HR needs to be there

The way commentators often present them, mergers and acquisitions are regularly referred to as unions or marriages of two sets of employees.

In reality, this sort of description is most often very far from the truth. A few senior executives may have become friends but beyond that, mergers and acquisitions are more like two mindsets who have never dated, and are thrown together because of the wishes of stockholders or boards who are far removed from employees.

When looked at like this, it is easy to see that there has to be a role in mergers and acquisitions for Human Resources specialists.

In most instances there are probably a few stages involved before a merger or acquisition takes place. These phases may be identified as:

• The meeting of minds, offers, and initial plans;
• The financial and other audit stage and the due-diligence; and
• The period of time during which the two entities are combined to form a cohesive and productive new organisation (obviously, the length of this stage can vary dramatically).

In the ideal situation, the acquirer's HR department is brought in early. If this happens, and if the members of that department have the required status within the company, they can certainly have a positive impact on the integration phase.

If people are really valued by the acquiring company's management, it should be fairly obvious to them that people are going to be a major asset or challenge or liability or maybe even all three.

In the vast majority of merger and acquisition deals, part of what you are buying is the talent and intellectual capital of the organisation. You can erode that so quickly if you get off on the wrong foot with people.

Everyone in HR now knows that there has been a need for the HR industry to move into more strategic roles in organisations. It is important to offer distinctive value to every part of the business process so that the unique capabilities of employees can be harnessed. If this is true in general, it is so much more necessary during the merger and acquisition process. It’s vital for HR to be proactive, to be ready to coach and to be on hand for whatever arises.

But this is not easy for HR. Pulling all the pieces together, particularly for a mega-merger or acquisition, is a massive undertaking. People who have been through it always stress that it is tough and challenging. 

HR professionals need to be in very good physical condition, because the energy required is immense. It can be a unique time in an individual’s career and an opportunity for unsurpassed HR education, but with the sheer volume of issues that arise, it is a pressure time.

In typical situations, the key HR initiatives that are necessary during acquisitions and mergers are:

• Development of preliminary organisational designs and identification of the top two and maybe the top three levels of management;
• Retention of key people and separation of redundant staff;
• Development of a total rewards strategy for the combined companies; and
• Communications strategy development and implementation.

The main difficulty arises for HR because all these things, and much more, have to be done almost simultaneously and at speed. But while it may be challenging for HR, it can be impossible for a company without HR.