HR’s role in mergers and acquisitions
As we all wind down to take a well-deserved break LeMaSa would like to wish you all a successful and prosperous 2012.
We have some exciting plans for 2012 and start early in the year with training from Fenestra, our partners in the use of electronic and virtual assessments. Sandra Hartog and Matthew Tonken, international experts in virtual assessments will conduct the training. They will also be available to visit some clients from 18 – 20 January 2012 to demonstrate the technology. If you are interested in a demonstration, please do not hesitate to contact me.
In this edition of the LeMaSa Chronicle we discuss the role of HR in mergers and acquisitions, as well as the role of HR in doing our business in a more environmentally friendly manner.
All the best for 2012 and enjoy the break!
Leadership assessment, cultural fit and employee communication are believed to be particularly important in mergers and acquisitions. A study carried out in the Asia Pacific region by Hewitt Asia shows that companies are well aware of the importance of human capital in mergers, acquisitions or joint ventures. In this study 60 per cent of companies reported the intention to pay more attention to leadership retention and assessment during the due diligence and integration phases.
Organisations that pay attention early on to people issues" beat the long odds of achieving shareholder value, say researchers at Hewitt Associates in Lincolnshire, Ill. Only 17 percent of more than 150 mergers and acquisitions that took place in the 1990s created substantial returns for shareholders; 20 percent produced decreased returns, 33 percent achieved only marginal returns and 30 percent resulted in substantially lower shareholder value.
"Despite these findings, many architects of large deals go out and strike a deal-while completely ignoring HR issues or paying very little attention to them," says Munish Vasisht, a consultant with Hewitt.
By getting involved early in the process, HR can carry out such vital functions as:
• Reviewing the target company's employee handbook and policies to compare organisational philosophy and cultural differences
• Reviewing payroll records to compare compensation structures between the organisations
• Reviewing employment contracts, offer letters and orientation materials to gain greater insight into employer-employee relations of the target company
Once a merger or acquisition is announced, HR's major challenge is to keep employees engaged through the process.
It is clear that HR plays a vital role to ensure the success of mergers and acquisitions. It is also clear that Assessment Centres can play an integral role in this process.