Before and During the Deal: What’s HR’s Role?

For an M&A process to go down smoothly, everyone within the company must take an active part in it, including the HR department. Unfortunately, though, most companies assign their HR departments with administrative functions only. That’s the quickest way to make a disaster out of the acquisition.

Those companies that have a goal of merging will assign their HR departments with significant strategic roles that will simplify the whole process. So, let’s have a look at what those roles are.

New Policies

Most companies have similar workplace policies. However, it’s important to unify and adapt them to the new circumstances. It will ensure that all employees are acquainted with proper workplace behavior, expectations, and responsibilities.

The merging HR departments will need to work closely together. That way they can come up with the best sick leave policies, harassment policies, attendance, drug testing, and healthcare.

It’s generally recommended for companies to review and update their policies annually, but this rarely happens. Therefore, M&As are the ideal time for this task to be completed.

Retention

Retaining the top employees is one of the critical tasks that the HR team needs to pay very close attention to. Many employees will need to be relocated, promoted, or demoted in an M&A, and it’s crucial to be careful here.

HR managers will need to examine each employee of the merging companies. They’ll need to look into everyone’s past performance, their skills, knowledge, expertise, career goals, capabilities, and more.

It requires great transparency and excellent communication between companies that are undergoing the M&A process.

Downsizing

On the flip side, the HR managers must come up with the best downsizing strategy as well. If both companies have their own marketing teams, IT departments, or other positions filled, someone will need to be laid off, and there’s no way to go around it.

It’s one of the more sensitive tasks that goes hand in hand with determining the retention strategy.

All employees will need to be assessed before the critical decision on who to fire and who to keep can be reached.

Company Cultures

The key role of HR departments in an M&A is ensuring that company cultures don’t clash. The biggest M&A fails were caused primarily by the clashing cultures. Because of this, the employees were never able to get accustomed to the new workplace environment.

The HR department needs to work on creating a unified company culture, and this needs to start before companies actually merge. Otherwise, the employees will be more likely to approach the M&A from the perspective of “us” against “them”. A tense situation like this results in lower productivity, efficiency, motivation, and of course, profits.

Conclusion

In a successful M&A deal, the HR department will hold an important strategic position and help the process go along smoothly.

Handling administrative tasks is always necessary, but a focus on unifying the two companies in every aspect is what will set you on a path to success.