In every M&A, seek opportunities beyond the numbers analyzing its people and the corporate culture of the target organization.
At the due diligence, look for red flags that hide in historical payroll cost; current benefits and historical metrics; history of Employee Relations cases and labor litigation history; review all HR policies and handbooks; if available, at least two years of employee survey results; history of performance evaluation, 9-box assessment, and rating curve and, all HR metrics available, from attrition rate, diversity chart, high-potential maps, and succession plans.
The outcome will provide a comprehensive overview of the company culture and its people’s potential. Analyzing the human factor of organizations helps to maximize the value of the transaction, prevent unnecessary turnover, address employee engagement and, reduce operational and continuity risks.
The phase before the deal conclusion is a source of anxiety for employees and negatively affects business results.
Approach the target company HR and leadership to develop trust and learn more about their culture and practices. Engage the acquired team in creating a plan for after the acquisition. Proactively identify key employees for the short and long term and develop retention strategies for each scenario. Prepare a severance package for overlapping staff and residual business and design a compensation plan to integrate the workforce into the new structure.
Finally, once the deal concludes, work in integrating the acquired employees, but don’t fall into the common mistake of thinking of it as a regular onboarding process. Remember that these employees didn’t choose to join your organization and will remember their employer with rose-colored glasses that generally translate into resistance to accept the new reality.
Use this opportunity to promote your culture and show the value proposition of the transaction. It is the perfect time to apply “psychological safety” exercises and create trust among new and existing employees.
It’s beneficial to prepare an executive script for both new and acquired leadership, creating a single tone for internal and external communications. And don’t be afraid to over-communicate with your employees, aiming to have your workforce fully aware not only of the deal progress but also about the value proposition this transaction creates so they can function as ambassadors of this new enterprise.
Connecting business strategy to culture increases the success rate of the newly formed organization. In addition, it reduces cost with attrition, engages the proper workforce by reducing the stress factor, and there is the benefit of planning and communicating with purpose, working on the culture accelerators for the new company.
Meritarc enables your business to realize the full value your people can create. We are a human capital software company and provider of advisory services, specializing in financial services, fintech, and consulting firms. Our job architecture, performance management, and reward tools anchor business strategy in all people processes. Visit our website to learn more