- People management, particularly retention, is becoming more difficult during mergers and acquisitions, according to C-suite leaders and senior managers responding to a late 2019 PwC survey. In 2019, 10% of respondents reported "significant success" in employee retention during M&As, compared to 45% in 2016 and 56% in 2010. The results, released in June, also found that 64% of organizations reported having full-time employees in HR dedicated to the transition.
- The report noted an increasing sense of challenge in navigating the people and organization aspect of integration. Eighty percent of respondents reported this aspect to be "difficult," compared to 58% in 2016. Organizations are also increasingly assigning an executive sponsor to transition teams, an occurrence which PwC said has doubled since its last survey. However, even though 65% of respondents said access to managerial and technical talent was a "very" or "most important" deal objective, only 17% said this objective was "completely achieved."
- Change management programs are also considered insufficient, according to the report. PwC considers change management to involve seven aspects, and "not one company" reported involving all seven of those drivers. Only 5% said they had three or more.
While the pandemic may have slowed business activity this year, experts are projecting a return and maybe even a rise in M&A activity going forward. Baron’s noted a rebound in the third quarter of this year, which saw 14 "megadeals" announced totaling over $300 billion in value. Mergers & Acquisitions magazine predicted a rise in healthcare and pharmaceutical activity as organizations look to prevent, treat and maybe even find a cure for the novel coronavirus.
Despite the many risks, high resource intensity and high potential risk of failure, M&A remains a popular option for organizations to accomplish certain goals. The PwC study noted a shifting of companies’ primary purpose for acquisitions, noting a sharp increase in "absorption" and "tuck-in" acquisition types, while "transformational" ones decreased significantly, from 54% in 2016 to 19% in 2019.
For HR leaders, an honest cultural assessment and a defined a shared path forward are the keys to navigating their responsibilities during a merger, sources previously told HR Dive; experts also pointed out the disproportionate role that finance and data play in making acquisitions, at the expense of truly considering the people aspects.
"When an M&A is being considered, it's very often a numbers game," Paul Zonneveld, an executive coach and senior member of the transformational faculty with Mobius Executive Leadership, told HR Dive in February. "Expectations are being drawn on a spreadsheet," he added, noting that they tend to lack a thorough evaluation of "people aspects" such as the history of the organization.
While HR may not be in complete control of people decisions during M&A, it can certainly guide the project in the right direction, and may need to have more input given this area’s increasing importance. "I think being able to go in and understand what are going to be such strong cultural barriers that will immediately impact the business is key," Dawn Conrad, EVP at Aon Strategic Advisory, previously told HR Dive. "Have a plan for overcoming them."