A promising M&A can quickly turn into a failure if the people processes aren’t managed well. Here’s how HR can help facilitate a smoother journey and why getting the right tech in place can enable a more seamless transition.
Since the pandemic, the number of mergers and acquisitions (M&A) has increased demonstrably, despite the impact on the economy. The low-interest rates in 2020, the proliferation of technology to conduct all elements of business remotely, as well as organisations being ‘deal-ready’ to take advantage of any new opportunities, have meant that companies are chomping at the bit to increase their global presence. In fact, according to Nasdaq’s figures, new projects on its platform are up 32% since the start of the year.
It's all about the people, people!
When it comes to the logistics of an M&A, the role of the people function becomes critical, and the approach taken by the HR leaders can mean a smooth transition versus a tricky one. Cultural incompatibility is probably one of the most common reasons for failure and addressing any people aspect in an M&A should be a process that is started well in advance of any deal signing.
HR leaders need to look at their people strategy from multiple angles – that means examining both the negatives (the cultural elements that will need careful consideration) – and the positives (what aspects of the company values and mission will blend together well). Then it’s about creating a new culture that will enhance the emerging company and help it achieve its strategic business goals, after all, that is the point of any new business relationship.
How can HR help?
When starting the M&A journey, the HR function from each organisation will be collaborating on the people strategies that are needed in order to facilitate a smooth transition. These will include:
Essentially HR’s primary job during an M&A is to collect and disseminate employee data from the new company. This provides a broader picture of the competencies that already exist and what might be needed. It also provides an overview of the risks, obstacles and opportunities, the costs (redundancies, promotions, new hires etc), and where any savings can be made.
Creating a roadmap
Once the data is analysed HR leaders can help prepare a roadmap for the boards of both companies which will outline the expected timeline and provides a cohesive plan to follow during the entire process. This also offers an opportunity to adjust anything that might cause issues further down the line such as the leadership structure, potential lay-offs, and how the cultures are to be combined.
In a merger and acquisition, HR takes on a coaching role that encourages and facilitates collaboration and open communication between the two organisations. This can be via pulse surveys to garner opinions, workshops and forums, and employee focus groups where open discussion can bring to light any concerns that HR can then address.
Merging organisational cultures
Often the lynchpin in the success of an M&A, workplace cultures need to synchronise. For example, is one perhaps sales-driven, and another has a more organic approach? Or is a democratic leadership style favoured in one company while autocratic leadership makes the final decision in another? If so, there needs to be a compromise that works for both sides and won’t see staff quitting due to inter-company conflicts and mistrust. The identity of the organisation, its purpose and values, need to be communicated and encouraged. HR can use different touchpoints to do this, pre- and post-merger so that the new organisation’s key messages, purpose and values are clear.
The role of tech in helping HR tackle M&As
Mergers can frequently see businesses end up with a patchwork of different systems. Implementing a single solution provides a reliable source of truth around employee data, allowing for smoother, more streamlined processes that do not require duplicating data and administrative tasks. One of the most common areas that HR focuses on is the new employee requirements. Understanding the existing workforce and being able to see where the gaps are is critical. Legacy systems can create silos for people teams to navigate so by consolidating HR processes using a single solution, aspects like recruitment and onboarding, contracts and compliance, performance reviews and talent management, payroll and other administration, rewards and benefits, recognition and communications and even L&D and professional development can be effectively managed. Using this data can accurately inform HR on how to best organise employees, particularly around talent pools, retention strategies and any skills gaps that need addressing.
Creating cohesion and clarity
Uniting all these processes with a single solution that the new organisation can implement moving forwards will help consolidate the new merged cultures, bringing clarity, cohesion and consistency to what can be a complex journey. Navigating elements like annual leave, pension allowances, contract nuances, and implementing any new business regulations that might be in place in the new territory if applicable, can be a minefield. Using an HR solution can also provide accurate and up-to-date analysis that will help HR tackle the more complicated aspects of a merger.
If you would like to know more about using a single source platform to help bring together all the HR processes that would help facilitate a smoother transition during a merger or acquisition, then request a demo today.