(Second in a series of posts about doing HR M&A right. The first one is .)
In our last article, we reviewed how to avoid being the next Mergers & Acquisitions horror story, highlighting HR’s impact on successful M&A transactions, especially regarding cultural alignment. While culture is important, there are other factors that can determine whether the deal has a happy ending or becomes a cautionary tale. One of those challenges is consistency within the HR approach.
Organizations must show discipline, implement a consistent process and have a dedicated M&A team to be successful in driving desired outcomes. It is that the investments made in human capital and the attention to people issues are handled in the same careful manner as the balance sheets and financial reports. Remember that most transitions primarily involve the transfer of employees, often involving complex transitions. This requires a sensitivity to not only time and costs, but also to people retention and engagement.
For HR to effectively support a successful transition, there must be a people-focused process in place rather than an administrative one. Taking an administrative view, the transition is seen as a series of checklists and project plans, with success measured by “ticking the boxes” or by cost and timelines. While this may be viewed as appropriate from a project perspective, people-related concerns are often not well-addressed when employees are not the priority, ultimately causing employee engagement and retention – and thus results – to suffer.
Disconnected workstreams are another major obstacle in completing an effective integration. Workstream alignment is most effective when it is defined very early in the process. Leaders must clearly assign teams upfront, and those teams should represent cross-functional competencies such as Operations, IT, HR, Finance, Legal, Real Estate and Security to ensure that the transition proceeds smoothly with no gaps between functions. There are two added challenges for HR M&A teams:
- HR team members are often working deals on top of or in addition to their day jobs.
- With its various sub-functions (such as Benefits and Compensation, Pension, Legal, Talent Acquisition and Payroll), the HR team is likely larger and more widespread than the other functions.
Often, project leaders question why so many HR people need to be involved, demonstrating their lack of understanding of the complexity of HR. Other common mistakes we’ve seen involved inviting either no one from HR or everyone from HR at the wrong point in the process.
Once the team is in place, goals are fully understood and task timelines are aligned, the next critical factor is to maintain continuity within the assigned teams. Simply sending the newly added team member a slate full of documents to read often results in disconnected support and information. In the event of changes to team members during the project, it would be wise to have a handover process in place to ensure continuity, especially with the multiple internal HR functions involved. Within the handover document or process, the new member should be informed of the history of the deal, current status, changes made over time to deal objectives, rationale for changes and any updated goals. This ensures that deal rationale and deliverables are clearly understood as the baton is passed between team members. Not only does this support a good relationship with the current acquiring team, but it also demonstrates experience, professionalism and caring toward the acquired teams working within the project.
Finally, no deal can succeed without HR’s input in creating clear strategy, goals and objectives. But too often, HR is seen as being more of an order taker, ticking the box on a project plan without clearly understanding the goals for the project or being able to influence the success of the deal. This mindset leads to companies assigning HR resources too late in the deal process and failing to provide them with history of the past activities, decisions or plans. HR is then left to operate in a vacuum of information and can potentially be driving actions again outdated material.
For example, the financial team in a recent deal was evaluating options for pension plans without communicating directly with the HR/Pensions experts. Discussions within HR referenced earlier decisions, and HR was engaging external consultants to evaluate different possibilities. At the same time, the integration planning team was spending vast amounts of money to find their own pension solutions based on the in-process decisions of the Finance team. No one was effectively bringing together all the experts to make real-time decisions. The result was sheer confusion, poor decision making and, ultimately, cost a lot of time, resources, money and frustration.
Remember that it’s sometimes difficult within an organization to balance all the HR requirements of an integration. There are various reasons for this, including multiple simultaneous deals; internal resource challenges and constraints; political issues or bureaucracy; or potentially an internal lack of M&A experience. M&A Partners is available and capable to train, support or augment your HR team to support successful people integration, helping you to avoid the most common mistakes HR makes in an M&A transition.
Don't miss the next installment in our series of Getting HR M&A Right where Ginger will share more insights on how to ensure your deal is a success instead of a cautionary tale. Come see her present in person at The Art of M&A for HR Leaders. Ginger’s first training program with The M&A Leadership Council is sold out, but she will be the featured speaker at the next one at the Hyatt Regency Grand Cypress in Orlando January 2019.