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One of the greatest challenges an organisation will face is a Merger or Acquisition. To ensure the successful integration of two companies, great effort must be paid to the planning of the organisational design, structure of the work, integration of the systems and culture and the management of the people.
In addition to this, the communication process, compensation, benefit and MIS conversions must be handled flawlessly by management to ensure minimal disruption to the productivity of the organisation.
Role of HR in Mergers & Acquisitions
HR Due Diligence in M&A
As part of the pre-acquisition analysis of an M&A exercise, the Buyer deploys a number of teams to review the Seller’s financials, contracts, customer information, employee data and HR systems.
The HR Due Diligence process itself includes a full review of the key personnel, the HR policies and practices, employee contracts, organisational design and structure, legal review, performance management, compensation and benefits and organisational culture.
From the review, a Due Diligence Report is created that identifies areas of strength, areas of risk, cultural assessment, organisation design recommendations and action plans needed to execute should the acquisition proceed.
HR Harmonisation and Action Plan
After two companies have agreed to merge, harmonisation of people, processes, practices and culture need to occur for the merged organisation to be able to perform efficiently and effectively.
Top priorities for HR in the harmonisation process include a communication strategy for the combined companies, creating talent strategies to retain key employees and aligning the merged organisation with Human Capital practices and processes that allows for optimum performance and effectiveness.
Organisational design and process flow need to be reviewed to ensure streamlining and cost effectiveness. Performance Management and Compensation & Benefits need to have a designed strategy for the combined companies.
Culture needs to be measured and addressed to ensure the workforce is engaged and committed and acting optimally.
Cultural Integration in M&A
There have been many articles written on the failure of Mergers & Acquisitions due to the lack of culture integration of the merged organisations. Different styles of communication, leadership, problem solving approach, decision making, organisation design and corporate values can dramatically impact the ability of a company and its people to perform well. Key Personnel can leave, M&A growth goals may not be achieved and the organisation will undergo years of delay to successfully integrate.
In addition, with the increase in global acquisitions into new areas such as the Emerging Markets, acquiring companies have new challenges to deal with to understand culture and how it will affect their ability to manage their teams in those countries to achieve their goals.
Organisational Design & Development in M&A
Merging two separate organisations together requires a good understanding and deployment of organisation design and restructuring, change management, culture, communication and an ability to create strategies that will retain key employees and engage employees to work together productively and effectively.
Further, the Human Capital strategies of the merged organisations may be at different stages of development. You may encounter that the competency levels expected for a level in the acquired organisation do not meet the expectations from the acquiring organisation. Learning & Development strategies need to be created and executed to fast track individuals to perform at levels of expectation, where possible.
Fortner Consulting has extensive Mergers & Acquisition experience in both the mature and emerging markets and can assist your team with creation and execution of an Organisational Strategy that meets your unique requirements.