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3 Ways to Increase Your Influence on M&A Strategy

Functional executives say they find it useful if HR plays three roles in the M&A process

Although HR teams are often involved with certain parts of the M&A process, only 25% participate in evaluating M&A targets with their CEO or board members.

Senior managers often ask HR to help with selecting leaders for the new company, to align the compensation and benefits policies with the acquiring firm’s, and to help the newcomers understand the culture of their new firm along with new goals, new ways of working etc that come with that.

But without contributing to overall deal discussions from the start, HR risks having to fix employee-related issues – such as a clash of cultures and working styles – rather than helping identify this as a risk when setting an M&A strategy and list of targets.

Three Roles to Play

Based on discussions with functional heads at some of the world’s biggest companies in CEB’s client networks, there are three important roles that the senior executives look for HR to play throughout the M&A decision-making process. If the HR function gets these right, they can increase their influence earlier in the M&A process and prevent problems that they will only be asked to fix further down the line.

  1. Help with cultural integration (but not always): A “cultural mismatch” is often blamed for deal failure, whether fairly or not. Chief HR officers (CHROs) should understand what the dealmaking team’s objective is with the deal (is it an acqui-hire? Do they want access to a new piece of technology? New customers? And so on), and then they can give their advice on whether culture matters, and in what way.

    If the deal team are looking to fully integrate the company and want to get the the two cultures aligned, the CHRO and his or her team can then take the lead in identifying what is needed to bring the two cultures together, and call out potential problems before a deal closes. If the target is going to be managed at arm’s length then cultural alignment will be far less important but the CHRO and team may well have a role to play in restructuring the new firm.

  2. Find and support a “quick win”: Any advice on a project big (multi-billion dollar acquisition, say) or small will tell you to find a “quick win.” This is something that it is quick and relatively easy to achieve and can be done before the momentum from starting a new project is lost. It energizes everyone involved and shows that the the project team are making progress.

    In M&A deals, senior execs are often expected to provide a quick win within the first few months of an acquisition to maintain shareholders’, customers’, and employees’ confidence, all while minimizing workforce disruption.

    HR teams can be a big help here, as a quick win can often be achieved by delivering training to a new set of employees or helping reorganize teams in the target company. CHROs can help by, again, understanding the objectives of the deal and suggesting where their team can help with overall goals.

  3. Make the most of integration plans: Senior functional managers tend to be preoccupied with, first, finding a quick win that will help the overall company (a CIO integrating the target firm’s IT systems with their own or a CMO showing a new branding strategy that includes the newly acquired target, for example), and second tackling M&A implications for their own functions (such as integrating processes, teams, and technology).

    But what can often get missed during the first six months of an M&A deal closing, is anyone making long-term talent plans for the function and laying the groundwork for those plans. CHROs should grasp the opportunity of M&A-driven change to help functional colleagues set themselves up for success, and to build a workforce and develop leaders that the future organization will need.

More On…

  • CEB Corporate Leadership Council CHRO Quarterly

    This post was adapted from an article in the CEB Corporate Leadership Council™ CHRO Quarterly. CEB Corporate Leadership Council members can access the CHRO Portal on the member website to read the full CHRO Quarterly and related tools, data, and case studies specifically designed for heads of HR.

  • CHRO Quarterly Public Edition

    Non-members can read the feature article from the fourth quarter 2015 edition by filling out the form.

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