Buyers are waking up to the reality and importance of M&A HR due diligence. To shed light on this pressing issue we reached out to seasoned HR due diligence and integrations guru Mark Walztoni.
Here’s what Mark had to say including his high-level integration due diligence best practices. You don’t want to miss it!
HR Diligence/Integration Best Practice #1 Determine the new organizational structure before Day 1
Before Day 1 arrives, it’s imperative that the new company structure is clear and people are clued in about their roles and responsibilities.
M&A Day 1 isn’t the moment to start wondering if you’ve got the right people in the integrated workforce. If you want the first day of operations to go well with little to no mishaps, you cannot afford to ignore the human element until it’s time to unite forces and work together.
Fortunately, when conducting HR due diligence this will be one of the first tasks to be discussed.
Takeaway: “Basic organization structure is the highest level transaction you need to think about. Are the right people in the right jobs, in the right locations?”
HR Diligence/Integration Best Practice # #2 Tackle integration challenges head-on
One of the more challenging aspects of restructuring will be addressing double job positions. It’s not uncommon during mergers and acquisitions for employees to find themselves in this conundrum.
How you tackle this sensitive issue can determine your retention rate. Are they ways you can keep top talent by creating new positions? Or perhaps altering their job title and or responsibilities so as to lessen friction?
Middle managers are especially vital. You need them for the M&A to proceed. This is where working with a seasoned HR due diligence expert who knows how to provide communication tips can become quite valuable.
Takeaway: “You’re going to have [to address] integration. There are two people for each job. Maybe there are some jobs that are different. You have to think about that specific change.”
HR Diligence/Integration Best Practice #3 Establish how you will address employee concerns
Senior management is often in the know about the finer details of the M&A deal. They know where they stand in terms of job stability, compensation, and future prospects within the soon-to-be amalgamated company.
Unfortunately for employees lower down in the pecking order, they might not be privy to what the higher-ups are doing. Therefore, if they catch wind of the merger or acquisition before they are properly informed and given a chance to air their concerns, panic can ensue.
Takeaway: “The first question [employees will ask] is, “What’s in it for me?” The second one is, “What’s needed from me?” There’s going to be a change. [Buyers must be sensitive about] what’s changing for whom and how?”
HR Diligence/Integration Best Practice #4 Do not ignore cultural incompatibility
Cultural clashes and or incompatibilities are some of the biggest causes of poor post-merger integration.
M&A HR due diligence is the perfect time to assess the target company’s culture i.e. how business is done in the said enterprise, what the employer/employee/client communication styles are; alongside the values and attitudes adhered to by all in the company.
Do not ignore the cultural red flags that you identify at this stage. If there are areas that are likely to pose a challenge once integration starts then sound strategies (such as hiring M&A HR specialists for a season) need to be developed prior to Day 1.
Takeaway: “[The fourth transition/best practice pertains to] cultural capabilities if I’m boiling it down. Culture has got to be practical and pragmatic.”
M&A HR due diligence and integration is not a function that can be ignored. Done right it can accelerate post-integration efforts. Execute it poorly and you may not see the ROI you expected.
So, if you want Day 1 to go smoothly the work begins with thorough and careful planning of how you will handle the human element. Therefore, consider contacting an experienced M&A advisory team today.
If you’re thinking of an M&A and need to discuss your options with an expert, don’t hesitate to contact us.