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Mergers and acquisitions (M&A ) “will be grabbing media headlines over the coming months” according to an experienced asset manager quoted in a detailed new report on the future of asset management. This manager who was involved in 3 of the 10 biggest mergers of the last 15 years admits that “two failed to achieve the stated goals and one succeeded. The quality of integration was the key factor. The ones that failed were no more than an elaborate game of musical chairs which added nothing to the business other than an extra layer of complexity”
If madness is doing the same thing over and over again while expecting a different outcome then the history of M&A suggests there are some pretty mad managers out there who have yet to learn that it is people not “assets” that make the difference in running a successful enterprise.
As the late Anita Roddick of Body Shop kept reminding us “people are not assets” they are the business. Which is why HR has such an important role to play in the activity of M&A. Doing so though may demand nerves of steel, particularly the willingness to come forward early enough to say how HR can make a difference to the eventual success of the merger or acquisition.
The big contribution of HR is strategic, that is, being able to talk about the cultural dimension that lies at the heart of so many failed commercial marriages. Sustaining Culture Change offers one approach to the task and sets out some key variables that make a difference in these change efforts. This is about understanding the roles, capabilities and attitudes of those involved. Quite simply there is what David Harding and Ted Rouse call Human Due Diligence in which deal makers commonly ignore, defer or underestimate the significance of people issues in mergers and acquisitions.
The HR response to a potential M&A need not be to wait and be invited to comment on the human dimension as so often happens. By asking “what is the purpose of the deal?” HR can help tease out what the culture of the new organisation should adopt and what structure should be put in place. Human due diligence can then focus on determining how well the two organisations are likely to mesh together and which executive talent should be retained.
If we in for yet another bumpy ride of M&A, and all the signs are that this is already happening, it makes sense for HR professionals to polish up their know-how in this area, or run the risk of being caught unaware and once again being marginalised. Actions you can take include:
- At the first hint of an M&A in your company be proactive about raising the issue of human due diligence
- Help senior decision makers by making them aware of the impact of culture on a successful business outcome
- Take a close interest in the intended structure of the organisation
- Encourage a rapid process of filling the top jobs quickly and deciding how to retain other key talent
- Spend quality time in exploring with decision makers what will win hearts and minds of employees in both organisations, not just the target company.
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