The phrase "mergers and acquisitions" brings to mind pictures of sharp-suited executives signing on the dotted line in well-appointed offices. But, as anyone who has worked on one knows, the reality is a lot less glamorous.
An immense amount of data-crunching and hard work is involved. A high percentage of mergers/acquisitions fail to meet their financial targets – and the reasons are usually HR-related, whether it's a failure to retain key talent, clash of management styles or incompatible cultures. So HR professionals have a crucial role to play. What can they do to make sure their deal is one of the success stories?
Manage the data
A key role for HR in any transaction is dealing with employee data. HR professionals can mitigate significant legal and reputational risks for the business by being alive to potential General Data Protection Regulation ("GDPR") issues when employee data is exchanged in the course of due diligence. Although pseudonymising employee data can avoid some risks, it may be ineffective for smaller businesses where employees listed by job title/salary can be identified with relative ease. As a result, it's crucial that data protection issues are considered at the outset of the transaction and a legal basis for processing the data properly identified before due diligence starts.
HR often provide a key interface between employees and the business while the details of a deal are being thrashed out. Although commercial confidentiality may limit the amount of information which can be shared with staff before completion, an atmosphere of secrecy is likely to unsettle employees and encourage key talent to look elsewhere. HR teams should take a lead role in developing an internal communications plan. HR should also engage with senior leadership to craft a clear narrative about the purpose of the merger and develop strategies for getting buy-in from key staff at an early stage. Staff are more likely to buy in to the project if they feel part of delivering it, so it's worth considering how responsibility for implementation can be shared.
Don't neglect cultural issues
HR's role in the due diligence process shouldn't be limited to number-crunching salaries and benefits or drafting multiple versions of an organisation chart. Ensuring that there is a cultural fit between the two businesses is essential. Do they have similar visions about performance management, career progression and diversity and inclusion? HR are often best-placed to judge these crucial issues, which are often (wrongly) neglected by boards focused on the financial aspects.
With economic and political turbulence likely (at least in the short term), businesses will be under even more pressure in the coming months and years to make a success of acquisitions they undertake. Neglecting people issues is one of the most expensive mistakes that businesses in this position can make.