Hai ppl... Cud u throw some light perspectives on role of HR at the time of Mergers and Acquisitions... Cheers Ram
From India, Mumbai
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1From India, Mumbai
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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 new background checks a common practice, or do you generally get what you get and realize only after the merger that you have employee issues.
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Dear Ram,
HR plays a pivotal role in M&A. Tell me specifically what you are looking at.
It starts from the management's intention to the normal routine of work. As HR professionals have to work closely with top management, it is essential to first understand the management's objectives. HR then acts as a catalyst to bring about the necessary changes and ensure implementation, where functional managers also play a crucial role.
From India, Gurgaon
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HR plays a pivotal role in M&A. Tell me specifically what you are looking at.
It starts from the management's intention to the normal routine of work. As HR professionals have to work closely with top management, it is essential to first understand the management's objectives. HR then acts as a catalyst to bring about the necessary changes and ensure implementation, where functional managers also play a crucial role.
From India, Gurgaon
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Hi Ram,
I was browsing through the posts and came across your email. I have completed a project on the role of HR in mergers and acquisitions. I am sure you must have found whatever information you were looking for (since your post is dated back in July). In case you haven't, feel free to ask me.
Regards,
Somrupa
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I was browsing through the posts and came across your email. I have completed a project on the role of HR in mergers and acquisitions. I am sure you must have found whatever information you were looking for (since your post is dated back in July). In case you haven't, feel free to ask me.
Regards,
Somrupa
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The role of HR in Mergers and Acquisitions
Whether your organization is about to undergo a merger, acquisition, or is just rethinking strategies, HR managers need to firmly place themselves as leaders in the organization. The 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 maximizing the potential of a merger and acquisition, HR needs to be up there, working in conjunction with senior management.
HR Management needs 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 organization. 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. Similarly, this applies to each part of the M&A process. Be proactive. Be a coach. Be there.
Looking at the steps involved in an M&A process, HR has value to add in many areas:
Pre-deal: Spotting problems that may be overlooked by other members of the management team, assessing people, organization, and cultural fit, educating executives about possible risks.
Due diligence: Recognizing that there is more to due diligence than the bottom-line issues such as benefits and employee pay, looking at the impact of learning and development, advising on organization design and development, 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&As fail due to ineffective internal communication. Communicating regularly to staff will boost confidence, improve morale, and prevent rumors 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 organization. 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 e.g. job swap, new career path, etc.
HRM is central to what an organization does, but unfortunately, HRM has not always been included when it comes to strategy development and M&As.
HRM's contribution to mergers and acquisitions includes:
Corporate and HR strategy
General strategy
Business performance
Change management
Corporate governance
Corporate social responsibility
Ethics
Human capital
Knowledge management
Mergers and acquisitions
Organization development
When going through M&As, organizations 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 recognize 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 optimized 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 programs 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 harmonization 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
- Harmonization 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 organization 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
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Whether your organization is about to undergo a merger, acquisition, or is just rethinking strategies, HR managers need to firmly place themselves as leaders in the organization. The 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 maximizing the potential of a merger and acquisition, HR needs to be up there, working in conjunction with senior management.
HR Management needs 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 organization. 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. Similarly, this applies to each part of the M&A process. Be proactive. Be a coach. Be there.
Looking at the steps involved in an M&A process, HR has value to add in many areas:
Pre-deal: Spotting problems that may be overlooked by other members of the management team, assessing people, organization, and cultural fit, educating executives about possible risks.
Due diligence: Recognizing that there is more to due diligence than the bottom-line issues such as benefits and employee pay, looking at the impact of learning and development, advising on organization design and development, 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&As fail due to ineffective internal communication. Communicating regularly to staff will boost confidence, improve morale, and prevent rumors 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 organization. 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 e.g. job swap, new career path, etc.
HRM is central to what an organization does, but unfortunately, HRM has not always been included when it comes to strategy development and M&As.
HRM's contribution to mergers and acquisitions includes:
Corporate and HR strategy
General strategy
Business performance
Change management
Corporate governance
Corporate social responsibility
Ethics
Human capital
Knowledge management
Mergers and acquisitions
Organization development
When going through M&As, organizations 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 recognize 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 optimized 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 programs 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 harmonization 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
- Harmonization 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 organization 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
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Dear all,
This has an excellent thread of discussions and is truly enlightening.
The critical aspect here is to get everyone (from both companies) to understand and agree on a "shared vision" for the merged company. When this is accomplished, the majority of employees will move away from the "You vs. We" mentality.
Unfortunately, there will always be a small percentage of employees from both companies who maintain this mentality. However, the focus should be on those who are "on the fence" about the merger or acquisition.
This transformation 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, there will be some level of turmoil. More unfortunate would be the situation where if your senior management team fails to do this, you risk losing valuable individuals from the acquired company to competitors. Some loss is inevitable, but the goal is to minimize the risk.
All mergers and acquisitions are undertaken for the betterment of the overall business objectives, where organizations leverage competencies.
Therefore, it is crucial to stay composed, navigate effectively, instill confidence, and earn the trust of the employees. It poses a significant challenge ahead in effectively communicating, building confidence, and gaining employee trust.
Cheers,
Rajat
From India, Pune
Acknowledge(0)Amend(0)
This has an excellent thread of discussions and is truly enlightening.
The critical aspect here is to get everyone (from both companies) to understand and agree on a "shared vision" for the merged company. When this is accomplished, the majority of employees will move away from the "You vs. We" mentality.
Unfortunately, there will always be a small percentage of employees from both companies who maintain this mentality. However, the focus should be on those who are "on the fence" about the merger or acquisition.
This transformation 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, there will be some level of turmoil. More unfortunate would be the situation where if your senior management team fails to do this, you risk losing valuable individuals from the acquired company to competitors. Some loss is inevitable, but the goal is to minimize the risk.
All mergers and acquisitions are undertaken for the betterment of the overall business objectives, where organizations leverage competencies.
Therefore, it is crucial to stay composed, navigate effectively, instill confidence, and earn the trust of the employees. It poses a significant challenge ahead in effectively communicating, building confidence, and gaining employee trust.
Cheers,
Rajat
From India, Pune
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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
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From India, Calcutta
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hi im tamil ............ am doing research oo cross cutural management.......... could you help to frame qustionnaires
From India, Madras
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From India, Madras
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Hi!
I am an MBA student and would like to understand the finer aspects of managing the people issues in case of an acquisition. Could somebody who has handled such a post-acquisition harmonization process shed some light on the same?
I would also specifically like to understand how the compensation and benefits harmonization 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 the base salary
- No company car, but interest-free car loan of up to 1,000,000
On the other hand, the acquired company for the equivalent role in that organization 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 superannuation
- No car loan, but company 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 companies be harmonized in the best possible way so that employees are not dissatisfied and the attrition rate is kept under control?
From India
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I am an MBA student and would like to understand the finer aspects of managing the people issues in case of an acquisition. Could somebody who has handled such a post-acquisition harmonization process shed some light on the same?
I would also specifically like to understand how the compensation and benefits harmonization 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 the base salary
- No company car, but interest-free car loan of up to 1,000,000
On the other hand, the acquired company for the equivalent role in that organization 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 superannuation
- No car loan, but company 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 companies be harmonized in the best possible way so that employees are not dissatisfied and the attrition rate is kept under control?
From India
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Greetings,
During a merger, broad banding is the process that takes care of the roles followed by compensation. It builds parity in the gross salaries and then starts dividing the salary components. Generally, a structure is drawn where different salary components are clubbed and accounted for as below:
1. Fixed - Basic, HRA, Medical reimbursement
2. Flexible - Car, Company-leased accommodation, membership, and Sodexo/food coupon
3. Variables - Individual performance bonus, Business performance bonus.
Certain other areas such as Mediclaim policy are taken under a different head.
Superannuation and ESOP are long-term benefits. A practice that I have seen is that these are frozen with the existing employees, and they may continue with the benefits. The new employees are not offered the same.
A median in the distribution is drawn where the new salary structure may have HRA at 40% of the base salary. To ensure the distribution into different components, please keep a larger part of the salary free from the mandatory division, such as HRA. The bigger the kitty you have, the easier the division is for you! For example, the mediclaim policy may have earlier covered the employee and dependants including the spouse and child. In the new structure, offer an extra Rs. 340 in case the employee wants coverage for his or her parents. This Rs. 340 would be deducted upon request and would be tax-exempt.
Regards, (Cite Contribution)
From India, Mumbai
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During a merger, broad banding is the process that takes care of the roles followed by compensation. It builds parity in the gross salaries and then starts dividing the salary components. Generally, a structure is drawn where different salary components are clubbed and accounted for as below:
1. Fixed - Basic, HRA, Medical reimbursement
2. Flexible - Car, Company-leased accommodation, membership, and Sodexo/food coupon
3. Variables - Individual performance bonus, Business performance bonus.
Certain other areas such as Mediclaim policy are taken under a different head.
Superannuation and ESOP are long-term benefits. A practice that I have seen is that these are frozen with the existing employees, and they may continue with the benefits. The new employees are not offered the same.
A median in the distribution is drawn where the new salary structure may have HRA at 40% of the base salary. To ensure the distribution into different components, please keep a larger part of the salary free from the mandatory division, such as HRA. The bigger the kitty you have, the easier the division is for you! For example, the mediclaim policy may have earlier covered the employee and dependants including the spouse and child. In the new structure, offer an extra Rs. 340 in case the employee wants coverage for his or her parents. This Rs. 340 would be deducted upon request and would be tax-exempt.
Regards, (Cite Contribution)
From India, Mumbai
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The Role of HR in Mergers and Acquisitions_ (Muntazir).pdf
Role of hr.zip