Human Resource Directors can never be sure when they may get a call which will turn their lives upside down. Simon Barrow is Chairman of People in Business and co-author of Employee Communications during Mergers and Acquisitions – the soft stuff is the hard bit, advises.
Nothing is more likely to prompt change than when the subject is mergers and acquisitions and a call from the CEO to tell you of a bidder’s approach or to involve you in stalking a target. In contrast to the pressures of M&A within companies nothing pleases investment bankers, lawyers, accountants and financial public relations firms more than a booming M&A market. However, their job is to get the deal done rather than try to ensure lasting value and the deal makers financial rewards are strongly linked to closure.
Senior management of the merging organisations can also be influenced by the promise of what the post deal life is likely to be. Todd Stitzer the Cadbury CEO would not be human if he had not, at least in the back of his mind, calculated the £15m or so he was likely to receive in the event of the deal between Cadbury and Kraft going ahead in January this year. This is a time which tests everyone’s fortitude, conviction, diplomacy, loyalty, energy and professional ability. That is because, like other moments of great change, the stakes are very high, a lifetime’s work potentially lost, a vision ended and a team destroyed.
Small wonder some people can behave badly under such circumstances just as they can do whenever stakes are high. Any head hunter will tell you of candidates who jump ship after days of professed commitment to a new job and any divorce lawyer will see appalling actions when high stakes are combined with emotion. The News of the World used to claim ‘All human life is there’ and the same can be said for any M&A.
Any HR Director, however professional, will of course think about the personal implications when he or she first hears of a possible deal whether his/her company is bidder or target. Like everyone else he/she will ponder these questions: who is the opposite number and how does he/she compare to me? From a personal standpoint do I want this deal to go ahead? What is the best and worst outcome for me and how much time do I have? What personal action do I need to consider over the next few days?
“Understand the chemistry and relationships at the top of your business and the underlying pressures for a deal whether as a bidder or as a target”
It is unrealistic to ignore such questions. If that is how you might feel within seconds of hearing news of a possible transaction don’t think you will be alone. That is how every executive will feel when they in turn hear the news. Here are some pointers for action in five areas to guide preparation be it for an incoming bid (whether agreed or hostile), an outgoing bid for a target or finally the chance of an internal merger within your own group.
Before a partner is identified
Understand the chemistry and relationships at the top of your business and the underlying pressures for a deal whether as a bidder or as a target. It may be that organic growth will not be sufficient to keep shareholders or key employees engaged and positive. Consider at what forum could such thoughts be expressed – how do other senior people really feel? Is there corporate development group and are you as HRD involved on it?
From a human and cultural standpoint what potential partners could you live with and which would be anathema to you and your colleagues? What are the processes which you should know of ahead of any M&A becoming real? What external partners might you consider in this area if need be?
Due diligence
While you will have considered some cultural aspects in your preparation above, due diligence should not be limited to financial and legal exposure and should include an assessment of the likely cultural challenges so that leadership actions can be based on peoples feelings, hopes and fears on both sides.
HR and communications during the announcement
Many deals feature mouthwatering figures for the synergies which are likely and then, later in the process, release new figures headlining even larger figures. That is great news for shareholders but conveys a different message for employees. Of course deals often mean job reductions but justice, fairness and being listened to are critical statements as well and the more aware in the financial community will understand the importance of this. You as HRD should be involved in external as well as internal communications for this reason.
The first 100 days
There are opportunities for some quick wins. It can have a major impact just to solve some of the ongoing gripes such as fixing something which has long been an irritant which has blighted employees’ lives. Highly visible improvements have an immediate impact which shapes the way employees interpret the other changes they see over the first few months. It also helps set the tone to under-promise and over-deliver; employees will get the impression that the new management team is competent.
Establishing the Employer Brand of the merged organisation
Think about what the bedrock of the new Employer Brand (EB) means in practical benefits in the fabric of the new organisation but do not start the EB process until people are clear about their own status. You cannot expect involvement in the future from people who are unsure if they have one.
