Hai ppl... Cud u throw some light perspectives on role of HR at the time of Mergers and Acquisitions... Cheers Ram
From India, Mumbai
1From India, Mumbai
If a company is actively involved in Mergers & Acquisitions, what methods can or do the HR department of the purchasing company use to fully understand the type of staff they will be inheriting? Are doing new background checks a practice or generally you get what you get and realize only after the merger you have employee issues.
Dear Ram,
HR plays a pivotal role in M&A. Tell me what specific you are looking at.
It starts from the Management intention to normal routine of the work. As HR Guys have to work in close association with the top Management so it is mandatory first to have the intention of Management what actually they want then HR acts as a catalyst to bring about that change and get the implementation done where offcourse Functional Managers will also play a crucial role.
From India, Gurgaon
HR plays a pivotal role in M&A. Tell me what specific you are looking at.
It starts from the Management intention to normal routine of the work. As HR Guys have to work in close association with the top Management so it is mandatory first to have the intention of Management what actually they want then HR acts as a catalyst to bring about that change and get the implementation done where offcourse Functional Managers will also play a crucial role.
From India, Gurgaon
hi ram
was browsing through the posts and came accross ur mail..
i have done a project on rile of hr in mergers and acquisitions... am sure u must have found wtever information u were luking for (since ur post is dated bac in july)... in case u havent feel free to ask me...
Regards
Somrupa
was browsing through the posts and came accross ur mail..
i have done a project on rile of hr in mergers and acquisitions... am sure u must have found wtever information u were luking for (since ur post is dated bac in july)... in case u havent feel free to ask me...
Regards
Somrupa
THE ROLE OF HR IN MERGERS AND ACQUISITIONS
Whether your organisation is about to undergo a merger, acquisition or is just rethinking strategies, HR managers need to firmly place themselves as leaders in the organisation. Success of an M&A depends on the people driving the business and surely, of all managers, HR managers have a part to play in that. When it comes to maximising the potential of a merger and acquisition, HR need to be up there, working in conjunction with senior management.
=================================
HR Management need to be proactive
HR should be involved in every part of an M&A process, particularly in the early stages. HRM should play a more strategic role in the organisation. The new role is to offer distinctive value to every part of the business process so that the unique capabilities of employees can be harnessed by the office. Similarily, this applies to each part of the M&A process. Be proactive. Be a coach. Be there.
Looking at the steps involved in a M&A process, HR have value to add in many areas:
Pre-deaL
Due diligence
Integration
Implementation
Evaluation
======================
Pre-deal
Spotting problems that may be overlooked by other members of the management team
Assessing people, organisation and cultural fit
Educating executives about possible risks
--------------------------------
Due diligence
Recognising that there is more to due diligence that the bottom line issues such as benefits and employee pay
Looking at the impact of learning and development
Advising on organisation design and development and
Recruitment and retention in the integration process
-----------------------------
Integration
Determining the culture/vision of the new company
Contracts of employment
Performance management issues
Looking at leadership commitment and talent
Confirming people's expectations - retention, cost and cultural fit
Looking at techniques that work well in both operations and selecting the most effective ones that will work across the board
------------------------------------
Implementation
Alignment of HR policies and practices
Advising senior management on people issues
Reward schemes
Education
Recruitment
-------------------------
Effective Communication
M&A's fail due to ineffective internal communication . Communicating regularly to staff will boost confidence, improve morale and prevent rumours from running wild. An effective communication plan, implemented at a very early stage, should make all the difference when it comes to communicating with and reassuring employees.
---------------------------------------
Dealing with Redundancies
No doubt, with an M&A, not all staff will be able to or want to stay in the new organisation. Managers who showed "softer" skills work best in achieving trust and boosting morale in periods of transition and downsizing. These "softer" skills include:
Honest and proactive communication
Good listening skills
Sensitivity to employee needs
An ability to illustrate the need for change despite the pain it may cause to some
An eagerness to offer advice eg. job swap, new career path etc.
-=====================================
HRM is central to what an organisation does but unfortunately, HRM has not always been included when it comes to strategy development
and M/As.
==============================
HRM contribution to mergers and acquisitions,include
*Corporate and HR strategy
General strategy
Business performance
Change management
Corporate governance
Corporate social responsibility
Ethics
Human capital
Knowledge management
Mergers and acquisitions
Organisation development
============================
When going through M&As organisations usually focus primarily on the financial, economic and commercial aspects of the deal, and often only as an afterthought on people. Contradictory really, as most senior executives recognise that people are their greatest asset, but they just seem to overlook this mantra in the heat of a deal.
=================================
The range of key issues that HR needs to address if the chances of success are to be optimised include:
understanding, prior to embarking on acquisition, the strategic rationale
underpinning the deal, together with the external constraints and opportunities
ensuring that cultural due diligence is carried out prior to a deal, so that
effective integration programmes can be implemented immediately post-deal
moving quickly but fairly in the appointment of new management teams at all levels in the business, and dealing humanely with the casualties
identifying realistic synergy targets, and exercising caution in estimating both the timeframe and the potential cost of redundancies
ensuring that due diligence provides comprehensive data on all aspects of reward, and that the costs of harmonisation or 'pragmatism' are factored into the deal
establishing early a flexible project management process, and ensuring that it has the necessary time, resources and processes to manage the transition
communicating consistently, truthfully and when necessary
HR being integral to the M&A process from the outset as a credible business-partner offering practical, financially astute and timely solutions.
Areas of HR policy identified as central to the successful handling of international M&As, were:
-pay and benefits
-management selection and development
-harmonisation and integration
-employee communication
-the pace of change.
===================
Mergers and acquisitions (M&As) are fraught with difficulties, many of which relate to HR issues. And international M&As are even more problematical. When engaging in cross-border deals or acquiring an organisation with operations in many countries, legislative frameworks, ways of doing business and cultural differences will all provide hurdles not found to the same extent in single-country deals.
=============================================
regards
LEO LINGHAM
From India, Mumbai
Whether your organisation is about to undergo a merger, acquisition or is just rethinking strategies, HR managers need to firmly place themselves as leaders in the organisation. Success of an M&A depends on the people driving the business and surely, of all managers, HR managers have a part to play in that. When it comes to maximising the potential of a merger and acquisition, HR need to be up there, working in conjunction with senior management.
=================================
HR Management need to be proactive
HR should be involved in every part of an M&A process, particularly in the early stages. HRM should play a more strategic role in the organisation. The new role is to offer distinctive value to every part of the business process so that the unique capabilities of employees can be harnessed by the office. Similarily, this applies to each part of the M&A process. Be proactive. Be a coach. Be there.
Looking at the steps involved in a M&A process, HR have value to add in many areas:
Pre-deaL
Due diligence
Integration
Implementation
Evaluation
======================
Pre-deal
Spotting problems that may be overlooked by other members of the management team
Assessing people, organisation and cultural fit
Educating executives about possible risks
--------------------------------
Due diligence
Recognising that there is more to due diligence that the bottom line issues such as benefits and employee pay
Looking at the impact of learning and development
Advising on organisation design and development and
Recruitment and retention in the integration process
-----------------------------
Integration
Determining the culture/vision of the new company
Contracts of employment
Performance management issues
Looking at leadership commitment and talent
Confirming people's expectations - retention, cost and cultural fit
Looking at techniques that work well in both operations and selecting the most effective ones that will work across the board
------------------------------------
Implementation
Alignment of HR policies and practices
Advising senior management on people issues
Reward schemes
Education
Recruitment
-------------------------
Effective Communication
M&A's fail due to ineffective internal communication . Communicating regularly to staff will boost confidence, improve morale and prevent rumours from running wild. An effective communication plan, implemented at a very early stage, should make all the difference when it comes to communicating with and reassuring employees.
---------------------------------------
Dealing with Redundancies
No doubt, with an M&A, not all staff will be able to or want to stay in the new organisation. Managers who showed "softer" skills work best in achieving trust and boosting morale in periods of transition and downsizing. These "softer" skills include:
Honest and proactive communication
Good listening skills
Sensitivity to employee needs
An ability to illustrate the need for change despite the pain it may cause to some
An eagerness to offer advice eg. job swap, new career path etc.
-=====================================
HRM is central to what an organisation does but unfortunately, HRM has not always been included when it comes to strategy development
and M/As.
==============================
HRM contribution to mergers and acquisitions,include
*Corporate and HR strategy
General strategy
Business performance
Change management
Corporate governance
Corporate social responsibility
Ethics
Human capital
Knowledge management
Mergers and acquisitions
Organisation development
============================
When going through M&As organisations usually focus primarily on the financial, economic and commercial aspects of the deal, and often only as an afterthought on people. Contradictory really, as most senior executives recognise that people are their greatest asset, but they just seem to overlook this mantra in the heat of a deal.
=================================
The range of key issues that HR needs to address if the chances of success are to be optimised include:
understanding, prior to embarking on acquisition, the strategic rationale
underpinning the deal, together with the external constraints and opportunities
ensuring that cultural due diligence is carried out prior to a deal, so that
effective integration programmes can be implemented immediately post-deal
moving quickly but fairly in the appointment of new management teams at all levels in the business, and dealing humanely with the casualties
identifying realistic synergy targets, and exercising caution in estimating both the timeframe and the potential cost of redundancies
ensuring that due diligence provides comprehensive data on all aspects of reward, and that the costs of harmonisation or 'pragmatism' are factored into the deal
establishing early a flexible project management process, and ensuring that it has the necessary time, resources and processes to manage the transition
communicating consistently, truthfully and when necessary
HR being integral to the M&A process from the outset as a credible business-partner offering practical, financially astute and timely solutions.
Areas of HR policy identified as central to the successful handling of international M&As, were:
-pay and benefits
-management selection and development
-harmonisation and integration
-employee communication
-the pace of change.
===================
Mergers and acquisitions (M&As) are fraught with difficulties, many of which relate to HR issues. And international M&As are even more problematical. When engaging in cross-border deals or acquiring an organisation with operations in many countries, legislative frameworks, ways of doing business and cultural differences will all provide hurdles not found to the same extent in single-country deals.
=============================================
regards
LEO LINGHAM
From India, Mumbai
Dear all,
This has an excellent thread of discussions and truly enlightening...
Here the critical aspect is to get everyone (from both companies) to
understand and agree on a "shared vision" for the merged company. When this is completed, the majority of employees will get away from the "You vs. We" mentality.
Unfortunately, you will ALWAYS have some small percentage of both companies that will maintain this mentality, but the target are those that are "on the fence" about the merger or acquisition.
This does not happen overnight, but can be very successful, if the senior
management team is willing to articulate the "shared vision" of the new
organization.
Everyone needs to understand "what's in it for them", and until that
happens, you will have some level of turmoil. More unfortunately will be,
that if your senior management team doesn't do this, you stand to lose
those individuals from the acquired company to competitors. You'll lose
some anyway, but you want to minimize your risk.
All mergers and acqustions are effected for the betterment of the
overall business objectives where organiztions leverge competencies.
So one has to stay cool and steer clear and it is a big challenge ahead in
communicating effectvely, install confidence and gain the trust in the
employees.
Cheers,
Rajat
From India, Pune
This has an excellent thread of discussions and truly enlightening...
Here the critical aspect is to get everyone (from both companies) to
understand and agree on a "shared vision" for the merged company. When this is completed, the majority of employees will get away from the "You vs. We" mentality.
Unfortunately, you will ALWAYS have some small percentage of both companies that will maintain this mentality, but the target are those that are "on the fence" about the merger or acquisition.
This does not happen overnight, but can be very successful, if the senior
management team is willing to articulate the "shared vision" of the new
organization.
Everyone needs to understand "what's in it for them", and until that
happens, you will have some level of turmoil. More unfortunately will be,
that if your senior management team doesn't do this, you stand to lose
those individuals from the acquired company to competitors. You'll lose
some anyway, but you want to minimize your risk.
All mergers and acqustions are effected for the betterment of the
overall business objectives where organiztions leverge competencies.
So one has to stay cool and steer clear and it is a big challenge ahead in
communicating effectvely, install confidence and gain the trust in the
employees.
Cheers,
Rajat
From India, Pune
Dear Somrupa, I am also doing a study on merger and acquistions and hr issues emerging in it. Can u forward ur work tht u have done in this topics??????? thanks a lot new learner
From India, Calcutta
From India, Calcutta
hi im tamil ............ am doing research oo cross cutural management.......... could you help to frame qustionnaires
From India, Madras
From India, Madras
Hi!!
I am an MBA student and would like to understand the finr aspects of managing the people issues in case of an acquisition. Could somebody who has handled such a post-acquisition harmonisation process throw some light on the same?
I would also specifically like to understand how the compensation and benefits harmonisation is done. I need specific info in this regard.
For instance, if the acquiring company for a certain role provides
-base salary of 18,00,000
-pays HRA of 40% of the base salary
-No transition or conveyance allowance
-Super-annuation of 15%of base salary
-No company car, but interest free car loan of upto 1,000,000
On the other hand, the acquired company for the equivalant role in that organisation provides:
-Base salary of 10,00,000
-hra of 50% of base salary
-Transition allowance of 4,00,000 and conveyance allowance of 9600
-No supeannuation
-no car loan, but compnay car (BMW 3 series with maintenance costs reimbursed)
Then in this case, how can I do the calculations and how can the compensation and benefits of both compnaies be harmonised in the best possible way so that employees are not dissatisfied and attrition rate is kept under control??
From India
I am an MBA student and would like to understand the finr aspects of managing the people issues in case of an acquisition. Could somebody who has handled such a post-acquisition harmonisation process throw some light on the same?
I would also specifically like to understand how the compensation and benefits harmonisation is done. I need specific info in this regard.
For instance, if the acquiring company for a certain role provides
-base salary of 18,00,000
-pays HRA of 40% of the base salary
-No transition or conveyance allowance
-Super-annuation of 15%of base salary
-No company car, but interest free car loan of upto 1,000,000
On the other hand, the acquired company for the equivalant role in that organisation provides:
-Base salary of 10,00,000
-hra of 50% of base salary
-Transition allowance of 4,00,000 and conveyance allowance of 9600
-No supeannuation
-no car loan, but compnay car (BMW 3 series with maintenance costs reimbursed)
Then in this case, how can I do the calculations and how can the compensation and benefits of both compnaies be harmonised in the best possible way so that employees are not dissatisfied and attrition rate is kept under control??
From India
Greetings,
During Merger, broad banding is the process which takes care of the roles followed by compensation. Build parity in the gross salaries and then start dividing the salary components. Generally, a structure is drawn where different salary components are clubbed and accounted as below:
Super annuation and ESOP are long term benefit. A practise that I have seen is these are freezed with the existing employees, they may continue with the benefit. The new employees are not offered the same.
A median in the distribution is drawn where the new salary structure may have HRA 40 % of the base salary. To ensure the distribution into different components, please keep larger part of the salary free from the mandatory division such as HRA. The bigger kitty you have, easier the division is for you!
For e.g. : The mediclaim policy may earlier cover the employee and dependants including spouse and child. In the new structure offer Rs. 340 extra incase the employee wants coverage for his or her parents. This Rs.340 would be deducted on request and would be Tax - exempted
Regards,
(Cite Contribution)
From India, Mumbai
During Merger, broad banding is the process which takes care of the roles followed by compensation. Build parity in the gross salaries and then start dividing the salary components. Generally, a structure is drawn where different salary components are clubbed and accounted as below:
- Fixed - Basic, HRA, Medical reimbursement
- Flexible - Car, Company leased accommodation, membership, and Sodexho / food coupon
- Variables - Individual performance bonus, Business performance bonus.
Super annuation and ESOP are long term benefit. A practise that I have seen is these are freezed with the existing employees, they may continue with the benefit. The new employees are not offered the same.
A median in the distribution is drawn where the new salary structure may have HRA 40 % of the base salary. To ensure the distribution into different components, please keep larger part of the salary free from the mandatory division such as HRA. The bigger kitty you have, easier the division is for you!
For e.g. : The mediclaim policy may earlier cover the employee and dependants including spouse and child. In the new structure offer Rs. 340 extra incase the employee wants coverage for his or her parents. This Rs.340 would be deducted on request and would be Tax - exempted
Regards,
(Cite Contribution)
From India, Mumbai
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