There was an article in the Sunday Atlanta Journal Constitution entitled “Merger Game Can Be Tricky.” (It also appeared online on Thursday). The writer Jeremiah McWilliams talks about the merger and aqcuisition activity of two Atlanta based companies, Wendy’s/Arby’s and Rock-Tenn. Both have gotten to where they are through M & A. Now one of them is breaking up after just three years and the other is in the middle of an acqusition that will triple its size. According to Dr. Teresa Daniel, in a publication for SHRM,
” It has been estimated that nearly two-thirds of all M&As fail to achieve their anticipated strategic and financial objectives. This rate of failure often is attributed to various HR-related factors, such as incompatible cultures, management styles, poor motivation, loss of key talent, lack of communication, diminished trust and uncertainty of long-term goals.”
Reporter McWilliams pointed out something similar in a quote from Professor Haley from Massey University, who said “Bankers, lawyers, consultants and executives often fail to adequately plan the post merger integration. They are skilled at accounting for physical and financial assets, but often not as good at the soft skills that help them retain talent. They are bean counters, but they are counting the wrong beans.”
According to Professor Daniel “Both mergers and acquisitions present significant challenges to HR professionals. The M&A process requires management of both organizations to consider all implications of a proposed merger or acquisition before agreeing to one—which necessarily involves consideration of the ‘people issues’ created by a proposed merger or acquisition.” In her assessment there are a number of issues to consider, which include:
- Assessing the human resources of both organizations to determine whether a possible merger or acquisition is of interest.
- Conducting surveys and otherwise using metrics to gather data relevant to a merger or acquisition’s potential “people issues.”
- Communicating with the divisional managers within an organization and with those managers’ counterparts at the company involved in a proposed merger or acquisition.
- Conducting layoffs of superfluous employees after a merger or acquisition.
- Creating efficient work groups after a merger or acquisition.
Linda Tepedino and Muriel Watkins, in their article “Be a Master of Mergers and Acquisitions” , make the point “Early HR involvement and a robust discovery process will help prepare your organization for integration. As a best practice, many companies form integration teams separate from the acquisition or due diligence teams. HR professionals can provide leadership by identifying potential members and forming the integration team. Then HR serves as the common thread between due diligence and integration.” (Article availabe to SHRM members)
Most HR departments are involved in the post merger or acquisition activity. Where the disconnect seems to be is in HR’s involvment on the front end. Supposedly this has been improving, however, if McWilliams article is an indication it is still not at the point where is it should be. Despite a claim of thorough research, McWilliams makes no mention of HR involvment.
The question you need to be asking yourself is “Has HR in my company been involved with M & A decision making?” “Given the recognized view that most failures result from HR reasons why has our HR department not been involved?” My guesss is that you are not recognized as a business partner. You are considered to not have the business knowledge needed to help make M & A decisions. So if this is your case what are you going to do about it?
If you have been involved in pre-M & A activity in your company comment and tell us what skill set is needed to be accepted as a partner in this?