Mergers and acquisitions are like arranged marriages of sorts. They involve the union of usually two organizations often out of necessity and corporate compulsion. Whether one company takes over or acquires the other or both join to form a new whole, the union is in terms of and affects the people, processes, structures, products and organizational cultures of both companies. Basically, everything that makes each organization what it is, is affected. This transition comes with many obvious and some not-so-obvious challenges. The HR teams of both organizations have crucial roles to play in ironing out the many differences that might prevent the smooth transition that is necessary (but often a mirage).
- The “acquired” taste of culture: The foremost hurdle that needs to be overcome has to do with the cultural differences that are bound to exist between the two firms. Culture, within any organization, is an acquired taste and there are aspects so deeply enmeshed in the culture that they can be very resistant to any change. While one company may be quite decentralized and democratic, the other may have quite a centralized culture and may not be in favour of a bottom-up approach. The HR departments of both the companies (or at least the “surviving” HR team) could conduct surveys to look into strong cultural aspects. There might be differences with regard to the values that are enforced, the terms in which success is measured, rewards are doled out and failure is dealt with and how conflicts are managed. These require strategic planning before the actual merger or acquisition takes place.
- People matters: The biggest and often the most powerful asset of any organization is its people. Your employees, even if denied a say in the decision of going forth with a merger or acquisition, hold great sway in the success of the venture. They are affected by the shift and especially by the “Us v/s Them” environment that sets in. The HR department needs to make sure that the news is effectively communicated to the employees well in advance. They should also be made aware of the reasons for the merger or acquisition, the challenges that might come along with it as well as the benefits it could lead to for the organization and for them. In case lay-offs are on the cards, that news needs to be conveyed as well along with specific reasons. A typical M&A situation results in confusion and that leads to resistance so the HR managers have to be prepared to clear the many doubts and questions.
- Structure puzzle: Most M&A deals seem to result in a “winner” and well, a “loser”. This dynamic, no matter how subtly manifested, leads to power politics, strained communication due to personality and working-style differences and leadership confusions. Moreover, the basic organizational structure tends to get modified with some teams and even whole departments being done away with on grounds of redundancy. How effective euphemisms like “restructuring” and ” The HR team needs to make sure that these structural changes neither obstruct vertical or horizontal communication nor hinder communication across the organizations. In case of a merger, a whole new organizational structure is often set up and lines of communication, control, responsibility and accountability need to be redefined sensibly.
While studies claim that around 80% of mergers and acquisitions crumble, collapse or crash into a pile of failed planning, unsuccessful communication and disastrous execution, there are lessons to learn from those who don’t. There are those like the Fiat-Chrysler merger, the Disney-Pixar venture or the acquisition of NeXT by Apple that prove that successful mergers and acquisitions are indeed possible.
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