HR’s Secret Formula for a Successful Merger or Acquisition

Business teamwork - puzzle piecesIt’s no secret that mergers and acquisitions are both exciting and dangerous for modern businesses in a global workplace. If you’re an HR professional, you may never even get to participate in one. If you do, however, it’s potentially a career-defining moment. An opportunity to make a name for yourself as someone who can steward a company through a challenging time while protecting profitability.

I had the privilege of attending the 3rd Annual Thompson Reuters M&A Integration Forum in April 2016 in New York City – featuring a veritable who’s who of top corporate change management executives in the northeast. Buried among the incredible experience, otherworldly wisdom and dizzying mega-merger anecdotes was a singular nugget of HR wisdom that deserves a moment in the spotlight. It concerns perhaps the most challenging aspect of the most challenging project that an HR professional will ever undertake: integrate two or more businesses into one.

While the prospect of that job is extremely exciting, the reality of the business environment suggests extreme caution. The failure rate of mergers and acquisitions consistently hovers between 70% and 90%. In 2015, only one third of companies involved in a merger or acquisition saw their company’s stock price rise after the deal was consummated.

Despite the challenging environment, deal values are absolutely soaring, with the number of “mega deals” (worth $10 billion or more) more than doubling from 2014 to 2015. Alarmingly, in the face of persistent failure, the stakes are actually rising. Figuring out why this is happening was a huge focus of the aforementioned M&A forum, with dozens of theories and potential solutions posed to the group.

The most salient one, in my humble opinion, came from Jason Bloomfield, the current Director of Project Management at Prudential and formerly the M&A Integration Lead at MetLife and One America. Bloomfield was also one of the featured presenters at the M&A forum and oversees deals of this nature on a regular basis. His message to HR, after years of watching these deals come to fruition is this: don’t go it alone.

“There’s a natural tendency for HR professionals who care deeply about people to ensure they are whole and well taken care of,” says Bloomfield. “It’s very tempting for an HR department to say ‘we’ll do it all’ just as much as it’s common for senior leadership to expect them to do that.”

This manifests in a breakdown in communication, which is anathema to the core of HR. “The sheer mechanics of updating people about reporting structure, salary structure, contracts and attrition all becomes quite complicated,” says Bloomfield. Instead, best practice is to insist on help, preferably in the form of a dedicated “change management” team or department that works very closely with HR.

Change management can assist with various intra-merger corporate functions like training, payroll, compensation, benefits administration and communication. Ultimately, it may even be able to help you answer the most difficult question employees tend to ask during this process: what’s in it for me?

There are signals that employees are after this type of information of course, and all you have to do is listen. Change management typically hears various questions of this nature, including:

  • What is my value proposition?
  • Why should I want to stay here after this deal?
  • What does the future of this company look like going forward?
  • What kind of training can you offer me to get better and to grow within my role?

That last question leads us back to another core aspect of HR, which is assessing skills, analyzing performance, identifying areas for improvement and delivering the appropriate training to achieve goals. One of the best ways to invest in the success of your own merger or acquisition is to tap into your best talent evaluators, cultural wizards and motivators as early as possible. Look no further than your HR department to do so, but equip them with the tools and resources they need to complete relevant and timely training to keep them ahead of the curve.

Here are some other strategies HR can use to conquer M&A integration:

1. The squeaky wheel gets the grease

Making yourself heard during integration of two or more business units is almost always a good thing. The senior leaders at your company want to hear as much feedback from you as possible when it comes to spotting cultural incompatibilities or areas that are potentially concerning amidst a major deal. And the truth is, they’ll continue to be in the dark until you tell them.

2. Flex your data analytic muscles

CEOs, CHROs and HR Directors may not always see eye to eye, but they are in agreement about at least a few things – they want more data analytics, a better understanding of the data that you already have and creative ways to harness data to inform business decisions. Share your experience (good or bad) in analyzing data and constructing real solutions, then extrapolate that to cover issues common to mergers or acquisitions like due diligence or cultural integration.

3. Articulate the motivation behind the deal

In any successful deal, the goals of striking the deal in the first place are always front and center when discrete tasks are assigned. For instance:

  • Is it a qualitative deal or a quantitative deal?
  • Is the target going to be fully integrated?
  • Is it crucial to preserve the operating structure, independence or entrepreneurial spirit of another business unit?

The answers to these questions need to inform the style of integration throughout the entire process in order to ensure success.

Ultimately, when a business acquires or merges with another one, it is making a statement that it either wants or needs help. Not necessarily to stay alive, of course, but help in getting to the next level, in growing, in pushing a competitor out of the market or in simply preserving its own share of the market. HR professionals needs to remember that asking for help is not a sign of weakness when it comes to integrating two or more business units. It’s a sign that you really, really want to succeed.

Mergers & Acquisitions

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