning the company to succeed for years after the business transaction has settled. Identify and begin the retention process very early for key talent. While retention bonuses and “pay to stay” incentives are very effective, do not rely solely on money. A personal outreach by managers to key talent is often more effective than monetary incentives and goes a long way in creating champions for change. For employees that you will not be able to retain, allow them to leave with dignity by providing them with outsourcing resources that will greatly assist them in moving on to their next opportunity.

 

• Communicate throughout the change. Keeping in good communication with employees unites them and immerses them in the process. You will find that knowledgeable employees become advocates for the change that is taking place and this is invaluable in ensuring long-term success.

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