Corporate transactions, including mergers, acquisitions, divestitures, joint ventures, and other methods of organizational restructuring and transformations, are strategically important in enhancing competitiveness, economies of scale and growth of an organization. Nevertheless, the human resources or ‘people’ factor of an organization holds the key to success in all such corporate transactions. But, this factor is the most overlooked one in the whole process of corporate transaction.
Mergers and Acquisitions (M&A) or other restructuring bring with them complexities of cultural incompatibility, different leadership styles, abrupt changes in compensation and reward system, and shedding off of extra workforce, all of which affect the effectiveness of the organization. It is, therefore, required that an analytical consulting back-up be provided to understand, evaluate, plan and manage HR related programs in such organization. Optimizing human resources and thrusting an atmosphere of effective decision making and execution are also crucial during such transition periods.
An HR Consulting firm plays an important role in addressing the HR-related risks and challenges in an organization undergoing M&A. The various aspects over which a HR Consulting Firm focuses its attention during M&A include:
-Due diligence
-Current organizational culture and post-merger cultural assessment
-Cultural transformation optimization
-Planning organizational structure
-Alignment of leaders and leadership styles in the organization
-Structuring of leadership teams
-Assessing HR capabilities and competencies
-Designing staffing models
-HR planning as per legal requirements of new country
-Planning and implementing techniques/programs for change management
-Benchmark retention
The work of HR Consulting Firm begins from the pre-deal phase, covers the deal period and continues till at least three months after the closure of the deal. In some cases, the consulting can extend up to two years after the deal closes.
The pre-deal phase includes chalking out the detailed HR programs and integration plans and activities that are implemented during the deal phase. The post-deal phase involves the field work of directing and equipping the HR with tailor-made techniques, tools and programs of project management and change management for a smooth and successful transition within the organization.
The process of M&A consulting generally involves following steps:
1.The foremost step in M&A Consulting is to re-check and transform the business model of the organization against any risks arising out of discontinuities and dead-ends due to transition.
2.This is followed by compliance assessment and planning, as legal conformities are crucial to organization’s working and reputation, particularly in a new country.
3.The Consulting Firm next focuses its attention on cultural integration. Effective cultural transformation is important for successful transition. This requires designing the program of change management, by understanding the three basic elements of drivers, behaviors and outcomes.
4.Designing and transforming of the HR function is vital in successfully reaping the benefits of the corporate transaction and its long-term success. This requires an analytical assessment, selection, development and strategic alignment of the HR leadership styles according to the transitional requirements.
5.As per the redesigned business and organizational requirements, the Consulting Firm identifies current workforce needs and future workforce trends for the organization. Accordingly, the gaps in workforce requirement and availability are analyzed. On the basis of such analysis, selection, retention, and recruitment of the ‘right’ people are done. This may also include training, development and motivational programs/workshops being carried out by HR Consulting Firm.
6.Compensation and reward system determination is also essential during M&A. Considering the financial objectives and investment plans of the organization, the Consulting Firm designs the pattern and timing of the reward system.
7.HR Consulting Firm, finally, provides a detailed set of tools, techniques and programs for the organizational redesign and transformation to be followed by the newly setup HR of the organization for a sustained success of the corporate transaction.
Thus, a comprehensive analysis and planning provided by the HR Consulting Firm ensures efficacy of M&A or other corporate transactions, during the transition phase as well as on long term basis.
