With global M&A activity up 32%, as listed in Mercer’s new report, people risks remain top of mind for both buyers and sellers all through the deal process.
The People Risks in M&A Transactions report found more than one-third of sellers (34%) are finding more and more of their divestment resources are required to address HR issues.
So what can HR leaders and their team take charge of prior to, during, and post an M&A deal?
Mercer’s research shows that by managing people investment as rigourously as organisations manage balance sheet risk and other capital investments, they can drive value from people-related areas.
Here are some top tips for the HR teams for both buyers and sellers.
- Assess leadership team and key employee capabilities – Use skills inventories and competency assessments to gauge abilities to execute on strategy, effectively govern, lead people, drive culture change and deliver business results.
- Develop effective retention strategies – Segment stakeholder groups beyond the executive team to determine appropriate severance programmes, stay and retention bonuses, roles and decision making authority during and after the transaction.
- Have a clear culture, communications and change management plan – Determine the right pace and amount of disruption, and communicate frequently and transparently.
- Evaluate HR service, delivery and design needs – Ensure basics are in place to deliver pay and benefits, while positioning the HR function to enhance business results.
- Adopt an enterprise or global view to effectively manage benefits – Avoid unnecessary costs and compliance risk by adopting a comprehensive governance strategy for global benefits.
- Understand the market competitiveness of rewards and leverage existing total reward programmes to attract and retain the right talent – This includes base pay and total cash to market, internal equity, incentive metrics/targets, and non-cash rewards.
- Identify critical employee groups and consider a retention programme – Target employee groups that influence key customer relationships or important operating initiatives.
- Consider providing a sensible, appropriately priced Transition Services Agreement – These arrangements can mitigate reputational risk, cover costs, and create an orderly exit.
- Document a clear talent management/staffing plan – Establish and communicate the infrastructure of the entity being sold, determine which employees will stay and which will join the new organisation.