Insights
Mergers and acquisitions can bring big opportunities, but they also have a tendency to create an avalanche of issues. HR issues—like cultural integration, communication, and retention—can make or break the long-term deal. Overlook them, and you’ll miss hidden risks that can have serious consequences. Sera Business Advisors has deep experience with mergers and acquisitions. So, I thought I’d offer some tips to stay ahead of common (but not all!) M&A problems.
When two companies come together, so do two very different ways of working. And let’s be real, cultural misalignment is a big risk. It can lead to lower productivity and higher turnover. If Leadership doesn’t get this right, the financial and operational costs get steep fast. It’s best to assess the cultural DNA of both companies, figure out how to take the best from both worlds, then plan the mutual combination (merger)--or, communicate, communicate, communicate the forward expectations of the new company (acquisition).
The goal shouldn’t be to wipe out one culture in favor of the other. Time and experience show combined companies thrive whether “M” or “A,” when both common cultural ground and effective change management are implemented. At that point, the best parts of each culture blend into one that works for everyone.
What is the number one concern employees have during a merger? UNCERTAINTY. What’s going to happen to their jobs? Their team? Their future? The best way to deal with ambiguity is CLARITY through open, honest, frequent, and consistent communication. Leaders should be at the forefront, using multiple communication channels to ensure everyone is informed and in the loop.
It’s wise to provide the “why” reasoning, too.
Transparency is key, whether it’s through town halls, emails, text messages, one-on-one conversations, snail mail, or even aerial flyovers! As a leader, it’s your responsibility to help employees understand and navigate impending changes and the new norm, whatever that turns out to be.
Employees want to know where they stand and what to expect. Encourage individuals, at all levels, to engage in their roles and “control the controllables” during the transition. By promoting our “My career is my responsibility” philosophy, organizations can build ownership, create accountability, and drive results, even during times of change.
Throughout the M&A process, your people, and therefore retention, should be top of mind. You don’t want your best people jumping ship because they’re nervous about the unknown. It’s necessary to create a sense of psychological safety regardless of other external and internal “noise.”
Employees should feel comfortable voicing concerns and asking questions without fear of negative consequences. When people feel heard and valued, they’re more likely to stick around.
M&As are full of hidden risks, especially when it comes to people. Effective HR can help mitigate risk, whether it’s potential cultural clashes or high performers on the verge of an exit. Risks must be addressed before they morph out of control; they’re often silent and sneak up unexpectedly.
These risks aren’t merely “HR problems.” They’re business risks. They’re reputation risks. They’re patient/customer/client continuity risks. Managing risk appropriately is key to long-term merger success.
Look closely at both company cultures.
Prepare a clear, straightforward communication plan.
People Are Priority.
There WILL be unplanned hiccups along the M&A pathway, so employees and leaders need to exercise patience and flexibility. An attitude of positivity is important. Be mindful to underpromise and overdeliver. Be VERY realistic about timelines. Your word is your reputation and your legacy. Hard work, consistency, visibility, and follow-through are essential for long-term M&A success.
HR is foundational in making your M&A a smooth and successful process. But if navigating all these HR challenges feels like too much to handle, you’re not alone. Mergers and acquisitions are complex, and getting the human side right can make all the difference. That’s where Sera Business Advisors has your back. We’re here to help you tackle the tough stuff, so you can focus on making your people-merger a success.
Sera Business Advisors is a management consulting firm specializing in HR with a business-first approach. Sera fosters growth and strategic development through training programs, an extensive library of proprietary tools, and a deep understanding of business for emerging startups, middle market companies, and publicly traded companies. To learn more, visit seraadvisors.com.