HR’s front-line M&A role (Web sight)

People and culture critical to merger's success

The merger of two companies is a huge HR challenge. In addition to working on operational and staffing issues, as well as integrating compensation and benefits, human resources professionals can play a major role in helping integrate the culture of the two firms before, during and after a merger. Since people and culture are critical factors in a merger’s success, the HR department should be on the front lines right from the start in managing the entire process, including due diligence, integration planning, implementation and post-merger.

HR ready to step up

www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2004/200412/TPTrack_MA.pdf

Towers Perrin interviewed more than 200 HR professionals in the United States and Canada to produce this report, entitled HR Rises to the Challenge: Unlocking the Value of M&A. Its research “confirms HR’s growing sense of confidence in its ability to provide both strategic and tactical advice in future deals.” The report says fully ready M&A companies are involving the HR department earlier in the process. “Ultimately, our survey presents heartening evidence that HR is poised to play an increasingly significant role in this arena.” As one survey participant says, “HR should be involved from the start and must acquire as much data as possible on employees, benefit plans, costs and the companies’ cultures. Effective due diligence by HR may tip the decision whether or not to proceed because HR can see things the legal and finance people don’t see.”

Helping other departments

www.hrmreport.com/pastissue/article.asp?art=25620&issue=145

According to “Making mergers meaningful” on the Human Resources Management site, “M&As have huge internal ramifications for staff and it is no exaggeration to say that many mergers and acquisitions live or die according to the integrative actions of the human resources teams.” In addition to working on its own post-merger integration issues, HR must also help other departments through their transitions. Although the “integration of the HR function, its systems and people programs is integral to a successful merger, it is often in danger of being neglected during the whirlwind of M&A activity.” The author recommends that HR teams “get their own department in order as quickly as possible to ensure that they can offer optimal assistance to other departments.”

Warning signs

www.kshstrategyhouse.com/pdf/earlywar.pdf

This PDF document, Early Warning Signals of a Merger (Cultural Integration) Going Awry, written by a PricewaterhouseCoopers LLP partner, is about a merger between two firms — one American and one European. The author spells out the warning signals that are easily missed since organizations tend to treat cultural integration as a post-merger consideration. “However, there is evidence that early warning signals of potential cultural integration problems can portend problems and offer significant opportunities. This means that HR may have a more significant role to play during the due diligence related to a merger in compiling and analyzing data, advocating culturally effective approaches and helping other team members interpret the data.” The author includes a nine-point plan HR can follow during a merger, including getting the ear of a management team member and getting on the due diligence planning or review team. The author concludes: “At the end of the day, HR input might not lead to a change in the ultimate go/no go decision — but then again, it might.”

Keeping a pulse on culture

www.veritude.com/ResourceCenter/ResourceView.aspx?id=1372

The article “HR Can Head Off Merger-Killing Culture Clashes” describes several ways HR can help harmonize issues ranging from compensation to dress guidelines. Start during the due diligence stage to get a sense of the other company’s environment, leadership styles and employee issues. “HR managers can also search for public documents, as well as make personal observations as to how decisions are made and what kinds of people and behaviour are rewarded.” Once the companies have merged, dig deeper. “Relevant questions include: What’s encouraged here? What’s forbidden? What’s really valued? What are employees held accountable for? What are people rewarded for?” Talk to employees about the company. After collecting the information, assess potential conflicts and identify those most crucial to resolve. HR can also play a role in minimizing the fear, uncertainty and doubt that comes with integrating two cultures. As one expert interviewed says, an ongoing merger of cultures “is something you have to keep a pulse on all the time.”

Ann Macaulay is a freelance editor and regular contributor to Canadian HR Reporter. Her Web Sight column appears regularly in the CloseUp section.

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