‘That its people make a business’, is an age-old popular axiom. No business can be successful without its most vital asset – its employees. As the human capital holds so much importance in any business or organization, it comes as nothing short of a surprise that this vital asset is hardly ever taken into consideration during business acquisitions, especially in terms of post-merger cultural integration.
Human resources must be factored into every aspect of a company’s growth, leading up to success and before that in all its developmental stages. Failure to do the same can lead to consequences that, if not prepared for, can leave a lasting dent in crucial stages of any organization. Human resources, is highly overlooked during company mergers, and research has shown that it has affected the performance and growth of the companies in question. A huge reason for the said handicap is failed attempts at post-merger cultural integration. Many business consultants agree that failure to maintain culture integration after taking over a company can further increase cultural issues in mergers and acquisitions.
When employees are going through transition, it can be a very stressful time for them. Not knowing how the new environment will affect them, whether there will be a different work culture, whether they feel welcomed or alienated, and many such other questions can leave even the best of employees feeling unsure and vulnerable. The outcome of this can potentially be that some of the star employees end up resigning from the company.
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However, all this can be easily evaded, if the acquiring company has in place effective strategies for merging different organizational cultures. According to business consultants, a safe place to start is by including the human resources management in the initial stages of acquisition. Most companies are busy concentrating on numbers and accounts during a merger or takeover, and in the bargain the workforce of the newly acquired organization is left to keep guessing. While financial risk, liabilities and costs are a huge factor, the work culture should not be sidetracked either.
Often when it comes to post-merger integration, the HR management of the acquiring company may not realize how important a role it needs to play, so increasing awareness can be a first stepping stone.
The role of HR can make or break the chain of cultural issues in mergers and acquisitions. So how can the HR help? Starting off by observing and understanding the existing work culture of the acquired company can help a great deal in figuring out how similar or different the company cultures are and whether the transition will be a comfortable one. The acquiring company should also be willing to face any changes that culture integration might bring along.
The right approach is crucial. Interacting with the workforce and understanding their needs, expectations and concerns can help the major stakeholders understand the ethics of the company, why previous employees quit and other such information which will prove helpful for future growth.
Difficulties will arise but the HR needs to figure out how to overcome them in the best possible way. Merging two different work cultures can be risky business, but a good strategy can overrule the risks. Proper training, regular meetings, policy changes, employee benefits and clearly defined roles will help make the transition smoother.
Ultimately, the importance of post merger cultural integration goes hand in hand with reducing conflict while promoting a healthy alignment of dynamic work cultures.
Reference:
“HR and acquisitions: what role should HR be playing?”, James Grinnell, 28th March 2018
