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Mergers & Acquisitions Playbook: Driving value through efficient HRM for your business

Mergers & acquisitions (M&As) are a powerful means of growth at scale and speed for businesses, and their popularity (especially in tech and manufacturing) is only increasing.

But M&As aren’t without their complications: somewhere between 70 to 90 per cent of attempted mergers and acquisitions fail.

Even with this high failure rate, the average amount of time to finalise a merger and acquisition has only been rising. Delays are rife, and it’s important to know that getting the deal signed off is only the first step in the process. Ultimately, the trick to aligning two organisations with different policies, systems, cultures and ways of working is about laying the groundwork early in this process to avoid later stresses. 

M&As fail for myriad reasons. Valuations are often misaligned, supply chain assessments can discover faults, and regulatory issues can halt the process. But the challenges of M&As aren’t all technical – often, what really matters in M&As is the interactions and people that guide them.

HR can provide a strategic advantage for companies looking to achieve this synergy: During periods of change and disruption, it’s more important than ever that employees feel heard and included, and informed. Too often, the opposite happens during an M&A.

It’s not just employees who benefit from efficient HR. Management also gains from close collaboration with human resources during the M&A process. Without strong HR input into the planning and strategy process, personnel – often a business’s most valuable asset – will be affected, making potential risks harder to notice and failures more difficult to manage. 

It’s useful, then, to consider including HR teams as one of the leaders in the M&A audit. Find the point at which your businesses differ the most – whether it’s payroll, workplace law compliance, culture or ways of working – and identify the key steps to achieving harmony. Issues can arise from differences between staff members in pay and conditions, especially where, post-M&A, equal roles do not hold equal pay. The hangover of varying levels of pay often lingers long after two companies have become one and can create major problems if left unchecked. 

Because of this, managers of payroll and HR teams have an obligation to identify major differences in pay and conditions and the reasons why they exist. Sometimes there is a valid justification for the so-called discrepancy. People with similar titles in mergers can often carry out vastly different tasks, justifying different pay and conditions. But where inconsistencies exist that do not warrant rhyme or reason, managers must take action to mitigate and resolve them.

Communication is the vital next step for HR teams to manage the change brought about by M&As. It’s imperative that employees are told what’s going on, how they will be impacted, and have an opportunity to voice their wants, needs and concerns. A dedicated point of contact in HR for employees is often invaluable in this process: employees with a single point of HR contact are twice as likely to find HR ‘value-promoting’ as those with multiple HR contacts and five times as likely than those without. 

As the communication process is streamlined and employees begin to understand the business operations better, it’s time to address the dynamics and culture. Organisations can merge with somewhat different understandings of what makes a business work. But if done right, there is a great opportunity for collaboration, idea-sharing and testing to find the best path for a new organisation. Finding this alignment of understanding allows for better communication and fosters long-term worker satisfaction. 

It’s important to include employees in the process of merging cultures. The only way to find commonalities and opportunities for learning between any group is through collaboration – whether it be formal or informal. It’s often the case that businesses are able to learn new and improved processes from one another and invest in streamlined tools to drive further efficiency and growth. Group training can be a great way to both align the business strategy and develop new bonds between employees. It’s also great to set time aside for group catch-ups, allowing for greater connections and expediting the integration process. 

Done early and efficiently, taking early action in an M&A will ensure a stronger and more dynamic business with improved assets, processes and culture. But it begs the question: How can all of this be achieved while there are still two businesses to run, work to be done, and agreements to be finalised? The technical aspects of managing mergers is often where businesses hit a stumbling block in the process. 

If businesses want to focus on the bigger picture of a merger, it’s worth considering outsourcing and automating some of the details in the process that can chew up valuable time. Looking at the tech-driven solutions to managing mergers to adapt efficiently and easily. This can include managing and automating payroll processes, integrating new ways of working, managing workplace law compliance and more. Many businesses will only attempt one merger or acquisition in their lifespan, and the ability to create efficiencies is key to their overall success.

Going into M&As can seem daunting at first, but they ultimately serve as an opportunity to find optimal solutions and reinvent a business. It stands a business in great stead to set a plan early, communicate that plan clearly, and implement it efficiently – but also be willing to adapt. There’s no one way to integrate a merger or acquisition, but one of the key success factors is integrating HR from the start of the process – happy and motivated employees will foster business success in the short and long-term future. 

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Kylie Baullo

Kylie Baullo

As Managing Director, Kylie Baullo is responsible for defining and leading the business strategy for ADP in Australia and New Zealand. Mrs Baullo will work closely with the global leadership team to identify key growth opportunities while modernising ADP’s product offerings, including bringing NextGen solutions to markets in the region. Kylie has spent three decades with ADP including 4 years as Vice President Client Services for APAC.

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