Successful Mergers—Not an Oxymoron

Mergers and acquisitions were at an all-time high in 2015. There is some indication they will slow down in 2016 because it is an election year but probably not by much. However, just because there are a lot of mergers does not mean they are successful. In fact, at least half of all mergers are not successful—which means, they don’t meet the long-term revenue goals set out that define success.

The first step most organizations take when considering a merger is to put a team together which typically consists of the CEO, the CFO, and maybe the Chief Marketing Officer. So the focus is necessarily on the numbers—what is it going to cost us to make the deal? What new markets will we get from this transaction? How will this merger increase our revenue, our profits, and our shareholder value?

Missing from this team are experts to focus on the people issues. Savvy organizations are learning that the sooner they involve HR in the process, the greater their chances of success. People drive the business and in any merger, it is extremely important, early in the game, to understand the strengths of each organization’s workforce and to determine who the key players are. It is also critical to understand the organizational culture of each company and to determine if the cultures can successfully be merged.

Here are some of the ways HR can add value early in the merger process:

  • Identifying the talent in the prospective organization
  • Assessing organizational culture difference
  • Reviewing labor contracts, if applicable
  • Planning and executing layoffs, if necessary
  • Putting retention strategies in place to retain key talent

HR also brings experience in change management. Many people fight change and people experienced in change management can head off some of the potential disasters such as a decline in performance or, even worse, the loss of the superstar talent that you wanted to take this new company forward!

Patrick Shannon, a San Francisco based partner in Mercer’s talent practice says, “Organizations need to think about the diligence around their talent decisions with the same rigor they use for their products, their operations, and their customer decisions.” How will those decisions be made if HR isn’t represented in the process?

HR just may be the key to a successful merger so be sure to include them in every phase of the merger process.

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