HR in Mergers and Acquisitions
From OrgChart.net
Contents |
Role of HR in M&As
Once a business has decided to merge with another company, one of the most important tasks is the combination of the two workforces into one. This task is primarily carried out by Human Resources (HR), and it is a critical and ongoing process that supports the entire merger or acquisition. HR must lead decision processes, prepare the company for integration and execute the actual reorganization. Throughout the process, they should also focus on building relationships with the new company.
What about M&A tools? In today’s mergers and acquisitions, an org chart is a requirement as it will make the process of workforce planning easier and quicker. A good software solution can help management combine workforces by using visualization and workforce organizational tools. Management can then set new budgets and organize the structure to best meet the new organization’s objectives.
Centralizing the data and personnel files helps in the allocation of resources, mapping out of the future company layout, and 'what if' analysis for possible reductions in force or promotions.
The role of HR during mergers and acquisitions can be separated into three phases:
Pre-deal
- Analyze hierarchies and reporting relationships
- Identify key personnel
- Generate headcounts by department
- Roll up total workforce cost
- Audit the workforce for diversity and other characteristics
- Assess government compliance issues
Integration planning
- Model the workforce to determine optimal structure
- Conduct “what if” scenario planning to visualize merger integration
- Collaborate with department managers to plan resources and structures
- Identify duplicate roles and plan necessary reductions
- Plan optimal management and reporting hierarchies
- Determine pay structure and reward systems
- Determine retirement and benefits structure
- Align workforce costs with departmental budgets
- Determine HR technology
Integration implementation and communication
- Consolidate workforce data into a centralized organizational chart
- Share the integration roadmap with management
- Provide managers with adjusted Spans of Control and budgets
- Publish a view of the new organization to all employees
- Produce documentation of the merger process for auditors
- Capture a history of organizational changes as planning progresses
- Communicate changes in compensation, benefits and reward systems
Post-merger workforce management and optimization
- Merge workforce data into a single system of record
- Ensure the successful assimilation of corporate cultures
- Align resources with corporate initiatives and business goals
- Refine business processes and workflow to reduce operational expenses
- Communicate performance management, talent acquisition and succession planning data.
- Present the unified workforce via a globally accessible, secure, intelligent organizational charting system
An increasingly important critical success factor in M&A is the ability to identify the organization that is not only the most strategic play but also the best organizational fit. Organizations with senior HR leadership are able to analyze the human capital factors during the due diligence process – often leading to better decisions.
Best Practices for Successful M&As
Research shows that most mergers and acquisitions fail to meet the expectations set for them. During a merger or acquisition, the best thing management and HR can aspire to is a smooth workforce integration. How can you combine two separate cultures into one? How can you ensure that employee morale doesn’t suffer?
Below are 5 best practices for a successful merger or acquisition.
- Define the integration strategy – with a clearly defined strategy is clearly, tactics follow easily.
- Focus on priority initiatives – resources should be allocated based on financial impact and timeline requirements.
- Develop a communication plan – establish a two-way dialogue and keep all your constituents informed: shareholders, customers, employees, vendors and the public. Offer the rationale for the deal and timing for key events.
- Establish leadership at all levels – assigning leaders early on will minimize uncertainty and establish accountability
- Manage the integration as a business process – the strategy must be executed in a timely fashion
HR Issues During M&As
In implementing a merger or a corporate acquisition, management often focuses on the financials. But corporate culture issues and the integration of two groups of people are often more important to the overall success. Crucial issues that can be overlooked include:
- Assessing the two corporate cultures : are they dramatically different?
- Defining the cultural aspects of the new company after combining the two separate cultures
- Developing a communication strategy : how will people be informed? Of greatest concern to employees: job security, relocation, new reporting relationships and changes in benefits.
- Retaining and motivating key employees
- Identifying and key leadership positions and tapping individuals to fill those roles
- Helping employees deal with change
