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Mergers & Acquisitions: Blending for Success

The Role of Human Resources in Mergers & Acquisitions
Leo Wolfert/123RF.com

As mergers and acquisitions become more and more common, it is important to understand best practices to ensure success. Culture and communication are two critical gauges of success in any merger or acquisition. If either side is missing, there is a strong chance the merger or acquisition will ultimately fail. Human Resources should be a key player in the merger or acquisition from the very start.

Due Diligence… Due Diligence… and more Due Diligence

A critical aspect of a successful merger or acquisition is due diligence. This involves a deep dive into the acquiring company – review of financials, understanding of staffing, transparent conversation on pain points and successes. By doing the initial investigation up front, the risk of coming across liabilities down the road decreases immensely.

It is imperative that Human Resources be included in discovery from the start. This will better assist in assuring a smooth merger of culture and people. Human Resources can also dig deeper into any potential employee relations issues, such as EEOC or Labor Board claims against the merging company. Human Resources will also be able to assess potential obstacles in regards to merging cultures between the organizations and staff feedback on both sides regarding the possible merger or acquisition.

Communication & Transparency

So, you have decided to move forward, now what? While the legal side of the merger pushes forward, leadership must remain transparent on both sides. Leadership teams from each organization should frequently meet to ensure they are on the same page and relaying the same information to their staff. The acquiring organization must be careful not to force their culture down the other company’s throat. Allow the staff to share their likes and dislikes about the current situation and blend processes, cultures, and ideas as much as possible for the maximum buy-in.

It is almost a guarantee that staff will be apprehensive regarding the merger. They may have questions relating to how their role might change, if they will have growth opportunities, any potential changes to their compensation package, etc. This is when it is most important to communicate openly, frequently, and as a team to address these areas of concern. A good idea is to highlight potential opportunities for personal development and growth as the merger is established. Also, ensure that staff is clear as to what their roles and responsibilities will be both during and after the merger.

Culture Blending

As mentioned above, blending the cultures of both organizations is the key to ensuring long term success. According to SHRM, 70-90% of mergers and acquisitions fail based on Human Resources related areas, such as culture issues, loss of key talent, and lack of communication. Human Resources should play a vital role in ensuring this does not happen. Don’t be afraid to implement new ideas or processes during this time. Maybe the merging organization allows their staff to wear fun scrub tops on Fridays, and the staff looks forward to that; why ruin morale over something that staff in the acquiring organization might enjoy as well?

One interesting method of blending cultures between organizations is to implement a buddy system. Pair staff with members of the other organization to not only assist in building relationships but also to create a sense of appreciation between the organizations. As the teams can see what the other side is working through and that they have similar end goals, the cultures are slowly blending as well. This type of buddy system can be implemented from the leadership team down to the line level employees to ensure successful relationships are being formed.

Why are Mergers and Acquisitions so popular in Health Care?

Health Care is an industry that has seen significant growth in the number of mergers and acquisitions taking place. In fact, it is the preferred growth plan for 44% of Health Care Executives. Why has this trend increased so much over the last few years? According to the article ‘Mergers and Acquisitions in Health Care – Who Benefits?’, high regulations in the industry, specifically in hospitals, can make it difficult for smaller organizations to be successful. When these small organizations merge into a larger one, they create a buffer to the volatility of regulations and increase their chances for continued success.

Merger and acquisitions, in Health Care especially, are not going anywhere anytime soon. As laws and regulations continually change and strengthen within the industry, more and more companies will use this tactic to remain successful. However, a merger or acquisition cannot be successful without due diligence, open and honest communication, and the appropriate blending of the two organizations’ cultures. Human Resources is vital to ensuring these steps are addressed and handled appropriately, providing the best chance for success.

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About Jennifer Alexander, SHRM-CP

Jennifer Alexander, SHRM-CP, is an HR Business Partner with almost ten years of Human Resources experience in several industries, including Health Care, Retail and Higher Education. She has a strong background in recruitment, onboarding, and compliance. When she is not working or studying for her MBA, she enjoys traveling and spending time in the Florida sunshine with her husband and three children.