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International M&A – Human Capital Management Strategies

By April 19, 2018May 2nd, 2018No Comments
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Considering a Merger or Acquisition with International Employees or Resources?

At Velocity Global, we’ve been fortunate enough to support a variety of clients with their International M&A initiatives. Participating in these initiatives has allowed us to gain a unique vantage point of the world of cross-border mergers and acquisitions. What we have discovered is that the human capital management side of these transactions is often treated as an afterthought.  That discovery often leads to a reactive approach by our clients and creates unnecessary stress on their HR teams. As identified by Cornell University’s International Law Review, here are some common questions that HR teams face during an International M&A deal:

  • How will the employees transfer from the seller to the acquirer?
  • What are the timelines and gating items to reaching “day 1” with an intact workforce?
  • What can be done to ensure employee retention?
  • Are layoffs an option?
  • Can employees effectively delay or stop the transaction?

With those questions in mind, what we offer here are 3 recommendations that can help you plan effectively.  The right mindset lays the foundation for a successful human capital management strategy:

1) Take a people-first approach to International M&A

Concerns like financials and operational processes often take precedence over employees during an international M&A.  However, the most successful companies at managing international transitions take a proactive, people-first approach from the very beginning of the deal.  This approach allows those companies to avoid or mitigate risks like low morale, diminished performance, the potential exodus of key talent, and even revenue loss.  This prioritization of people during M&A deals is precisely why companies like General Electric and HSBC have been so successful in these global transactions.  If your company is the acquirer, make sure that your human capital is being given top priority.  Without this strategy, your HR management situation will become unsustainable at the most inopportune time.

2) Plan for and manage the pain points

There will be pain points. Furthermore, it’s important to directly acknowledge that from the outset. The key is, how to manage those pain points in order to achieve a successful transition. In order to properly manage them, you first must know what pain points to expect.  Pain points that are quite common in organizations are:

  • Unclear organizational reporting lines
  • Clash of corporate culture
  • Transfer of employee information
  • Unfamiliarity with local regulations
  • Breakdowns in decision making and unrealized synergies

It is absolutely critical to be aware of these potential challenges prior to any transitions and we also recommend creating a playbook on how to address each of these concerns.

3) Do you have an “HR Integration Playbook?”

If your answer to that question is, “no,” then you need to create one.  This playbook should take into account the pain points mentioned above and a decision on what mechanism is going to be used to employ your new resources.  A communication project plan usually looked over, but it can make or break an international M&A.  If you’re looking for a good playbook, here’s an article that we would suggest.

Once you have this playbook in place, you’ll have taken a very important first step toward a successful M&A integration. However, execution is key and it is in the execution where Velocity Global excels.