A merger and acquisition holds different prospects for the two companies, but the end goal is always the same. The merger is a stepping stone for the acquiring company, while it provides the prospect of a different working environment for the organization acquired.
HR plays a pivotal role to ensure the smooth transition of power, and ensures that workflow is not disrupted. Retention of talent is another role that HR must play. This blog will help you understand the role of HR in an acquisition and a merger.
The combination of two or more company to form one company is called merger. An acquisition on the other hand is when a company is purchased by another company and no new organization is formed.
In a merger, both the companies end up sharing assets; while in an acquisition, the acquired firm loses its identity and becomes non-existent.
Now as you can determine the role of HR in both the scenarios is different. In a merger the idea is to incorporate culture and vision sharing with the new partners in crime. While in acquisition, the acquired company has to highlight talent that the acquiring company must retain.
The HR department must have a firm grasp on the culture of the company. Additionally they should also study the culture of the company that they are merging with or are acquiring. The difference in culture revolves around how both the companies’ measure success within the organization and the management styles.
A quick review is never enough to find out the styles of management and the overall attitude of the employees towards the business functions. However, it does help in putting things into perspective for the owners.
The initial offer the acquiring company makes for the purchase of the company signals the start of the due diligence process. During the due diligence process, the purchasing company assesses whether the deal makes financial and strategic sense.
The human resource department from the acquiring company assesses the benefits structure of the potential company to find out any potential problems in the process. The HR department will then highlight plans that the acquiring company should consider revamping.
A merger or an acquisition instills fear and uncertainty in the employees of both the purchasing company and the purchased company. It is the job of the human resource in both companies to ensure that the transition of the employees is carried out smoothly. The HR department should stay alert throughout the period and should give feedback to the employers about concerns shown by the employees.
Mergers and acquisitions often lead to the elimination of redundant departments. The human resource should be aware of these scenarios beforehand and should inform the employees about the changes in the chain of communication. HR may also work with management and the employees to alter the job description of various posts.
