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.
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.
Contact Information:
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