The Importance of Human Capital in Mergers and Acquisitions Strategy

Effective teamwork and collaboration means more than having employees who get along and work together to reach a common goal. These workers must trust and respect each other in order to form any sort of lasting bond. However, morale and productivity are often affected during mergers.

Mergers occur when two separate entities come together as one. While there are many benefits to this, there are also drawbacks to be aware of. Most notably, different companies have different missions and work structures. Employees of each company sometimes have trouble overcoming “the way we’ve always done it,” and embracing updated company qualities and ethics.

In fact, in the 2018 Deloitte report, “State of the Deal: M&A Trends,” 30 percent of the more than 1,000 corporate executives surveyed said their mergers and acquisitions (M&A) efforts fell short due to unexpected challenges and lack of preparedness.

Despite this difficulty, maintaining a strong human capital is possible through the M&A process. The success of this directly correlates to the capability of a company’s HR department.

This is how you can use infrastructure optimization to enhance your business operations:

Stick to the Plan

One of the first tasks you’ll accomplish in working toward a smooth transition is to create and distribute new documentation. This includes policies and guidelines, benefits, and other information.

There will inevitably be some shakeup in terms of staffing. Few companies encounter a merger with the idea of keeping operations separate, or moving forward with the exact same plan as before. In addition, duplication of roles and efforts is counterproductive. This means it’s likely there will be some employee downsizing and opportunities for early retirement.

Retaining qualified employees will also become a challenge. Some team members will react with resentment for not having been made aware of company changes earlier. Help them understand the reasons why information was not able to be made immediately public. Show them how their role will adapt, and how their work remains integral to company’s growth.

During this time, it’s also important to keep upper management informed of the state of employee relations, and how that plays into the company’s goals for a successful transition.

Prepare Employees for Success

To that end, qualified HR professionals should view the M&A process as an opportunity to reveal weaknesses within the newly-formed organization, and create strategies to address and resolve these issues. One of the most important ways to achieve this is through open communication.

There’s bound to be confusion in the weeks following any merger. In addition, certain employees won’t be on board with workplace changes. Change brings with it feelings of fear, uncertainty, and resistance.

This is when you’ll need to become the beacon in the storm — guiding employees through the rough waters so they can understand what’s happened, why it happened, and what their role is in the future success of the new company. Communicating with all team members is essential to winning their trust and involvement.

Move Forward

Don’t let lack of time or resources set you up for failure. Let us help you maximize your human capital potential through effective infrastructure optimization. Here’s where you’ll discover trouble spots in your company and concrete methods by which to improve efficiency and productivity. Contact us today to get started!