By: Rebecca Deering
When many think of a merger or acquisition, they often consider the transfer of assets or the price tag of the deal. However, there are so many other facets that go into making M&A successful than solely the bottom line, most of them lying within the human resources function.
An estimated 70 percent to 90 percent of all M&As fail to achieve their anticipated strategic and financial objectives. This rate of failure is often attributed to various HR-related factors, such as incompatible cultures, management styles, poor motivation, loss of key talent, lack of communication, diminished trust and uncertainty of long-term goals (https://www.shrm.org/topics-tools/tools/toolkits/managing-human-resources-mergers-acquisitions).
As a result, it is imperative for the business to deeply consider employees through a human lens at all stages of the process. This can be an especially tricky road to navigate.
Communication is Key
A primary cause of failure from an M&A deal is poor or lack of communication. This poor communication can create an overall mistrust and angst amongst employees and lead to a decrease in employee engagement. Employees may be concerned about their future with the company and feel resistant to change. These issues cannot be ignored as it can cause employee retention issues and large disruptions within the company.
Leadership and HR should work together to assess what type of communication is best for the organization. Ideas to consider is using a combination of methods such as: the company intranet, shared drives, email, in-person/virtual meetings, and information sessions. Messaging needs to stay consistent on the end goal(s). These goals should be clearly communicated by leaders and why the deal is most valuable for the combined company.
Thorough and transparent communication with employees will only make things smoother as the transition progresses. This will ultimately build trust with the new employees and maintain trust with those remaining with the organization.
It is also imperative to ask for employee feedback throughout the process. Ask them how they are feeling and if there’s anything more the company could be doing to help assist with the transition. This can change or mold the direction of the communication so it is important for management to keep communication methods as fluid as possible.
Retaining Critical and Key Talent
When a merger or acquisition is announced publicly, the first thought that runs through employees’ heads is usually: “How will this impact my job?” and “Will I even have a job?” They may feel deep uncertainty, skepticism, and overall fear for their overall quality of life. This can be a scary thought if it could involve losing their job or their team members. It is important for leadership and human resources to critically assess the talent as early as possible. Keeping as much talent in place will not only assist with decreasing the uncertainty and skepticism, but also lead to decreased costs. When looking at talent, those that are key to company and departmental success need to be a primary focus as if they leave, the Company could be in jeopardy and affect the overall bottom line.
Managers should schedule frequent one-on-ones with new and retained employees to ensure communication is clear and any questions are able to be answered consistently and frequently.
Focusing on employee retention also includes assessing the benefits from each company, pay structures, in-office arrangements, learning and development, and overall company culture.
Meshing Cultural Differences
An integral part of the acquisition is the meshing and compatibility of two company cultures and the integration that needs to occur. When two company cultures do not align, deals may falter or fail completely. “Values must align to maximize the efficiency of the human capital between the merging companies (https://www.forbes.com/sites/forbesbusinesscouncil/2020/04/07/considering-a-merger-keep-these-14-important-factors-in-mind/?sh=736c14901b66).” Leadership must assess cultural differences including mission, vision, values, communication methods, and leadership hierarchies. One way to approach cultural differences, is to set up a culture workstream. This can include employees from both companies to make sure all voices are heard. As possible, ideas should be considered and implemented from both ends. If this is not done appropriately and efficiently, this can affect the overall success of the organization.
M&As are difficult to navigate through in a way that makes it the least stressful and anxiety-driven for employees. However, keeping all the ideas mentioned top of mind will cause the least amount of disruption to the business and hopefully result in positive employee engagement and a profitable bottom line.
“Companies are people. They are not technology. They are not revenue. They are the collective ideas, spirit, and values of the individuals who carry the torch every day (https://www.forbes.com/sites/forbesbusinesscouncil/2020/04/07/considering-a-merger-keep-these-14-important-factors-in-mind/?sh=736c14901b66).”
About the Author
Rebecca Deering leads the talent function at a small pharmaceutical company based in Princeton, NJ. She has extensive experience in talent acquisition and talent management working in the pharmaceutical and retail industries. Rebecca holds a BA from James Madison University and MBA from Temple University, with a concentration in Human Resources. Rebecca is also a member of Philly SHRM’s Thought Leadership Team.
https://www.linkedin.com/in/rebecca-deering-mba-sphr-a944021a/
Author’s Disclaimer: The content and opinions expressed in the article above are my own, and do not necessarily reflect those of my employer.
Editor: Dennis Paris
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