By Bill Swan, Principal Consultant
Mergers and Acquisitions (M&A) can be exciting for companies but also present significant challenges for the human resources department. The HR department often plays an important role in assisting with due diligence information, particularly in employment areas, such as job descriptions, employment contracts and agreements, and other important documents. Collecting and exchanging information is very important, but there are often challenges that the HR department can be instrumental in helping the companies get through.
Here are some of the biggest hurdles HR faces during M&A integration, along with strategies to navigate them:
Cultural Clash: Merging two companies often means merging two distinct company cultures. Think about your company values, mission, and acceptable and non-acceptable behaviors. Your culture is unique, which can lead to confusion, frustration, and decreased employee morale when trying to blend it with another.
Solutions:
- Conduct thorough cultural assessments pre-merger to identify potential conflicts.
- Develop a clear communication plan that outlines the new company culture and values.
- Organize team-building activities to encourage interaction and collaboration between employees from both companies.
Differing HR Policies and Benefits: Integrating different benefits packages, compensation structures, methodologies, and leave policies can be complex. There are financial implications, and it is important to work with the accounting and finance teams.
Solutions:
- Conduct a comprehensive review of both companies’ HR policies and compensation/benefits.
- Develop a clear timeline for transitioning to a unified system.
- Offer communication channels for employees to express concerns and ask questions.
Workforce Redundancy and Layoffs: Unfortunately, some M&A deals involve job cuts. Managing layoffs sensitively is crucial for maintaining employee morale. There can also be legal compliance considerations that must be followed.
Solutions:
- Offer generous severance packages and outplacement services. Consider the ensuing company brand reputation: How do you want terminated people to feel about your company after they leave?
- Implement clear selection criteria for layoffs to ensure fairness and legal compliance.
- Communicate layoffs transparently and with empathy.
Communication Breakdown: Clear communication is essential to keep employees informed and engaged during a merger.
Solutions:
- Establish regular communication channels to update employees on the integration process. Employees will have many questions. The more information, the better.
- Utilize multiple communication methods like company meetings, emails, newsletters, and internal websites.
- Hold Q&A sessions to address employee concerns.
Talent Retention: The uncertainty surrounding M&A can lead to employee anxiety and potentially high turnover. Many ask themselves, “Should I stay here or move on?”
Solutions:
- Highlight the long-term benefits of the merger for employees. Be clear about how this merger benefits them. Otherwise, they will look elsewhere.
- Offer career development opportunities to high-performing employees.
- Recognize and reward employees who contribute to a smooth integration process. They will appreciate the recognition, and other employees will witness the recognition given. This will help with developing a positive cultural environment.
This is just an introduction to a big topic, but by proactively addressing these challenges, HR can play a critical role in ensuring a successful M&A integration and creating a positive future for the combined organization.
If your organization could use help in a Merger and Acquisition, then FIT HR can help. Contact us, and let’s start a conversation.