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Business mergers and acquisitions have slowed down significantly due to economic strain.
Investors are being cautious with where they put their money, and founders are focusing more on sustaining themselves and less on growing their company at pace. That being said, experts remain optimistic that despite cautiousness, the M&A space will thrive, and UK businesses are likely to be bought by foreign investors now more than ever.
So, what are some of the challenges HR professionals might face during a merger or acquisition? There are a variety of challenges that arise when two companies come together. Things that take HR managers years to cultivate become disrupted and a business’ culture, policies, employee benefits and retention rates are all challenged. That’s why HR professionals have one of the toughest jobs when it comes to maintaining employee wellbeing and being a trusted message-carrier between employees and executives during the process of a merger or acquisition.
Why are you so important?
HR needs to be involved in the entire process of a merger or acquisition as they’re the backbone in making sure the company moves forward as usual. There might be new company policies, the possibility of compromised company retention, and desires to downsize or bring about redundancies. Despite these varied potential outcomes, all of these are dependent on the continued success of one of the most important aspects of a business; culture.
On their website, management consulting company McKinsey & Company says that understanding and managing culture is critical to successful integration. They say: “Cultural factors and organisational alignment are critical to success (and avoiding failure) in mergers. Yet leaders often don’t give culture the attention it warrants—an oversight that can lead to poor results.
“Some 95% of executives describe cultural fit as critical to the success of integration. Yet 25% cite a lack of cultural cohesion and alignment as the primary reason integration efforts fail.”
Culture is king
A thriving, healthy company culture is considered one of the most important things in attracting and retaining talent. A study recently found that 57% of UK workers value workplace culture over salary when it comes to their job satisfaction, while 77% said they take into account a company’s culture when applying to a role.
A good company culture is often associated with fostering employee wellbeing and talent attraction, so if this is compromised, the whole business becomes compromised. When a smaller company is acquired by a larger company, or two businesses merge together, culture is the first thing put on the chopping block.
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A company’s culture is its values and identity, when faced with coming together with another business that is likely to have a different set of attitudes, practices, and behaviours, there is the potential of an identity clash.
HR must work closely with company execs to identify the characteristics of each business and set out the most important existing values, and any news ones, that might maximise a deal and lead to a better organisation overall.
How?
In a paper by Deloitte entitled Cultural issues in mergers and acquisitions, it says that despite culture often being presented as a “woolly and soft topic”, it can be measured, and it’s important for HR practitioners to link culture to measurable business attributes.
For example, when HR professionals express ideas about culture, it should always be specific examples that are tied to business results. Also, culture should be seen as important as communication within the M&A process, and so should be assigned to an individual or team to ensure healthy integration. As a result, these staff members should be held accountable by senior management and culture should be on the agenda of regularly scheduled meetings.
Additionally, the paper says that it’s important to build the employee brand with an awareness of how it will be interpreted by employees and create a decision-making process that isn’t swayed by the pre-existing cultures of either organisation.
Mergers and acquisitions can be complicated, and it’s up to HR Directors to ensure integration remains smooth for employees and the business as a whole. This can be achieved through prioritising culture as one of the most important aspects of the transition, while thinking about culture as a measurable entity.
