Managing Engineers

What does a Merger or Acquisition Mean for HR?

December 5, 2014

Mergers and acquisitions can instill fear and dread into the very best managers. I have been involved in the world of organizational change management for almost 20 years, the majority of which have been in a people and human-resources-related role… so I’ve seen those strong emotional waves pass over a face firsthand. The news that ABC Inc is now buying XYZ Inc and we are all going to come together and live happily ever after is always a change communications nightmare.

Now when two companies come together there are lots of things said by the various senior managers that sound great. Unfortunately, I have some bad news. What you hear being aspired to is not what will likely happen.

What Actually Happens After a Merger or Acquisition

Let me bust some myths out there –

  1. No, the new company will not be a harmony of the cultures of both
  2. No, the new company will not be just like the old one
  3. No, all jobs will not be the same
  4. No, the organizational structure will not be the same
  5. No, you won’t be doing things the way you did before

So that means things are about to change and managing the change and the effect on the people is a pretty big deal! There are going to be lots of things for HR to consider, not least of which is keeping the business operational with the combined talent from the new organization.

What does this mean for HR?

The real question is “how do I know what the new talent pool is and how is that best used?”

There will be different labels for describing talent, competence and suitability. There is likely to be an expectation placed on the HR Manager or Team to quickly see how they can fit everyone together and how they work out who sits with who and what happens to the incoming or outgoing personnel for each department.

In fact, that can be the first challenge – who decides value to the company and really which company’s HR is the lead? Then, of course, make this fit the way the new business is going to work moving forward. And this is where the discussion on talent considerations can take us into a deeper discussion on organizational culture. Something for another 25-page essay really, but how things are done around here, is often the mantra of organizational culture, and bringing together two differing cultures is a challenge of fair play and balance for Human Resources.

A publication by the Society of HR Managers (SHRM) in 2010 talks about the need to align competing cultures when it says “you have to try to reconcile the differences, take corporate values as a development process, and finally work on the corporate identity of your new organization,” which is something I can reaffirm. You need to accept the development and creation of the new corporate identity as part of the journey towards the creation of the new entity.

In Managing Human Resources in Mergers and Acquisitions SHRM offers a more detailed discussion on the range of requirements for the role of HR and the expected organizational needs during the transition; and more importantly after the event.

Talent Management After the Transition

What about those employees who decide that the new company is not for them and leave, or those that leave within the 6-12 month window following the amalgamation as the new culture “just isn’t for them”. What does this mean?

It means that there’s going to be a significant amount of upheaval in that talent pool over the coming 1-2 years, and talent acquisition, redistribution of talent and potential internal growth opportunities are going to be plentiful.

Now this turnover of staff, and depending upon its size, can have a significant impact on any organization. Demands rise for increased training events, increased recruitment exercises and even performance evaluations to see who is a good internal fit for that newly created or newly vacant position.

And all of this at a time when the HR is trying to fathom out what their new processes are and how to apply them to the new organization. It’s going to be a busy period for HR.

So let me finish be offering a rebuttal to my 5 myths above, with 5 truths:

  1. Yes, there will be a lot staff turnover.
  2. Yes, there will be an increase in hiring.
  3. Yes, there are going to be a lot of new inexperienced faces having to do things they have never done before and needing a lot of training.
  4. Yes, many old faces will move on and decide this is not for them.
  5. Yes, HR will be very, very busy before, during and after the transition process.