How HR execs can survive a post-merger integration

In our mergers and acquisitions work with clients, we frequently find that the issues around post-merger integration are as difficult and complex as the issues involved in the acquisition or merger transaction itself.

As well posing the obvious operational issues, merger integration programmes make tough – and sometimes unreasonable – demands on the HR team collectively and on HR executives individually. They have to shoulder the dual burden of providing business support to help get right the myriad “people decisions” in the merger, while delivering significant synergies by combining and streamlining the HR functions of the two merging companies.

Markus Rimner, who leads Accenture’s Mergers & Acquisitions practice in the Nordics, has written an interesting article describing:

  • why and how HR is critical in a merger integration programme
  • the challenges the HR function will face
  • what HR executives need to know and do to help make the merger a success for the company, for the HR team and for themselves.

His article is summarised below, and there is a link to the full article at the end of this post.

The challenges of post-merger integration

Mergers can be risky and expensive. They are time consuming to plan, and are almost always extremely difficult to execute correctly. They often tax even the most well run and experienced companies. All those involved need to be at the top of their game.

Quickly getting a combined organisation in place once the transaction is complete can be critical to minimising the employee uncertainty that will otherwise become a drag on company performance.

In most cost-­focused mergers, the vast majority of synergies are expected to stem from elimination of overlaps, best practice transfers between the two companies, and transformational efforts in certain areas to drive performance beyond that of either of the two companies on their own. This will invariably result in redundancies. Managing the severance process swiftly and smoothly can have a significant impact on company results, due to the time value of money.

Organisational changes and redundancies can both generate deep uncertainty among employees. The processes surrounding them should therefore be implemented quickly and professionally, and much effort should be invested in employee communications in order to reduce this uncertainty.

Finally, the HR function itself is likely to be a rich source of cost synergies. In a merger of two similar-sized companies with overlapping activities, synergies of between 10% and 30% of the combined HR cost base are typical.

Meeting the challenges

Accenture offers the following six guidelines to help HR executives to turn a post-merger integration programme into a success.

1. Understand what is expected of HR and of you.

Meet with the CEO to discuss the deal thoroughly. Make sure you come away with an understanding of:

  • how important the merger is to the company
  • what the expectations are for HR
  • where HR can make the greatest contribution.

2. Position HR and yourself as a contributor.

Proactively present the CEO and integration leadership with solutions to the HR issues that can be expected.

3. Use resources wisely.

Decide which on­going HR transformation activities you need to put on hold in order to free up resources for integration. Create clear roles and responsibilities to help ensure a successful integration.

4. Use the unprecedented opportunity to change HR.

The merger integration gives you the chance to make changes to the HR function that may have been long desired but have previously been impossible due to internal resistance.

5. Don’t mess up execution.

HR will be either driving or closely involved in activities that not only have a significant impact on people, but are also seen as key indicators for how well the merger is progressing. This makes flawless execution all the more imperative.

6. Take care of your people.

The HR team will experience increased pressure during a merger. The well-­being of HR team members is likely to require more personal attention than usual.

Mergers, while difficult for all involved, are disproportionally challenging for HR functions. By following the six rules outlined above, HR executives can improve their ability to turn a challenging merger integration into a raging success – for the company, for the HR team and for themselves.

You can read Markus Rimner’s full article here.

Tips on other aspects of post-merger integration are available here.

Alternatively, feel free to email me or call me on 020 7099 2621 for further information or advice.