HR can play a role in mergers and acquisitions

HR can play a role in
mergers and acquisitions

HR can play a role in mergers and acquisitions
• There has been renewed spotlight on mergers and acquisitions (M and
A) following the all-time annual record volume arising from M & A in
2015. In that year alone, companies globally spent a breathtaking
amount of close to $4 trillion on M & A, leading to speculations that this
trend could continue for the current year.
• Although a couple of factors such as the upcoming American election
and the uncertainty that the European Union is currently going through
following Britain’s dramatic decision to opt out of the EU serve as
indicators to show that these levels are unlikely to be accomplished; the
industry continues to be optimistic when it sees M & A acquisitions from
a global perspective.
www.netzealous.com +1-800-447-9407 netzealousllc@gmail.com

A snapshot of the M & A
scenario of 2015
2015 was a blockbuster year for M & A
globally. At $3.8 trillion, this was the
biggest year for this activity at any
recorded point of time. This volume was
better than the record set in 2007, in the
time just preceding the slowdown.
Although the “hot” industries, namely
pharmaceuticals, beverages and food
dominated, accounting for a quarter of all
the acquisitions; the M & A scenario was
not too fragmented. A few other big ticket
mergers and acquisitions too, did take
place.

The role of human resources
HR is the organization’s facilitator, carrying out a wide variety of tasks that
lubricate all the processes the organization carries out. It can play a
supporting cast in a number of areas. M & A is one of the main activities
that HR can support. HR can involve itself with the M & A process at the
time of initiation. It can consult management and be a part of the
discussion at the estimation change. While bargaining on the deal may be
a management issue in which HR may have an ancillary role; HR has a
lot to contribute when it comes to preparing the organization for a lot of
work that needs to accompany M & A. It can handle all the people-
related aspects of HR. The following are some of the areas in which HR
can play a very important role in a merger or acquisition:

Understanding the cultural aspects
of the employees
A lot of discussion goes on about the financial aspects of an M & A. This of
course, is very important, because finance is the chief consideration in a
merger or acquisition deal. But what gets overlooked often is the cultural fit
of the merging organizations. Business is mainly about money, but every
organization has its own unique culture. When companies merge, they
merge not just their business dynamics, but their cultures. When there is a
huge cultural gap between the merging organizations; smooth conduct of
business is bound to get derailed. This is where HR can contribute like no
other department. It can make a proper and complete assessment of the
merging organizations’ cultures, which is central to the whole process of
bringing together organizations of different approaches, attitudes, styles and
outlooks, and synchronize, if not homogenize them.

This is perhaps the most important function of HR in an M & A scenario,
because convergence on the cultural aspect, which is immeasurable and
intangible, is of very high importance to the merging entities.

Addressing employee concerns
The financial aspects apart; mergers and acquisitions bring huge changes
into an organization. Almost everything that was in place could get
dismantled and new systems could be put up in their place. This is sure to
cause unease among employees, because humans are generally
resistant to change. It is in crucial situations such as this that HR has a
very major part to play. It should communicate freely and transparently
and assuage the feelings that employees, especially those of the acquired
company, go through. Putting them at ease with the changed situation is
very important, and goes a long way in motivating them to work
productively in the changed situation. Doing this is very important for the
organization that has been through change and helps it maintain its
decorum and productivity.

Ensuring that benefits play out to
the employees
When a merger or an acquisition takes place; it is but natural that there
are going to be clear terms on what the management and the employees
are going to get from it. Terms and conditions for assigning benefits need
to first be put in place before the actual task of disbursing the benefits
takes place. This is another core area for HR, because again, being
placed uniquely as the organization’s facilitator in a number of areas; it
can execute the whole exercise and see to it that there is clarity and
transparency in the implementation of the terms of the benefits.

Overseeing restructuring
An M & A is a rejigging of the organization in varying degrees. The
existing entity is almost certain to get completely restructured to make way
for a new one or could get subsumed into the new entity. This is long
drawn, and usually complex. Ensuring that this goes on smoothly is one of
the primary tasks for the organizations’ HR. Human Resources needs to
understand the nature and magnitude of the merger or acquisition quickly.
It needs to be a proactive player in the transition process, keeping a close
watch on the financial, legal and attitudinal aspects of a merger or
acquisition. HR can play a primary role in helping the organization
understand the implications of the merger or acquisition and accordingly
work towards making it happen smoothly.

Supervising layoffs
This is a painful, yet inevitable byproduct of a merger or acquisition. The new
management takes a call on who stays and who doesn’t. Although the
management could have solid reasons to back up its decisions, it leaves a
bitter taste in the staff that it being retrenched. HR needs to address genuine
concerns that people in the firing line have. After all, most people are
concerned about their families and what the new structure could mean to
their livelihood.
This is another of the areas in which HR could be a soothing influence on the
employees whose careers could be on the line. Communicating honestly and
politely, while making the employees aware of the new realities, is what is
required of a responsible HR. it needs to take employees into confidence and
let them know that the echanged situation is going to do to them in the future,
and what options they could possibly pursue for their future.

Preparing business continuity plans
Yet another highly critical task for HR is to prepare the organization’s
business continuity plans. Usually, an M & A results in the takeover of a
company by another. This means that all the activities and businesses will be
either taken over or performed differently. The entire process of acquisition
usually takes time, and in many M & A agreements, the old management is
asked to stay for a fixed period of time. HR has to make plans to phase the
whole operations out while keeping the business steady. An organization has
to have business continuity plans in the event of a merger or an acquisition.
HR has to drill this down to the management and the employees.
The most important quality that serves as the foundation to all these actions
from HR is openness. The more HR communicates on all these aspects to
the affected or the new employee; the better it is for the employees, HR and
the organization.

HR stands as a pillar in
these situations to
communicate all that is
important and useful
during the M & A
process. Being open and
truthful about the whole
process makes life easier
for the affected
employees, and at the
same time, lifts the
morale of the incoming
employees or
management.

HR can play a role in mergers and acquisitions

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HR can play a role in mergers and acquisitions