Mergers & Acquisitions – The Politics of People

Mergers & Acquisitions – The Politics of People

800 371 Kamal Karanth

Mergers and Acquisitions maybe strategic to organisations. But, not everyone is game for this forced partnership. Employees at acquired organisations view it with suspicion as post mergers they become the collateral damage.

HR gurus need to coin a better term for Merger and Acquisitions. A friendlier description is definitely the need of the hour from the employees’ point of view. Employees always dread this term as when 2 firms come together there is always an overlap of functions. In the process, some employees tend to become collateral damage. There might have been strategic reasons for the recent Vodafone-Idea merger or the MORE sale by the Aditya Birla group to Amazon or the ongoing Dell-EMC merger. All three cases have different contexts. However, the people side has similar dynamics and the emotions of anxiety, fear and stress are common for most. Besides strategic assets like customers, products, geographies, balance sheets the most important asset declared by acquirers is talent. The irony is that talent itself becomes a casualty. The reasons are the obvious ones.

The Acquirer Mindset

In any M&A one thing is common. There is always a dominant partner who calls the shots and one at the receiving end. Though the acquirer buys the target firm as it is strategic or complimentary the owner mindset creeps in from the word go. They tend to put their trusted leaders in the acquired firms which decreases the trust amongst the employees there. The last time I witnessed something unique was when HP bought Compaq. In India, the entire Compaq leadership team was in leadership roles in the merged entity which brought in unique dynamics. An ideal leadership team at the merged entity should have equal participation from both entities.

The Lost Feeling

 One can’t help but feel lost when you are being acquired. First, we tend to think the acquirer is superior post-merger and has a control over our future. Depending on the context of the acquired firm these feelings can manifest further. If the firm is in a distress mode or much smaller in size compared to the acquirer the anxieties are bound to be higher for the employees of the acquired firm.  I recollect the first few meetings with the leaders of our acquirer post a merger of equals. It felt I was in a job interview or sort of defending my job. I felt miserable, I can’t say it was because I felt we were acquired or we were treated that way. An exception can be cases like Microsoft’s acquisition of LinkedIn. In this case, the acquired company brought in skills and businesses which MS did not possess.

So from a people point of view, almost everyone at LinkedIn became an asset. Also in cases of complementary acquisitions overlap also tend to be minimal limiting people related redundancies.

HR Missing in Action

The missing piece in most pre-post Mergers situations is a strong HR. Many acquirers give very little responsibilities to HR leaders to take charge of integration. Most of the mergers are led by biz leaders who take the heart out of any acquisition. At the end of the day, M&As are meant for business acceleration or survival for the acquired or merged entities. Many decisions including redundancies have to be taken swiftly and ruthlessly. So, severance packages, outplacements are all done in a time bound and formula driven manner. This enables uniformity across the organisation. It also helps in speedy and fair transactions for the organisation. But, mergers work when the people to people connect is built. There would be a need for a few overlapping functions to give way. This has to be managed with soft hands.

The severance cheques however generous can’t erase the feeling of “not wanted”. A meaningful HR presence can minimise if not eliminate the feeling of being victimised. Astute HR leaders can integrate two organisations better. This becomes difficult as HR can be an overlapping function in merged entities and maybe fighting for their own survival. Probably this self-protection instinct would make it difficult for them to diligently focus on the rest.

Mergers & Politics

Every merger has its share of power centres and leaders from both sides would be trying to protect their turfs. Till there are substantial security and trust in the new leadership there will be unrest amongst the leaders and their followers. There will be transactions but no real progress till the interest of the leaders have been assured. Most people complain of politics during mergers which is nothing but leaders fighting for their presence. The highest level of senior-level exits happens in any organisation during M&As. Many people quit out of fear or negligence than reality on the ground. The sheer anxiety of what’s going to happen freaks people out. Employees assume lack of communication also as a deliberate act to force them out.

In a nutshell, M&As bring many careers to an interim freeze. You would commonly hear decision making paralysis for a few months or a  couple of years. Increments, promotions, development programs, expansions all come to a halt. For many, the integration period could be very crucial in their personal context. The longer it takes to integrate the number of good talent an acquirer can lose is higher.

If one does a before and after analysis of key talent presence, it would be a good indicator of how the merger has been managed.

 

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