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The Art Of Managing Mergers And Acquisitions Successfully
Category: Mergers Acquisitions
Subcategory: Basics of Mergers

 

The Art Of Managing Mergers And Acquisitions Successfully
In the corporate world, mergers have become the order of the day. When two companies are merged, at the executive level, managers are faced with the onerous task of keeping everything under control, with the least amount of negative consequences arising out of the merger at the functional level. While there is a lot of information available about the financial implications of mergers, very little attention has been paid to the human element. Whereas, in actual practice, it is vital that the human resources of the companies coming together receives paramount consideration.
 
Top human resources experts who have experienced the fallout of mergers have realized this. One top expert suggests spending as much time with the employees of the merging companies as is spent with financial analysts. They reason that since people care about their workplace, they should therefore be made strategic partners. They recommend bringing together the employees of the merging companies and having an open and transparent discussion about the potential benefits that would result by merging the companies.
 
If the prime reason for company X and company Y to merge is to benefit from the sales experience of X, and Y’s distribution expertise, it should be ensured that X’s distribution personnel listen to Y’s distribution people, and that Y’s sales people are aware that they stand to gain from the sales experience of X’s sales team.
 
Downsizing is also a common exercise undertaken during mergers. The general reason is to effect cost savings by combining tasks that become redundant on account of the merger. The basic principle in downsizing is to release employees considered least productive for the new entity, and retain the best. The principle would apply to people of both companies equally. One cannot retrench a good employee of company Y just to retain a low productivity employee from company X.
 
Everything needs to be done in a transparent manner. Everyone appreciates frankness. Even when people are apprehensive about losing their jobs, they prefer to hear it straightaway, instead of being surprised by suddenly being chucked out from their jobs at short notice, after being assured all the time that their job is secure.
 
When two companies operating on different policies and procedures, each with a different work culture, merge together, it is a source of stress for everyone involved. After the restructuring, the people who remain will be subject to a new work culture. They will have to deal with different policies and procedures, a possible increase in the workload, deal with new people, and a loss of earlier friends and colleagues. There would be good people leaving the organization, as they would no longer feel comfortable working in the new atmosphere. This is to be accepted as normal.
 
The most important asset of an organization is its people, and they need to be treated accordingly. This is accomplished by having a transparent management policy, and a well-informed and committed employee pool. This will prevent good people from leaving the company, and will be a positive sign for new entrants. Experts opine that unless the human capital of the new organization is adequately supported ad integrated, the merger will not be a successful one, and will fail to attain its objectives.