Merger & Acquisition Decision with Org Charts

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The Role of Org Charts in Mergers and Acquisitions

A Vital Decision-Support Tool

The outcomes of mergers and acquisitions (M&A) depend on skillful planning and execution: successfully blending the product lines, physical assets, and financial and human resources of two or more companies into a coherent whole that delivers value to customers.

The integration of separate workforces is a major challenge-one where mistakes, misjudgments, or poor preparation can trigger unexpected expenses. These costs and risks can be substantially mitigated with the help of a critical planning and execution resource: org charts. During all M&A phases, this seemingly routine business tool can contribute high-level value beyond what you might expect.

Pre-Deal Analysis

Organization charts quickly and readily bring to light the structural strengths and weaknesses of candidate organizations. Practically at a glance, M&A planners can see where resources from one company can be harnessed to fill gaps in another, without resorting to new hires. Also clearly evident are areas of overlap and duplication-pointing to separation costs that must be balanced against possible staff reduction savings. What's more, through studying reporting relationships and other hierarchical factors depicted in org charts, analysts can glean key intelligence about similarities and differences in corporate culture and management styles.

On a more granular level, org charts enable M&A planners to:

  • Quickly identify key personnel
  • Generate headcounts for each department
  • Project and calculate workforce costs on both the recruitment and reduction sides
  • Identify areas where specific skills and personnel may be needed
  • Uncover key data for use in assessing and managing risk

Integration Planning

A sound workforce structure needs to be developed for the combined company, by exploring, evaluating, discarding, and refining various alternative plans. Once again, the best, fastest, and most efficient tool for this process is highly capable and flexible org chart software.

With easy drag-and-drop features, org charts let M&A planners quickly create and compare a range of structural options and scenarios. They can:

  • Mock up alternative hierarchies combining new and existing personnel
  • Perform "what if" analysis to project and compare costs
  • Identify areas for employee reductions
  • Make pay-scale adjustments
  • Work out sound resource allocation strategies
  • Plan for personnel promotions

Finalizing and Communicating the Plan

After an optimal company organization plan has been mapped out, it can be circulated to employees, as either a complete org chart for the entire enterprise, or selected views distributed to various departments. Access levels can be easily tailored so employees are shown just the data appropriate to their respective positions and roles. Similarly, org chart editing privileges can be reserved for senior managers only.

By distributing org charts to a wide internal company audience, M&A planners can:

  • Publicize the new high-level framework easily and efficiently
  • Foster employee buy-in and inclusiveness
  • Provide instant, at-a-glance awareness of the new hierarchy and chain of command
  • Instantly communicate plan revisions and adjustments to keep everyone in the loop
  • Create a visual history of the organization's structure, tracking the evolution and changes throughout the M&A process

M&A Implementation

Once the M&A agreement is in place, management must execute the plan and successfully combine separate workforces, each with hundreds or thousands of employees.

Workforce transition on this scale can be daunting. Budgets and pay scales need to be set and approved, personnel information compiled and updated, and work groups organized. All this requires considerable time, expertise, and coordination. As with any large organizational undertaking, the devil is truly in the details. Errors can be easily made, data and people can fall through the cracks, and confusion take hold.

A good org charting solution will get you through an M&A implementation in the shortest possible time, with maximum efficiency and minimum stress. Org chart software allows you to centralize all your HR data, procedures, and decision processes. This creates orderly structures and workflows, enabling management and HR professionals to efficiently:

  • Develop budgets and apportion resources
  • Merge, standardize, and update personnel profiles
  • Work up and analyze "what if" future scenarios
  • Visualize and evaluate company operations
  • Make key decisions about employee promotions and separations

Post-Merger Workforce Management and Optimization

As the workforce transition reaches completion, companies can continue to use org charts to track key HR metrics, set targets, assess performance, outline future goals, and plan for succession.

On an ongoing basis, org charts help both managers and employees:

  • Become familiar with everyone in the company without having to personally query people about their identities and roles
  • Understand reporting relationships within each department
  • See the entire company structure at a glance
  • Make rapid and informed decisions
  • Manage workforce talent and monitor employee performance
  • Model alternative budgetary and structural projections

See also

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