What is the role of HR in Mergers and Acquisitions?
Mergers and Acquisitions (M&A) are defined as the combination of companies, and while they can be a great way to grow and expand, they’re not always smooth transitions.
Often, an area that is frequently overlooked but can cause a huge amount of friction is the people within the business.
Factors such as culture and leadership can differ so drastically that if added care isn’t taken, the entire M&A can quickly go downhill.
In this blog, we’ll delve into four key HR elements to consider during your Mergers and Acquisitions, helping you harmonise and drive your people priorities to guarantee success.
1) Pre-transaction HR due diligence
Before your global merger can occur, due diligence must take place to ensure that you understand the other company’s current HR status.
By conducting this assessment, you’re able to locate any and all risks that will impact the deal.
This risk mitigation is critical to the success of any transaction you undertake, whether that be finical or operational.
2) Preparing for staff transfers
When moving people, you’ll have to consider the following factors:
- Employment contracts
- Past or pending litigations
- Entity, employment and organisational structures
It’s crucial that your HR processes are smooth, timely and legal and that these changes are communicated throughout the entire business.
Additionally, the changes most likely won’t impact each employee the same. So, consider a tailored communications strategy that gets across the relevant changes to the right people.
By keeping everyone updated, you can maintain employee engagement and minimise the attrition of key performers.
3) Defining a cohesive culture
HR will undoubtedly play a fundamental role in marrying the opposing cultures throughout the merger.
At the beginning of your plan, HR leaders must create a vision of a new and combined culture.
These underlying cultural attributes can then be used to inform further decisions, including your leadership and operating model.
4) Prepare for a Reduction in Force (RIF)
Unfortunately, a Reduction in Force is a possibility when undertaking a Merger and Acquisition.
In fact, Harvard Business Review found that on average, roughly 30% of employees are deemed redundant after a M&A in the same industry.
Your HR processes will fundamentally be crucial when executing a strategic and compliant plan.
One aspect to consider is employment law differs significantly across the world, and you must ensure you’re prepared to manage the varying jurisdictions.
How can IRIS FMP support?
Undoubtedly, Mergers and Acquisitions are complicated especially on a global scale, but our solution offers expert advice to support the process from start to finish.
Our team of specialists are here to help, providing guidance to help you develop and execute your strategic planning.
From day one, our service is available for you to consult with before making any firm decisions and once your merger has successfully gone through, we’re able to assume the role of your internal global HR function.
For an in-depth look into our service, click here.