The Role of HR in Building The Company Culture Post-M&A

By: Yaron Kopel, Chief Executive Officer, Meet in Place

During a merger or acquisition, companies have the opportunity to grow, drive the value of their business and establish a global presence. However, employees can feel isolated, unsupported and unsure about what the future holds. 

The Biggest M&A Challenge: Employee Retention

A company’s culture is typically driven by the C-suite, and filtered down to the whole organisation. During an M&A, those corporate leaders tend to focus more on the success of the business deal, rather than the culture and challenges their employees face. However, in order for an M&A to be truly successful, there is a need to prioritise cultural integrations to ensure they complement one another. This is especially true when attempting to retain staff, which can be difficult during a merger. 

According to a Deloitte research paper, C-suite and mid-level managers play a key role in employee retention, as they can influence an employee’s decision whether or not to stay in a company long term. While some companies find that providing incentives to stay with the combined organisation is sufficient, these incentives can only create temporary stability and not encourage long term commitment. In order to remain loyal to their organisation, it is critical that the organisation understands the limitations of financial remuneration in an M&A situation. The additional dollars will not buy hard work or long-term loyalty. Instead, they should help open the door for the organisation to begin demonstrating it will “do the right thing” for its employees. Those things may include providing managerial support and direction, clear communication about the business, learning opportunities, and strong leadership. The new organization also has to do a good job at communicating its vision for the new combined entity and how the combination is actually beneficial to the employees through growth and/or sustained viability.

The Door of Opportunity Opens: Blend in or Stick out

Stemming from a roundtable hosted by PwC, nearly 50 percent of attendees, who were representatives of Silicon Valley’s leading companies, found that the clash of corporate culture was one of the most common change management pain points that should be overcome in order to achieve a successful merger. Company leaders need to respect the areas that are important to the acquired company, and work together to change the areas that work best for both parties. For example, in order to not lose talent when Amazon acquired Zappos, it vowed to leave Zappos alone as long as the company hit certain financial targets. This method protected Zappos’ unique culture and ways of working, and allowed the companies to work alongside each other versus as two separate companies under one umbrella. 

Isolation is one way of avoiding the clash. The other way is bringing cultures together, and that’s a whole new story. The roundtable touches on many of the storylines, for example Day One, which is about continuity. And that’s never truer than with people matters because there are the demands of customers to be served, payrolls to be met, employee benefit coverages to be extended, and workplace infrastructure to be maintained—in the form of assets, systems, and processes that enable people to do their jobs day-to-day. Critical Day One tasks need to be identified earlybefore longer-term, more-detailed planning commences. Early identification of those immediate tasks allows for prompt identification of long-lead-time items, well before they can turn into closing-day surprises. A detailed plan should then be created that includes all of the actions that will be put in place on Day One. Planning for Day One should begin in conjunction with the due diligence process.

The HR Department Has the Key to Success

Research by CASS Business School shows that talent management and human capital affect how businesses are able to deliver value before and after a deal. Over 80 percent of companies who say significant value was destroyed in their latest acquisition lost over 10 percent of employees following the transaction. If there is a gap between two or more cultures, the leadership team needs to create a strategy outlining how the two cultures can best work together in order to become united. It’s best to involve HR in facilitating the integration process, to identify opportunities and risks, and develop a plan on best practices. 

In the past, M&A efforts have suffered from not enough attention to the people side of the deal, so it is important to make a mutual effort to better address any issues. Effective communication and investment in human resources is key to inspire employees to continue being productive and loyal to their workplace. 

About the Author:

Yaron Kopel is the Founder and Chief Executive Officer of Meet in Place, a global network of innovative meeting spaces designed for an urban boutique hospitality experience. The Meet in Place philosophy is rooted in meeting science, as every design feature and amenity offered serves a unique purpose to make meetings as productive as possible. For more information about Meet in Place or to book a room for your next meeting, please visit https://www.meetinplace.com/uk/gb

Submit a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.