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Role of HR in Mergers and Acquisitions (M&A) - Emerging HR Trends - Part V
In continuation to my previous post on emerging HR trends, I intend to touch upon Role of HR in Mergers and Acquisitions now. The past few years have ...
Raj GuptaLeadership · HR · Career
In continuation to my previous post on emerging HR trends, I intend to touch upon Role of HR in Mergers and Acquisitions now.
The past few years have seen a steep increase in cross-border merger & acquisition (M&A) activity - Vodafone’s $12.9-billion acquisition of 67% stake in Hutchison Essar; Tata Steel’s $12-billion buyout of Corus; and Hindalco’s $5.9-billion Novelis Inc (Canada) deal. However, despite the synergies and competitive advantage that M&A offer, they can also have a disruptive effect on organizations if not managed with utmost attention and care. And the key to successful integration and change management is carrying the people along—both in the acquired and acquiring company.
Whether your organization is about to undergo a merger, acquisition or is just rethinking strategies, HR managers need to firmly place themselves as leaders in the organization. Success of an M&A depends on the people driving the business and surely, all managers have a part to play in that. When it comes to maximizing the potential of a merger and acquisition, HR needs to be up there, working in conjunction with senior management.
The past few years have seen a steep increase in cross-border merger & acquisition (M&A) activity - Vodafone’s $12.9-billion acquisition of 67% stake in Hutchison Essar; Tata Steel’s $12-billion buyout of Corus; and Hindalco’s $5.9-billion Novelis Inc (Canada) deal. However, despite the synergies and competitive advantage that M&A offer, they can also have a disruptive effect on organizations if not managed with utmost attention and care. And the key to successful integration and change management is carrying the people along—both in the acquired and acquiring company.Whether your organization is about to undergo a merger, acquisition or is just rethinking strategies, HR managers need to firmly place themselves as leaders in the organization. Success of an M&A depends on the people driving the business and surely, all managers have a part to play in that. When it comes to maximizing the potential of a merger and acquisition, HR needs to be up there, working in conjunction with senior management.
HRM is central to what an organization does but unfortunately, HRM has not always been included when it comes to strategy development and M&As which results in the prime focus on financial, economic and commercial aspects of the deal, and often only as an afterthought, on people, though they are the greatest assets of an organization.
HR should be involved in every part of an M&A process, particularly in the early stages. HRM should play a more strategic role in the organization. The new role from them is to offer distinctive value to every part of the business process so that the unique capabilities of employees can be harnessed by the Organization. Similarly, this applies to each part of the M&A process. Be proactive. Be a coach. Be there.
Looking at the steps involved in a M&A process, let us see how HR can add value at each step.
Pre-deal
- Spotting problems that may be overlooked by other members of the management team
- Assessing people, organization and cultural fit.
- Educating executives about possible risks
Due diligence
- Recognizing that there is more to due diligence that the bottom line issues, such as benefits and employee pay
- Looking at the impact of learning and development
- Advising on organization design and development and Recruitment and retention in the integration process
Integration
Dealing with Redundancies
There is a possibility that after M&A, not all staff will be able to or want to stay in the new organization. It is for HR to identify key resources and plan a strategy to retain them. The effort should also be on utilizing employees on bench by moving them cross functionally, if possible else a human approach should be applied while planning their exit. A softer approach works best in achieving trust and boosting morale in periods of transition and downsizing. To facilitate transition some of the prerequisites are honest and proactive communication, good listening skills, sensitivity to employee needs
Hence HRM contribution to mergers and acquisitions, include Corporate and HR strategy, General strategy, Business performance, Change management, Corporate governance, Corporate social responsibility, Ethics, Human capital, Knowledge management & Organization development.
Mergers and acquisitions (M&As) are fraught with difficulties, many of which relate to HR issues, international M&As being even more problematical. When engaging in cross-border deals or acquiring an organisation with operations in many countries, legislative frameworks, ways of doing business and cultural differences will all provide hurdles not found to the same extent in single-country deals and need to be handled with more sensitivity and knowledge of law of land.
- Determining the culture/vision of the new company
- Contracts of employment
- Performance management issues
- Looking at leadership commitment and talent
- Confirming people's expectations - retention, cost and cultural fit
- Looking at techniques that work well in both operations and selecting the most effective ones that will work across the board
- Alignment of HR policies and practices
- Advising senior management on people issues
- Reward schemes
- Education
- Effective Communication
Dealing with Redundancies
There is a possibility that after M&A, not all staff will be able to or want to stay in the new organization. It is for HR to identify key resources and plan a strategy to retain them. The effort should also be on utilizing employees on bench by moving them cross functionally, if possible else a human approach should be applied while planning their exit. A softer approach works best in achieving trust and boosting morale in periods of transition and downsizing. To facilitate transition some of the prerequisites are honest and proactive communication, good listening skills, sensitivity to employee needs
Hence HRM contribution to mergers and acquisitions, include Corporate and HR strategy, General strategy, Business performance, Change management, Corporate governance, Corporate social responsibility, Ethics, Human capital, Knowledge management & Organization development.
Mergers and acquisitions (M&As) are fraught with difficulties, many of which relate to HR issues, international M&As being even more problematical. When engaging in cross-border deals or acquiring an organisation with operations in many countries, legislative frameworks, ways of doing business and cultural differences will all provide hurdles not found to the same extent in single-country deals and need to be handled with more sensitivity and knowledge of law of land.