In today's world, where human capital is widely acknowledged as one of the few remaining sources of a sustainable competitive advantage, people issues matter more than ever. This is especially true when an organisation is undergoing change.
While mergers and acquisitions are typically focused on financial gains, the people implications can be significant. Therefore, human capital needs to be at the focus of any organisational change initiative to be successful. Having a robust people plan and an adequate amount of strategic HR involvement will ensure cultural and organisational integration can occur seamlessly and that inefficiencies are removed, risks identified early and minimised. This not only ensures that the organisation can retain its best talent throughout the change, but that they can successfully execute their merger or acquisition and achieve their desired growth objectives.
The following outlines some simple, yet effective tips for ensuring a smooth and successful change process that adequately identifies, retains and engages employees that are critical to success.
Focus on people from the beginning
When an organisation is planning a merger or acquisition, human resources need to play a critical role in the due diligence stage to ensure the change project is set up for success. For many industries, people are the key driver to an organisation's value generation, or conversely, value destruction if there is inadequate or misaligned people focus. HR should bring a strategic people plan to the deal table, to enable the post-deal business strategy to be successfully executed. This should address people risks and opportunities such as potential cost savings, as well as a people integration plan that is focused on what the combined culture and competencies need to be, in order to execute a winning strategy. The required culture and competencies are likely to differ from what you have today and also from what you are acquiring.
Include the opportunity cost of integration
Organisations often neglect to sufficiently estimate the costs of integrating employees and teams into their deal models. As a result, businesses don't always allocate sufficient budget to be able to successfully align organisations, cultures and systems. HR should be involved at the onset of due-diligence to help to price people risks and integration costs into the deal appropriately, to enable execution of the strategic objectives of the desired change.
Consider integration challenges
Each organisation has its own culture, sub-cultures and nuances. Therefore, every merger or acquisition is different and brings unique challenges to managers' tables. Change leaders need to create a unique plan for each change initiative and they need to be acutely aware of the different workforce focus areas, risks and cultural differences. When this is inadequately done, organisations risk seeing their key revenue-generating talent walk out the door. By its very nature, change is disruptive and presents the perfect opportunity for competitors to attract your employees (and customers) when management is internally focused on change.
Preparation is key
To ensure these challenges don't occur, the key is preparation. Integration milestones, opportunities and risks should all be identified as part of the pre-deal due diligence. And it is important that businesses don't delay their plans. Organisations that fail to integrate or integrate slowly may be burdened with increased complexity and the risk of future errors or omissions (for example, when systems are upgraded or any legislative changes). By preparing appropriately, businesses can minimise these risks. Involving external consultants allows an external view to ensure all key items have been adequately considered and to challenge thinking. Also engaging early with key stakeholders and internal influencers is advisable who understand the strategic vision of the deal, who can act as ambassadors for the change internally.
Most critical to any change process is communication, and in situations such as these, there is no such thing as too much communication. Without regular and consistent messaging from your change leaders, employees begin to fill communication voids and this is when rumours, gossip, speculation and anxiety begin.
Remember that during any time of change, employees want to know if they are safe, secure and – put simply – if they still have a job. People leaders should eliminate their concerns as quickly as possible and connect with their people on an individual level. Group communication is also important, to ensure all employees are bought into the same vision. Communication should be shared from all leadership levels to provide a consistent voice articulating the group's values, behaviours and reasons for change. Keeping it simple and focusing on the future strategy helps to keep employees adequately engaged and productive and eliminates the anxiety that comes with a lack of knowledge of what is going on.
Continuous listening is also an imperative to understand issues and concerns on the floor and how these may differ in pockets, which allows an immediate pulse check of the mood of the organisation. This is particularly important for customer-facing teams, who will face customer questions and will be critical for delivering business results and retaining customers throughout the change.
Organisations should make employee groups a priority throughout their change journey wherever possible. This works well as a two-way dialogue that seeks employee inputs and values their contribution. The sooner concerns are aired and resolved, the sooner organisations can fully focus on customers and growth. This is not easy and relies on having accessible leadership on the ground with sound competency in communicating and executing change.
With active HR planning from the outset and continuous communication throughout a change process, organisations can ensure they can achieve the retention of high-performing employees, the maintenance of customer relationships and the activation and achievement of their growth plans.
Start a conversation with us
At Aon Hewitt, we have an experienced global team focused exclusively on people and HR issues to support our clients during times of change. To ensure your business is equipped to support your people during change, contact us to help you to develop your HR due-diligence roadmap and integration plan.