What? Another Merger and Acquisition? - Why Human Resources is struggling to keep up!

What? Another Merger and Acquisition? - Why Human Resources is struggling to keep up!

Mergers and Acquisitions are booming in these times of economic uncertainty. I've been privileged enough to meet with the investment bankers that research and make the deals happen, CEO's that are driven by the chase and deadlines that often shroud these deals and finally, but in my view, by no means least; the HR directors and managers that respond to the transactions and try to make sense of it all.

If you're in the latter category, just how do you keep up with the demands that are created through M&A's? My understanding is that in the majority of cases, HR as a function is usually responding (late in the day) once a transaction has taken place to merge or acquire. In fact I had a conversation with a senior partner with a major M&A consultancy that in 30 years of advising on deals, remembers only one or twooccasions where a HR Director was involved in the due diligence/pre transaction stage.

So how can we shift this thinking more towards the people behind the deals? Why are people and their performance not considered as critical to success as they should be through these processes? How do we link performance to the bottom line? HR Directors and business partners alike need the tools and information that create the "buy in" needed to make these issues "real".

So in more generalist terms, M&A's are the drivers behind more commonly discussed themes such as changeorbusiness transformationortransition. So whilst there is no debating the huge amount of pressure and deadlines that an M&A deal brings (financial, logistical aspects), there is just as much pressure building to a hidden "deal". The deal I'm referring to is the one between the individual and the employer.

The first question at an individual level is"what happens to me in all of this?"It takes away the fundamental freedom and empowerment that one has by choosing a role and an employer. The result of an M&A can be disenfranchising for all but a select few through the process (just ask your HR manager!). Individuals go through an emotional process throughout the organisational change.

This image has been adapted for organisational change from Kbler Ross (1969)

As the individual traverses the change curve there are inevitable casualties. Individual denial and anger leads to a drop in performance. A drop in performance commercially results in less output, less output equates to a direct impact on the bottom line. If performance drops by 10% per employee, what does that look like in your team? Lower sales? longer lead times? poor customer service? What are the consequences when the drop in performance is working as a railway safety inspector? or a gas safety engineer? Top talent will leave and top talent will stay away.

The business case is clear. A budget is needed to take into consideration the human capital factors. A 2008 study by Mercers found that"43% of EU firms in recent M&A transactions suggested losses of 1-4 million as a result of cultural issues"A 2010 research paper by the CIPD researched five companies that had been through such transactions and surveyed 300 people. There were seven findings that they defined as "headlines" from the research which were:

1.Changeshakes the deal.

2. Losing the power to choose is the most destabilising factor.

3. Communication remainsundervaluedby organisations.

4. Employer brands do set expectations.

5. There is a lack ofculturalconsiderations.

6. There is a lack of longer-term plans beyond an initial operational integration.

7. The process of change is anengagementlever in itself.

So having had the chance to meet people on all sides of these deals the question is "so what? Will this make any difference to whether or not a deal goes through? Probably not ifI'mhonest and realistic; but what it does do is give HR Directors and business partners alike, an evidence based approach as to how they add value to the organisation. How HR can positively impact and influence the outcomes of deals such as these (something which is rarely achieved through consultation). HR are no longer operational, they are and should be in my view, far more strategic in scenarios exactly like these.

Mergers and Acquisitions don't just involve finance, warehouses and equipment, they involve people and people are "real". If you're acquiring people, and"our people are our most important asset", spend some time agreeing and communicating your vision through a positive change programme, invest and protect your most valued asset!

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