An Hr Manager's Guide to Mergers and Acquisitions
An HR Manager’s Guide to Mergers and Acquisitions by David Zatz, Ph.D., Toolpack Consulting Senior Consultant
Opportunities for HR
Mergers and acquisitions are often planned and executed based on perceived cost savings or market synergies; rarely are the “people” and cultural issues considered. Yet, it is the people who decide whether an acquisition or merger works. The opportunity for HR lies in the fact that customer and employee reactions determine whether the newly combined company will sink or swim.. If a convincing argument is made to senior leaders, HR may gain more power to increase the effectiveness of the organization, and may be able to mold the cultural changes instead of being pushed along by them.
Hazards for HR
One result of many mergers is the consolidation of staff departments. Eliminating one of the HR departments is sometimes stated up front as a justification for the merger.
For the “losing” department, layoffs tend to be a fact of life. The “winning” department may find a substantially higher workload. If both HR departments are kept, there may be issues of interdependence and autonomy, and hard decisions about which policies and services should be shared and which should stay separate.
In many cases, the parent company has taken on a great deal of debt to finance an acquisition. The next logical step is to cut costs — and HR is often the first department on the block. Thanks to outsourcing agencies, even HR people in formerly indispensible functions such as benefits administration can now be replaced for short term gains (and, sometimes, long-term losses — but since the stock market rewards cuts in head count, this may not be an overriding issue for leaders). Internal OD consultants may be the first to be cut, since they are not clearly required to keep products or services rolling out. This makes it particularly important for HR managers to make a strong value case to the senior leadership.
Fortunately, there are also opportunities
Opportunities for HR
Mergers and acquisitions are often planned and executed based on perceived cost savings or market synergies; rarely are the “people” and cultural issues considered. Yet, it is the people who decide whether an acquisition or merger works. The opportunity for HR lies in the fact that customer and employee reactions determine whether the newly combined company will sink or swim.. If a convincing argument is made to senior leaders, HR may gain more power to increase the effectiveness of the organization, and may be able to mold the cultural changes instead of being pushed along by them.
Hazards for HR
One result of many mergers is the consolidation of staff departments. Eliminating one of the HR departments is sometimes stated up front as a justification for the merger.
For the “losing” department, layoffs tend to be a fact of life. The “winning” department may find a substantially higher workload. If both HR departments are kept, there may be issues of interdependence and autonomy, and hard decisions about which policies and services should be shared and which should stay separate.
In many cases, the parent company has taken on a great deal of debt to finance an acquisition. The next logical step is to cut costs — and HR is often the first department on the block. Thanks to outsourcing agencies, even HR people in formerly indispensible functions such as benefits administration can now be replaced for short term gains (and, sometimes, long-term losses — but since the stock market rewards cuts in head count, this may not be an overriding issue for leaders). Internal OD consultants may be the first to be cut, since they are not clearly required to keep products or services rolling out. This makes it particularly important for HR managers to make a strong value case to the senior leadership.
Fortunately, there are also opportunities