The role of HR during Mergers and Acquisitions

Personally, I remember my experience about over 10 years ago, when I was managing a process of HR due diligence after an acquisition made from an Italian air carrier toward a polish air charter company.

The challenge I faced at that time was to audit and assess the internal climate of employees (mainly pilots, cabin crew, handling team and aircraft maintenance team) immediately after the acquisition, verifying whether the internal communication plan was properly set up and in general understanding which was the real risk of losing- during such transformation- the most valuable and talented people.

Personally, it was a very demanding project, with lot of challenges that I could not even imagine. The first assessment I made when I completed the project was: why such large companies involving HR (eventually) just during the last step (after acquisition) and only when they are afraid to lose their best talents?

After more than 10 years…I do not have answer to this question, but I would like to present some consideration that are important during such processes: mergers and acquisitions can fail for a variety of reasons, but two you can’t afford to ignore are poor culture fit and human capital issues. Your human resources team plays a key role in preparing for and getting you and your employees through a merger or acquisition. From cultural integration and effective communication to change management, don’t forget the human side of the merger.

Many times, but not always, a company is attractive as an acquisition because of its company culture. Successful mergers often are ones where the companies’ cultures and values are similar. To understand if there is a matching, you should need a pre- HR audit. This is not very common as mostly of the activities are focused on financial books and statement. Please remember in the end of the day, you are ‘buying’ a box with lot of human being inside. Those human beings are the key of the business.

In general, when a M&A is imminent, your employees may be asked to tell the buyer what it’s like to work at your company. There may be surveys, leadership interviews or focus groups. This is all part of the preparation process to determine whether the cultures are a good fit. Do not underestimate it!!!

Culture alignment isn’t a step you can afford to ignore in the merger process. Unfortunately, many mergers fail because what looks great on paper, may not always add up if the two cultures simply aren’t compatible.

Of course, every merger and acquisition have its own unique reasons based on the organization goals: acquisition of technology, assets or talent, Increased market share or reduce a competitor activity, increasing capabilities & sharing expertise, etc, but one import point that should be always taken in consideration from HR function: Build a clear communication plan!!! Indeed, just as critical as planning for culture fit is the need to communicate throughout the merger process.

A clear and thoughtful communication plan can go a long way in easing concerns, distrust and resistance as employees are challenged to go from the known to the unknown. The main focus should be done on the following answer: who and what will be impacted and how? This can include anything from processes and deadlines to whether there will be job reassignments. Having a communication plan and timeline provides vision and clarity to your leadership and assures your employees that you are attentive to how this affects them.

Please do not underestimate that people often fear change, and a M&A creates uncertainty and change for employees both of the purchasing company and the purchased company. Human resources in both companies must help smooth out the transition for employees, helping calm any fears as well as answering questions about how the merger or acquisition affects each employee individually. If the employees of both companies do not have as much fear over the change, productivity is more likely to stay at previous levels. Human resources can detect and address any rumours about layoffs, office relocation or other changes employees fear, giving feedback to management about employee concerns.

Another critical aspect of any M&A is the change management focus: one of the biggest reasons M&A fail is due to poor change management. As a result, how you interact with employees and manage the change process can be the difference between success and failure as you merge two organizations. This is where your communication plan and leadership team alignment will pay off.

Obviously, when M&A is in process, some changes to both organizations may occur, such as eliminating redundant positions or combining teams and departments, this is very critical and time-consuming process: indeed, the transformation of altering the two organizations merged into one can take months to complete, and human resources plays a vital role in the changes. Human resources communicate to employees changes in who they report to within the company, what team or work group employees are assigned to as well as any changes to different positions’ roles in the organization. The critical and central role of Human resources team is to work with management and employees to alter the job descriptions of various positions, ensuring everyone understands his role in the newly altered organization: in the end you do not want to buy a box of chocolate without chocolate inside. Don’t you?