Why a focus on people is Integral to Mergers & Acquisitions

Mergers and Acquisitions (M&A) happen for many different reasons and in businesses that have employees, the people within these organisations are greatly impacted upon in terms of their terms and conditions of employment and their working environment.  Unfortunately, during these transactions the people component is often overlooked- before, during and after.

Whether your company is merging with another or you’re acquiring a business, there are almost always employees involved. It doesn’t matter the size of your company, whether you have 100 staff or 10, it is important to understand the legal and the organisational people implications of M&A’s to ensure success.

A focus on people is required before, during and after and here are a few reasons why. 

• Due Diligence is about more than just finance and legal issues and implications. The people focus is required and is a big part of the transaction and there are many considerations at this stage. There are transfer of business and continuity of service rules in the Fair Work Act that will apply that you will need to understand and possible impacts on the contract and purchase price. Some considerations are; should you take all employees?  Will you need to effect redundancies?  What are the terms and conditions and how will they transfer? Will you recognise prior service? What other liabilities exist such as; accrued entitlements, poor performance, grievances, industrial claims and workers compensation claims history. In addition, to employment legislative requirements there are also important cultural considerations. Can the two cultures be merged?

• Consulting and communicating with employees is not only important through an effective change management plan.  It is also necessary for such a major workplace change, as required under all Modern Awards. Change management is about leading an organisation from a current state to a desired future state, it’s about successfully transitioning individuals and organisations to a new way of doing things and will assist in preparing individuals to be successful. If organisations are proactive in managing change, their management initiatives can shift from preventing and managing resistance to engaging employees and building enthusiasm and passion around the change.

• Determine the New Workplace Culture as a shared way forward for success. Many M&A’s have failed or have not been as successful because of culture not being created and managed. A new culture must be built – it can’t be acquired like others things within the business. Leaders in the new organisation need to play a very important role in this along with creating enthusiasm about the new business vision, mission and goals to ensure employees are engaged.

They say 80% of change programs fail. Only 20 to 50% of major corporate re-engineering projects at Fortune 1000 companies are successful. Mergers and acquisitions fail between 40 – 80% of the time and 10 – 30% of companies successfully implement their strategic plans. Why? People are the hardest part of change. Do you focus on people with your organisational change?  In 75% of cases, failure of organisational change is linked to failure to consider and effectively manage the people side of change.  Understanding the dynamics of the human transition in organisational change and how to manage this process is critical.

At HR Business Direction, we can help you with Mergers and Acquisitions at every stage of the transaction from workplace compliance to employee behaviour. Contact us here.

Leisa Messer BBus(HRM); GradDipIR; CAHRI; IRSQ
Managing Director | HR Strategist
leisa.messer@hrbd.com.au
07 3890 2066
www.hrbd.com.au