HR Strategy


4 Ways To Use HR To Increase The Success Of Mergers And Acquisitions

THE HUMAN FACTOR CAN MAKE OR BREAK A DEAL, ESPECIALLY IN TODAY’S HYPER COMPETITIVE TALENT MARKETS. HERE ARE FOUR WAYS ANY COMPANY CAN USE HR TO ENABLE AND ENHANCE DEAL VALUES AND SUCCESS.

Mergers and acquisitions can be some of the most efficient means for firms to grow market share and marketing dominance, ensuring the continued health and profitability of the end firm. However, when HR issues are not taken appropriately into account, talent and culture challenges can derail well-meant mergers. As a result, it is important for firms with a merger or acquisition in their future to make a special effort to turn HR factors into an advantage from the earliest possible stages of the M&A process. In the paragraphs, four ways this can be accomplished will be discussed.

BRING HR INTO THE PROCESS IN THE PRE-PLANNING STAGE
All too often, HR teams are brought into the M&A process in the later stages of the deal. While companies may have a clear picture of the products and services they’re acquiring, firms are often in the dark about the true value (or cost) of the other organization’s people infrastructure. This can lead to costly personnel issues and missed opportunities with key talent.

Thus, rather than addressing HR as an afterthought on the deal, HR leaders and key personnel managers should be brought into the M&A process as early as possible. According to the International Labor Organization (ILO), the best result come when HR is involved at the pre-planning stage, so that critical HR issues can be brought up, discussed, and included in all forward-moving elements of the deal.

USE ANALYTICS AND DIAGNOSTIC TOOLS TO ENHANCE TALENT MANAGEMENT PROCESSES
Along with bringing HR teams into the process in the very earliest stages, it is also important for the success of any deal to allow (and encourage) the use of analytics and diagnostic tools in the talent management and integration process. It’s easy to get excited about a new deal and miss details that data would highlight. It’s also easy to be unnecessarily fearful of issues that data would reveal to be unimportant. Using the data available helps strip out inaccuracies for HR teams on both sides and can help uncover new opportunities in the deal itself.

According to Deloitte, data and analytics tools can help HR be a leader in quantifying integration risks, capturing integration costs, and identifying key employee populations. Further, dashboards and other metrics displaying can be used by HR teams to help keep the whole integration team on the same page as the deal unfolds, flagging morale dips, turnover spikes, or places where people cost overruns are occurring. In this way, HR can help prevent deals from going sideways at critical junctures and keep the new, united organization moving forward.

MAKE AN INTENTIONAL PLAN FOR CULTURAL INTEGRATION
In bringing the new organization together, there should be an intentional plan for cultural integration. Far too many M&A results are disappointing because the two cultures never truly come together. Since a successful cultural integration can not be relied on to happen organically, it needs to be guided, led, and continually monitored.

The ILO recommends that companies appoint an integration champion who is specifically tasked with ensuring a smooth cultural union between the two organizations. Deloitte further notes that even in the case where a smaller company is being acquired, or a new acquisition is being treated as a somewhat siloed or “bolt on” entity, cultural integration does need to occur. Planning for this early on, announcing at the same time the deal itself is formalized, and giving it critical attention in the first 100 days can help firms successfully navigate the new union in its early stages.

This will be an especially high stakes point of collaboration between HR groups from the uniting companies. Mergers would do well to appoint champions on both sides, according to Deloitte, and ensure that these champions work well together, particularly for same-sized firms merging or where cross-border integrations are being attempted. In this way, points of difference between the two company’s cultures can be identified and blended together from the top down, showing internal and external stakeholders that nothing is being left to chance and that the firms are serious about making the deal a valuable, going concern.

BUILD THE ORGANIZATION’S M&A CAPACITY USING AFTER-ACTION TRAINING
A final way HR teams can increase the value and success of M&A activity is by helping the organization build its capacity for mergers using after-action analysis. Many firms move rapidly from one deal to the next without fully integrating the lessons being learned along the way. Having an HR team sit with the C-suite for after-action assessments and recaps to drive home key lessons can be a way to get out ahead of repeated missteps and build systemic safeguards into the M&A process.

For example, such after-action meta analysis might reveal areas where templates and fresh standard operating procedures (SOPs) could help reduce turnover, system integration friction, and duplicative processes between firms. It would also help teams identify people and processes that worked exceptionally well, giving executives an idea of who could staff an M&A “A-Team” for the firm, and which systems need to be prioritized for integration in each new deal. By improving processes such as these, the firm would be able to handle more deals with less disruption and become a more capable acquiring firm in each market.

CONCLUDING THOUGHTS
HR elements can be the make or break part of any deal. By bringing HR teams into the pre-planning process, leaning on data and analytics, appointing cultural integration champions, and doing after-action review sessions, firms can leverage their HR partners to enhance the value and success of their deals. At the very least, by ensuring HR is intentionally included and considered at each milestone in the M&A process, firms will be better able to keep deals on track and use deals to continue to grow market share and dominance.