Navigating HR Challenges During Mergers and Acquisitions

Change can be hard. Uncertainty can be even harder. That’s why HR challenges in mergers and acquisitions are so complex. From handling integration problems to keeping employees focused and productive, M&As are a big task for even seasoned HR professionals.

Adding to the pressure: the stakes are quite high. According to the Society of Human Resource Management (SHRM), 70-90% of mergers and acquisitions fail to achieve their financial and strategic goals. And all too often, their failure is attributed to HR factors like poor cultural alignment and a flawed change management process.  

This raises the question: what are the key challenges for human resource management during mergers and acquisitions? More importantly, how can HR teams best master this make-or-break event?

Develop a Stellar Communication Plan

In most organizations, HR is the liaison between leadership and the workforce, and that’s especially true during M&As. It’s a given: employees will be worried, distracted, and eager for information—information that leadership may not yet be ready or able to fully share.

It’s up to HR to fill this breach as honestly yet reassuringly as possible. After all, the longer the uncertainty lasts, the lower productivity will sink, even as turnover climbs.

A sound HR communication plan will include:

• The reasons for and benefits of the merger or acquisition—i.e., the new organization’s common vision
• A detailed description of the desired changes
• A rough implementation timeline
• Ongoing updates regarding the integration progress, with an emphasis on positive news

Keep in mind: evidence suggests that the better employees understand the business reason behind a merger or acquisition, the easier it is for them to accept it. Keeping employees informed will give them a sense of greater control and inclusion at a time when they may feel neither.

Facilitate HR Integration

From an HR viewpoint, mergers and acquisitions involve integrating two distinct corporate cultures…two sets of HR policies and processes…two sets of compensation and benefits standards…and, typically, at least two HR software systems. All while circumventing potential compliance issues!

While the HR team may take the lead in making related assessments and recommendations, it must collaborate with the company’s leadership, legal, and financial teams to achieve the end results.

At the end of the day, the objective is to create new HR standards and best practices that reflect the new organization’s values and objectives.

Manage Redundancies, Layoffs, and Retention

Unfortunately, in most mergers and acquisitions, efficiencies are achieved by eliminating redundancies in personnel. That means HR will be working closely with managers from both companies to determine who will move forward with the new organization.

On the one hand, HR is typically charged with developing and implementing a broad retention strategy, which may include leadership transitions and succession planning.

On the other hand, HR will be likely handling layoffs, managing severance packages, and dealing with the resulting fallout. For many HR professionals—and managers, too—this is one part of the job that never gets easier.

That said, HR can make separations easier for employees by treating them with respect, explaining what happens next, and providing access to career-related resources.  

Keep the “Human” in Human Resources

No doubt about it: During mergers and acquisitions, HR teams play a key role in achieving the integration of two separate organizations into one greater whole. And while many tasks involve logical thinking, collaboration, and problem-solving, there is an undeniable human element, too.

During M&As, even as HR personnel are on the receiving end of employees’ fear, anxiety, and possible anger, they’re experiencing their own firsthand emotions, too.

At the end of the day, mastering a merger or acquisition requires both a cool head and a compassionate heart. While you’re taking care of your people, your team, and your employer, be sure to take care of yourself, too.

For more ideas on tackling tough conversations and helping employees deal with stressful events, download our Guide for Navigating Mental Health in the Workplace.

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