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US HR professionals play a prominent and crucial role in preparing for organizational restructures like a merger or acquisition. If a restructure is like uncharted waters to an explorer, then HR and its Transition Team are the captains of the ship. This job runs the gamut from preparation and planning to communicating with employees and implementing risk avoidance strategies. HR’s role is so crucial here that it can actually make or break the restructure itself, affect the price of an acquisition or merger or cancel the restructure altogether.
Mistake #1: Nominating Unqualified People to the “Transition Team”
The Transition Team is responsible for leading the organization through the process of a merger or acquisition, which can be extremely stressful and daunting for employees. They must lead the employees through the fog, storms, shark attacks and any other troublesome maritime metaphor that comes to mind.
Thus, it is crucial that HR takes the time to nominate qualified employees to handle the transition, listen to their concerns about staffing and due diligence requirements and where necessary, train employees to assist with special duties.
Mistake #2: Spreading the Word Too Early
The Transition Team should also be tasked with controlling the flow of information; much like a captain would first speak to his/her Chief Officer, and so on. This is another hugely important job for HR professionals due to the overwhelming loss of productivity that can and does occur with mergers and acquisitions if word gets out too early or to the wrong people. Without a “plan” to resolve organizational incompatibilities, redundancy, reduced budgets, etc., employees can get nervous.
The last thing you want is for Joe in Acme Accounting to resent Bob in Emca Accounting because he gets a higher commission percentage and to carry that resentment with him to work every day, where he can spread that sentiment to the other Acme accountants. Keep a lid on the news until the organization is ready to move forward with a public statement, at which time it should already have a plan in place to handle discrepancies like this.
Mistake #3: Failing to Prevent Productivity Loss
Employee uncertainty is ubiquitous in the mergers and acquisitions environment and HR has the difficult job of stopping it because uncertainty leads directly to productivity loss. Thus, HR has to focus on implementing structures that foster and encourage employee engagement and involvement, both before and after the merger or acquisition.
These protocols should be directed at both the instant company and the target company, where a huge shake-up in the managerial structure could cause productivity to plummet. HR should tackle this issue before it occurs.
Mistake #4: De-emphasizing the Goals of a Merger or Acquisition
HR must conduct a tremendous amount of due diligence in preparation for a merger or acquisition and that process could potentially involve a review of the entire corporate structure, policies and procedures. But reviewing such a large amount of information without allocating the proper attention to relevant risk areas is tremendously wasteful. For example, if Acme, Inc. is acquiring Emca Corp. to broaden its distribution network, it should focus on Emca’s distribution protocols, capabilities, its relationship with shipping companies and the costs of its employee transportation systems and vehicle maintenance.
The goals of the acquisition or merger should always drive the due diligence work, but should not necessarily restrict it.
Mistake #5: “Softening” the Findings
Last but not least is the pervasive mistake of “softening” the findings or not reporting risk candidly to the Executive Board. Rarely is a decision to acquire or merge with a company made in haste, so certainly the Executive Board members will be “rooting” for HR to report that it should be “smooth sailing” through the restructure.
But again, the Transition Team is responsible for captaining the ship, and if they hold back on their risk assessment, they could end up sharing beachfront property with Tom Hanks and conversing with a volleyball. That’s not good for anybody. Be candid and realize that the information you provide can actually determine whether the destination is worth the journey.