You have a high-performing organization, a high-performing leadership team and your company culture is solid. You’ve come a long way from the early days. Your business has grown from a small start-up to a business that other companies want to buy. Now what?
Mergers and acquisitions can fail for a variety of reasons, but two you can’t afford to ignore are poor culture fit and human capital issues.
Your human resources team plays a key role in preparing for and getting you and your employees through a merger or acquisition. From cultural integration and effective communication to change management, don’t forget the human side of the merger.
There are things that you can do to help prevent your company from becoming an M&A statistic.
Determine whether it’s a good cultural fit
Many times a company is attractive as an acquisition because of its company culture. Successful mergers often are ones where the companies’ cultures and values are similar.
While every business will have its own company culture, this is one area that will make a difference if you can get a close match to your acquiring company. And if it’s not a match, is one company or the other willing to change to make things better?
When a merger or acquisition is imminent, your employees may be asked to tell the buyer what it’s like to work at your company. There may be surveys, leadership interviews or focus groups. This is all part of the preparation process to determine whether the cultures are a good fit.
Culture alignment isn’t a step you can afford to ignore in the merger process. Remember, many mergers fail because what looks great on paper, may not always add up if the two cultures simply aren’t compatible. You don’t want to get down the road and have to pull the plug at the last minute because you overlooked this phase.
Build a communication plan
Just as critical as planning for culture fit is the need to communicate throughout the merger process. A clear and thoughtful communication plan can go a long way in easing concerns, distrust and resistance as employees are challenged to go from the known to the unknown. Early on, sit down with your HR team and come up with a timeline of what will happen, what will be communicated, and when. Not everyone will find out at the same time – and some communication will go only to certain groups.
Items you’ll want to consider:
- Who needs to know about the merger and acquisition? You’ll be communicating with employees, customers, channel partners, vendors, media, etc.
- Who needs to buy into the changes resulting from the acquisition? You should have a core team of early adopters who will be your champions of change. Your leadership team should be unified in how it presents itself and information.
- Who and what will be impacted – and how? This can include anything from processes and deadlines to whether there will be job reassignments.
- How will you communicate each piece of information? In print, email, general announcement, formal letters, press release, website or social media? It will depend on the audience and the formality of the announcement. Some communication will have to be vetted by your legal counsel to ensure the information is accurate and aligned with the merger agreement.
- What types of milestones will you put in place? Establish a timeline. For example: “By 60 days out, we will have job assignments made. By 30 days all employees will have met with their supervisor.”
Having a communication plan and timeline provides vision and clarity to your leadership and assures your employees that you are attentive to how this affects them.
Focus on change management
One of the biggest reasons mergers and acquisitions fail is due to poor change management. As a result, how you interact with employees and manage the change process can be the difference between success and failure as you merge two organizations. This is where your communication plan and leadership team alignment will pay off.
As you get closer to transitioning, there are workforce issues that will need to be addressed. The timing of these will have been established in the communication plan. There is no set formula for the timeline, as each merger or acquisition has its own needs.
- What will the organization chart of the combined organizations look like? Determine job titles and the reporting hierarchy.
- Do you have the right people in the right jobs? Which managers will you need and in what key roles?
- Do you need to reorganize? Is there overlap on positions? Some organizations will have their people interview for their jobs to ensure there is alignment moving forward.
- What about compensation? Review the compensation philosophy of each company. If you’ll use the benefits and payroll systems of the acquiring company, you need to communicate that to your employees.
- What is the performance evaluation and reward system? Do you need to do a skills inventory or audit of your current staff?
- What should your team know about the other organization? Your employees should learn about the new company – its history, its culture and its processes. This could range from a cultural immersion program to a welcome breakfast sponsored by the acquiring company. Share the handbook of the new company with your employees and highlight items that may be different from how you typically do things.
You may find that you stumble along the way – and that is bound to happen. But, in dealing with human resources issues, take note of these potential oversights:
- Not involving an HR professional early on
- Not thoroughly understanding employee needs and concerns
- Not engaging and guiding the leadership team
- Not carving out enough time and resources for a successful integration
Leadership doesn’t happen in a vacuum
At the end of the day, the success or failure of this endeavor may rest heavily on your leadership style and company culture.
While you may be focused on the financial and legal details surrounding a merger or acquisition, remember that you’ll need a strong human capital guidance system. Be as prepared as you can be with a communication plan, timeline and transition plan that keeps your workforce in mind.
Because this takes a lot of work and there are pitfalls that you want to avoid, you may want to outsource all or part of the human resources effort. You could choose to have a company take over the day-to-day HR administration such as payroll and benefits administration or ask us to help you develop a strategic plan to get you through the merger.
Having your i’s dotted and t’s crossed before you get to a merger or acquisition can go a long way in determining whether the deal is successful.
Discover how you can get there with How to develop a top-notch workforce that will accelerate your business.