Chicago M&A Advisory Firm

7 Common HR Obstacles That Occur With Acquisitions

Sun Acquisitions Quote Left

Our Process Ensures Maximum Value For Our Clients!

Sun Acquisitions Quote Right

7 Common HR Obstacles That Occur With Acquisitions

The world is more interconnected than ever, and the marketplace in which a business competes with others is global. In the age of technology and innovation, leaders turn to mergers and acquisitions to meet their needs and remain competitive and relevant.

It can be said that a company’s greatest assets are people-based. So, when one company acquires another, the acquired organization tends to shift its culture and practices toward that of the buyer. That identity loss is felt by employees and customers which can result in these seven common HR obstacles.

  1. Talent Loss

Knowing one’s place in company culture comes with two connotations — a negative one and a positive one. The negative connotation leaves an employee feeling devalued and useless, unable to move up company ranks, put down and uncertain about their job security. The positive connotation contributes a feeling of belonging, teamwork and trust in a stable system where an employee has the support they need to get the job done and grow.

It is understandable that employees lean toward the negative end of a spectrum of “knowing one’s place” during an acquisition if HR isn’t invested in its most important asset — its employees. Instability, or the thought of it, can lead to talent loss. Essential employees move on to work for competitors.

  1. Incompatible Cultures

Identity loss and culture shock can occur once the buyer makes the acquisition. The acquired company’s culture becomes diluted or non-existent. Buyers need to take the time to realize that a successful melding of cultures does not occur overnight and work hard to build the culture of the combined entities to maintain the top talent.

  1. Management Styles Clashing

You cannot shift a management style suddenly and expect employees of the acquired company to fall in line. The buyer must also adapt to the needs of the acquired business and achieve a solution that redirects that culture shock toward accomplishing shared goals.

  1. Communicating the Need for Acquisition

All is said and signed. The business has been acquired, but the buyer must now communicate the why and how for the business acquisition. Why has this occurred? How will employees be affected moving forward?

Employees need support during the critical stage of communication to build trust and rapport. Lose employee trust and morale drops — and you risk losing the employees.

  1. Drop in Morale

The staff of the acquired business naturally feel uncertain about their futures as they transition into new job duties, policies and work culture. They struggle to reconcile and juggle the past way of doing things with the new way. Clients or customers are also used to the old ways, and a less than smooth transition creates rough waters for everyone. That added stress leads to a significant drop in employee morale.

What if the buyer must make cuts? If an employee is not let go as a last resort, it can lower morale among the staff especially if that employee is later rehired. Disclosure, consistency and one-on-one meetings go a long way to keeping morale high if cuts must be made.

  1. Deciding on HR Policies

Deciding on HR policies that clash with previous policies that employees approved of can create tension. That is why it is important to take the temperature, so to speak, of the acquired business.

Get to know the company culture and try to keep what works, acquiring this as well. Survey employees to find out where their dissatisfaction lies and come up with a solution that works for everyone, within reason and adhering to the proper laws, of course. Taking action in this way will keep up employee morale and retention levels.

  1. Weak Support and Training Systems

As two companies fuse, confusion naturally arises about where responsibility for what lies. Getting used to new practices, policies and technology throw employees of the acquired business for a loop — along with the customers.

Detail the roles and duties, and let the employees find their own meaning in what they do. Provide hands-on training for employees and keep an open door policy as they get acclimated. Don’t set the employees and acquired business up for failure in the new partnership.

HR obstacles commonly occur when one business acquires another one. Talent loss and a drop in morale may result when management styles clash or weak support and training systems fail to accommodate employees. Culture shock occurs, and trust may be lacking when the buyer fails to communicate the reasons for and benefits of the acquisition to the staff once the deal is sealed.

Sun Acquisitions is here to advise you during acquisitions process and afterward to ensure a smooth and confident transition. Contact us to schedule an M&A advisory consultation and honor your best asset in an acquisition — the people.

Leave a Reply

Your email address will not be published. Required fields are marked *

Free Confidential Consultation

Our advisors will provide a complimentary and confidential consultation.

Schedule A Consultation
Sun Acquisitions

Ask Our Team

Submit your question using hte form below and a member of our team will reach out to you shortly. Thanks!