Acquisitions and mergers often spell organizational transformations of great magnitude. There are drastic and impactful changes in the management processes, operations, HR policies and most importantly ‘people’. The last factor is most important, yet most ignored one. Often, organizations only focus on altering organizational strategies, processes and policies. What no one takes into account is the emotional impact of the merger or acquisition on the psyche of the employees. This probably explains why many ambitious collaborations fail to achieve desired outcomes.
Organizational Transformation Challenges
Every organization participating in a merger or acquisition has a story of its own. It has a culture that becomes second nature to the employees. For those who have worked long enough for the company, the culture becomes their comfort. When the merger or an acquisition happens, the employees are shaken and pulled out of their comfort zone. The resultant organization after a merger or an acquisition sometimes adopts entirely new operational policies or it may blend the best practices out of the two participating organizations. In either case, the employees are required to condition themselves for the change in course. If the dominant organization does not respect the culture or core values of the smaller participating company, then it may have several undesirable effects upon the employees. The employees may rebel against the new management practices or show indifference, which may severely hamper productivity and performance.
The challenges increase manifold if there are cross-cultural acquisitions spread across diverse geographies. The case in point is that of our client. A promoter driven pharma packaging research organization had acquired companies in UK and US to further its expansion plans. The strategic intent was to become a solution provider company offering various products and services to customers at various stages of their business value chain through geographically dispersed global business units. The challenge here was to make that transition from a single product local company to a diversified strategically aligned and cross-culturally diverse yet integrated Indian MNC.
We handled this challenge by conducting vision, mission workshops in parent and acquired companies to establish consensus and give uniform direction to all participating entities. We implemented Balanced Scorecard initiatives and conducted competency based recruitment to ensure fair and ethical selection. Besides, we implemented various initiatives that helped employees across diverse cultures and geographies to cope with the changes. This instilled a sense of oneness amongst the diverse entities of organization.
Post Acquisition HR Integration
Integration of HR policies is the most complex task post acquisition. The human aspect has to be taken into account while reforming HR policies and practices. We can identify 7 key levers that can influence the outcome of an acquisition.
- Integration teams – to establish a connect between two companies.
- Speed – to bind the integration in a stipulated time frame.
- Leadership – to define the course of direction.
- Communication – to ensure transparent exchange of ideas.
- Retention of valuable employees – to ensure smooth transition.
- Culture – to bind the participating entities.
- Results – goals of the merger.
Post acquisition challenges can be overcome by adopting a ‘humane’ approach, because ‘people’ are the ultimate core of any business.