It is one of the most difficult scenarios any human resources manager must handle. Mergers and acquisitions have the power to create nervous uncertainty among employees to a level that can suspend productivity company wide.
Dual speakers at WorldCity’s HR Connections shared how they’ve handled the various elements that HR must handle when dealing with mergers and acquisitions.
“Each one of the major decisions that will take place when you define the acquisition itself will actually drive what is going to happen with the people inside,” said panelist Cesar Salas, head of HR, Administration, Compliance and Quality for the region Caribbean and Latin America Southwest Coast for Hamburg Sud. “Companies don’t realize that until they are already well into the acquisition.”
“I always like to focus on, ‘What can I control?’,” said panelist Rocio Sarabia, HR director for Latin America at Lexmark International.
These are some of those things an HR manager can control in the midst of a merger or acquisition:
Train Managers for Difficult Conversations
“Have those managers trained to have difficult conversations with employees…with an employee that is very nervous, that is not focusing on his job, has all these questions,” said Sarabia. “You need to prepare those managers, because that is the closest person that they are going to talk to. Sometimes they don’t come to HR.”
The alternative to this will make the situation even more difficult.
“Sometimes (employees) are not going to hear our voice, but if we don’t speak up, it’s going to be worse,” said Sarabia.
“How do you make sure all of these leaders are able to deliver exactly the same message?” asked Giuliana Castro, HR manager at Grunenthal.
“We have to make sure our leaders are professional enough to really defend what’s in the best interest of the organization,” said Salas. “That’s difficult. It’s very difficult…sometimes (leaders) will have their own thoughts, like, ‘Maybe my job is going away.’…It’s true, but we’re a professional first, and then we have to leave all those feelings on the side. We have to have that open conversation with our leaders.”
“They have to vent all of the thoughts that they have,” said Sarabia, about giving leaders the opportunity to privately express their emotions about the merger or acquisition before they are tasked with delivering the company’s message. “You cannot say something that you don’t believe, because people are going to feel it.”
“Create a forum where leaders can vent a lot first. Express everything they need to express first as individuals, because then they need to act as leaders,” said Sebastian Bustos Rappa in agreement, head of HR for LATAM at Grunenthal.
Bustos Rappa noted the scene from the film Saving Private Ryan where the unit did not want to go chasing after Private Ryan but Tom Hanks’ character, as leader of the unit towed the company line with a consistent message of the importance of the mission.
“We are the people giving support to everybody,” said Sarabia. “That’s what we get paid for (as HR professionals).”
Incentive Leaders to Stay Through the Merger or Acquisition
Your company’s best talent often will begin searching for opportunities with more future certainty in the midst of a merger or acquisition; however, there are ways to try and get them to stay aboard through the process to help the company.
“A monetary incentive to stay through the closing of the deal,” explained Salas. “If you haven’t left or presented your notice, you’ll get X amount of money. A retention bonus.”
Beyond the closing, there has to be something else, or these leaders could just cash out the retention bonus and leave after the merger or acquisition is complete.
There is also competition for that best talent, with its own ways to incentivize leaving, once word leaks that a merger or acquisition is coming.
“From the perspective of people in our business, these kinds of situations…these become great opportunities in my business to approach people in one or the other companies being affected by it, because there’s uncertainty there” said John Mestepey, managing director at Diversified Search. “Even with retention bonuses…that doesn’t slow us up, because we’ll buy those out with stock or cash or whatever.”
Mestepey said word of a merger or acquisition tells companies like his a group of high value employees may be available that normally would not have been approachable. HR managers must keep this in mind.
Show Your Face and Put Your Name on It
If layoffs are coming, don’t execute them from the stereotypical ivory tower of the corporate offices. Show up.
“I went to Argentina and made the communications to the employees that were going to be terminated,” Sarabia explained of one experience she had in the past. “I gave support to my HR Manager, after the communication was done, and proceeded to have a town hall meeting with the rest of the employees to provide information for damage control. After talking to the employees, listening to their concerns and responding to their questions, they were more at peace and started focusing on their work.”
Sarabia didn’t go into details of what the package included for departing employees, but being on the ground massively helped the situation.
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