Approaches where HR may be reduced as policy police agent where all its other primary functions are outsourced to internal departments who may or may not have the necessary time or expertise to do everything HR is supposed to do. I am fascinated by all this as the most important resource of any organization is human resources, yet HR is almost viewed as a sidelined activity necessary to please the law and comply with regulations. Even in mature organizations development and training are segregated from HR as if they are non-relative functions. Even when HR offers developmental or training activities, it is considered one more thing for the employees to do so the checklist can be completed. With globalization as bigger companies acquire smaller ones or strategically merging to keep control of their verticals or for obvious reasons to increase their market shares and gain strategic advantage in the marketplace has heightened complexities of HR functions and roles.
There are tons of articles written on this subject, but I want to record five key things along with challenges HR professionals need to be aware of. All these ideas come from an article I read last year from a journal. This is my best attempt to recall and summarize in a succinct way. HR practitioners at a high level during M& A from the acquiring company should be very involved in these activities.
- Creation of new policies to guide the new organization.
- Retention of key employees.
- Employee selection and downsizing.
- Development of compensation strategies.
- Creation of a comprehensive employee benefits program.
- Proactively avoiding legal issues that may be violated by federal or state anti-discrimination laws and the Worker Adjustment and Retraining Notification Act (WARN)
- Participation in defense lawsuits that may be brought forward because of the M& A
- Aligning HR function between two entities to achieve the strategic HR objectives of the acquiring company in a non-threatening manner. This will include alignment of workforce strategies and business objectives. A company may also choose to learn and leave the culture and HR practices of the acquired company alone.
- Ethical dilemmas that may be involved in eliminating the HR function in the new structure or positions of co-workers within the HR function.
- Attempting to maintain internal status quo and
- Communicating transparently and promptly to upper management, stakeholders, and people in both organizations especially the one being acquired.
- In Communicating: knowing about appropriate levels of disclosures and level of confidentiality has to be stewarded and shepherded and can be challenging in itself.
- Dealing with realities of layoffs, redundant or superfluous employees in combined new entity
- Devising new culture and managing cultural transitions.
Before the transaction HR needs to be involved in the following:
- Reviewing of the legal documents
- Assessments of employees fit, culture, employment contracts, policies, legal exposures
- Evaluation of employee benefits and programs
- Awareness and settling of discrimination cases
- Providing reports on suitability of acquisition
After the transaction HR needs to be involved in the following:
- Retention of key employees before competition snatches them or before they leave because of transitional confusion
- Creation of new policies or adoption/adaption of existing ones and embracing of the main things that acquired company employees need to know.
- Employee selection assessments and downsizing of redundant workers, migrant worker legal paperwork assessment,
- Development and communication of compensation strategies
- Development of employee benefits programs.
Some of the post-acquisition activities go in parallel with after acquisition phases these can be summarized as:
- Managing the cultural fit, educating what are the non-negotiables and what can be left as it is
- Leading HR technology change initiatives and absorbing existing employee data marts from existing HR systems
- Scaling HR functions seamlessly across the new entity
- Communicating and training of global issues, culture, process changes and eliminating inefficiencies.