by Tim Hird, executive director of Robert Half Management Resources
Mergers and acquisitions (M&A) activity has been high in recent years. Global mergers in 2015 had a combined value of more than $4 trillion, The Wall Street Journal reported, and 2016 saw a number of deals between large companies.
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Yet some of these buyouts and takeovers don’t work out as smoothly as initially envisioned, especially if management commits missteps. Recent research by Robert Half Management Resources identified the top M&A pain points by interviewing 2,200 chief financial officers from U.S. companies. Of the respondents, 25% said most M&A mistakes involve employees and company culture—second only to business systems and technology, cited by 26% of respondents.
Clearly, M&A is an area where talent management needs to play a large role. Effective staff management is vital to the success of the transformation, and human resources (HR) can smooth the way. Here are five best practices for HR professionals:
1. Make The Case for Effective Staff Management—Yours
Not all of the executives overseeing the highest levels of M&A possess the necessary staff-management skills and expertise. It’s up to you to take the initiative and talk to decision makers about how you can help.
Present a detailed plan of action and back it up with data, including case studies of other mergers that have failed due to issues around employee dissatisfaction and corporate culture mismatches.
2. Analyze the Benefits Packages
The two companies that are about to join forces offer different benefits packages, which will need to be adjusted and aligned over time. Your team should compile a report on the current benefits and, if possible, complete a similar report on the other company.
There could be issues on either side. For example, employees might be locked into a particular health plan, a pension might be underfunded, and certain benefits may not be available to new entrants. You must identify these variables as soon as possible, ideally well before the transition begins, so they don’t become roadblocks to a successful merger.
3. Perform A Comparative Culture Analysis
M&A can combine two groups of employees with very different working practices. Some differences will be explicit, such as policies on flextime, telecommuting, and work/life integration perks the teams receive. Others might be subtler, such as the way the hierarchy is organized and preferred methods of communication.
M&A staff management is easier if you have a full understanding of the two groups’ differences. Conduct a thorough comparison and identify the area where compromises will need to be made. Also look for commonalities, which set a strong foundation for future cooperation and collaboration.
4. Take Responsibility for Messaging
Communication is often fraught—and sadly lacking—during M&A. Staff are desperate for information and worried about job security. Management, however, often wants to divulge as little as possible due to the sensitive nature of the deal. This misalignment can cause friction, leading to a loss in productivity, drop in morale, and possibly even the resignation of top performers.
The HR team needs to step into that gap and ensure the lines of communication remain open. Pass on what information you can, even if that means telling everyone you have no new information. The main thing is to let them know they and their concerns are not forgotten.
Also, resist the urge to sugarcoat, no matter how good your intentions are. It’s counterproductive to tell someone their job is safe when you don’t know for sure. In the long run, broken promises will damage your department’s reputation and its staff-management abilities.
5. Plan for Retraining
With M&A comes the inevitable mismatch of technology tools. Systems must be integrated, and one or both sets of employees may need more technical training. Don’t overlook this important aspect, as you don’t want to risk disorienting and alienating employees. Staff may also require other types of education, such as courses on regulatory compliance and data security.
Consider bringing in consultants experienced in navigating business transitions who can help with functional needs and provide insights on best practices. For example, a business systems expert could help with integrating disparate systems, while an interim financial executive could help the newly formed organization address compliance mandates.
Then there are the “softer” skills you’ll need to relay to the combined staff. They’ll need to understand the postmerger company they work for. This means holding sessions to talk through the overall vision of the new enterprise. A team can’t work as one if they have two different conceptions of their employer.
M&A are high-stakes activities, including the stress they can cause the organizations’ employees. For these transactions to succeed, HR must play a prominent role and have a voice over staff management during the transition.
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Tim Hird is the executive director of