The Role of Human Resources in Mergers & Acquisitions

Whether your small business is the purchaser or the target company in a merger or acquisition, your human resources department as well as the human resources workers in the other company play a vital role in the process. Human resources helps manage any problems or challenges related to people in the organizations as the merger or acquisition process unfolds.

Company Culture

Human resources helps determine if the cultures of the two companies that are becoming one through a merger or acquisition are compatible. Human resources must have a firm grasp on the culture of the company for which they work and must study the culture of the other organization to make such a determination. Cultural differences may include how the two organizations define and measure success within the organization; benefits employees enjoy, such as personal time and insurance; how problems within the organization are handled; the management styles of the two organizations; and the overall attitude of the employees and managers toward business functions and the industry in which they work.

Benefits Problems

During the due diligence portion of a merger or acquisition, which comes after the purchasing company makes its initial offer to purchase the other company, management from the purchasing company assess whether the deal makes strategic and financial sense. Human resources from the purchasing company specifically assess the benefits structure of the other company to uncover any potential problems, such as a pension plan that is running low on funds or a health insurance package that will cost a significant amount for the company to continue offering.

Employee Concerns

People often fear change, and a merger or acquisition creates uncertainty and change for employees both of the purchasing company and the purchased company. Human resources in both companies help smooth out the transition for employees, helping calm any fears as well as answering questions about how the merger or acquisition affects each employee individually. If the employees of both companies do not have as much fear over the change, productivity is more likely to stay at previous levels. Human resources can detect and address any rumors about layoffs, office relocation or other changes employees fear, giving feedback to management about employee concerns.

Changing Roles and Structure

When one company merges with or acquires another, some changes to both organizations may occur, such as eliminating redundant positions or combining teams and departments. The process of altering the two organizations so they work together as one can take months to complete, and human resources plays a vital role in the changes. Human resources communicates to employees changes in who they report to within the company, what team or work group employees are assigned to as well as any changes to different positions’ roles in the organization. Human resources may work with management and employees to alter the job descriptions of various positions, ensuring everyone understands his role in the newly altered organization.

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