Most mergers fail to fulfil their potential because senior managers lack a clear strategy and mismanage people issues, according to a report by Roffey Park.
Effective Mergers and Acquisitions claims poor handling of people during merger leads to the loss of key employees, restructured responsibilities and derailed careers. It says merging companies often underestimate the level of integration required and fail to respond to cultural issues.
Report co-author Valerie Garro said, “Eighty per cent of changes occur in the first three months after a merger. Employees seek to interpret the signs of new appointments and allocation of offices as well as plans for closure and relocation.
“HR teams often find themselves in the front line having to meet commitments that they’ve not been party to making, while being uncertain about their jobs.”
The report advises HR teams to adopt a strategic role and focus on the most imperative business and organisational priorities of mergers. Otherwise, HR departments are foisted with a passive, data provision role.
“More often than not, HR is not included in deal negotiations and it is a catch-up situation once the merger is announced,” claims the report.
“HR teams have to equip themselves for managing the people aspects of integration, especially if their organisation is on the acquisition trail. Partly this is about developing specific expertise within HR teams.
“It also involves making sure that HR has its own house in order with regard to systems, information and organisation.”
Garro stresses the need for staff retention during the integration phase. This can be difficult considering it is characterised by pressures to deliver targets, increased performance scrutiny, and new work processes and teams. She stresses the importance of effective communication and transitional managers.
The report contains input from 13 companies, including Amoco, BP, Citibank and Deutsche Bank.
How HR teams can be prepared for merger:
Create a checklist for due diligence
- Carry out risk analysis on