HR expertise needed for successful acquisitions

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first_img Comments are closed. Related posts:No related photos. HR has to develop its skills on mergers and acquisitions if it is to havethe respect of the board when restructuring activities are in the offingHR directors don’t have the commercial expertise or business knowledge tosupport their companies effectively through merger or acquisition activity. You might think a comment like this would have most HR directors frothing atthe mouth in anger – but the truth is that nearly half of FTSE 250 HR directorsinterviewed in a recent survey admit to it. And with a similar proportion of finance directors sharing the same opinion,is it any wonder HR issues take a back seat during most corporate transactions,thus contributing significantly to their failure to deliver againstexpectations. The survey by the Human Resource Consulting practice ofPricewaterhouseCoopers supports the previously-held belief that CEOs, financedirectors and transaction directors do not consult their HR colleagues earlyenough in a merger or acquisition situation. HR directors showed refreshinghonesty, revealing that even if called in earlier to help smooth the way forM&A activity, their own HR functions lack the necessary capabilities to beeffective. In an ideal world, with the right skills and support, HR directors can makean enormous contribution to the success of corporate transactions. However,they cannot possibly earn the opportunity to prove this when they themselvesacknowledge their limitations. Company executives should know by now thatmismanaging or ignoring employee issues at times of major change will lead to asignificant downturn in business performance arising from a loss of key people,depressed morale, poor customer service and low productivity. Failure to tackle critical people issues, such as retaining top talent and communicatingeffectively with the workforce, is a key reason why 70 per cent of all dealsfail to meet expectations. And while there is no doubt that today’s companiesare far more aware than they were a decade ago about the critical importance ofsuccessfully addressing the people challenges in such transactions, it isequally true that management, including HR, often neglect to tackle thecritical people challenges early enough. Although the survey found 87 per cent of respondents (finance and HR directors)recognise that effective employee communication is a critical component of anysuccessful deal, there are still consistent and common problems around keyissues that affect a vulnerable and uncertain workforce. The most common problems include failure to communicate at the right time, alack of clarity around who is in charge and how these leaders should behave.This of course results in a significant dip in business performance and in mostindividuals in the workforce feeling vulnerable and uncertain. HR directors and functions can and should play a strong role in helpingorganisations achieve the goals of a corporate transaction. However, to be ableto do this they must demonstrate a better understanding than has beentraditionally the case of what really matters for business success – and how totackle the critical people issues that impact most. Only then can HR earn theinternal credibility to have that early leadership seat in their company’scorporate transaction. The first step in any positive move forward is to recognise when change isrequired. The fact that so many HR directors in our survey recognise thechallenges they face, bodes well for their future opportunities to successfullyaddress these issues and step up to the mark. By Marc T Hommel, partner at PwC’s Human ResourceConsulting Previous Article Next Article HR expertise needed for successful acquisitionsOn 10 Dec 2002 in Personnel Todaylast_img

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