HR’s role in mergers and acquisitions

December 2011

Dear clients,

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!

Warm regards

Sandra Schlebusch

HR’s role in Mergers and Acquisitions

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.

The “greening” of HR
Human Resources (HR) has a role to play in building greener businesses. If being green is not reason enough, the motivation to get involved might be driven by the fact that, increasingly, people want to work for greener businesses. “The Greening of HR Survey,” conducted by Buck Consultants, an ACS company and one of the world’s leading human resource and benefits consulting firms, finds that 54 percent of respondents incorporate environmental management into their business operations. The survey analysed responses from 93 organisations in the United States, representing a wide range of industries. The research was conducted during the fourth quarter of 2008, and examines the types of “green” initiatives employers are using in workforce management and human resources practices. Whether they are part of a strategic business plan or a one-off practice, some common green human resource initiatives include: • Using Web or teleconferencing to reduce travel (78 percent), • Promoting the reduction of paper use (76 percent), and • Implementing wellness programs to foster employees’ proper nutrition, fitness, and healthy living (68 percent). “Many employers now recognize that green programs in the workplace can promote social responsibility among workers and help retain top talent,” said Don Sanford, managing director of Buck’s Communication practice who directed the survey. To go further, HR leaders could pursue green initiatives on a number of levels. For example, HR could work with IT departments to define policies on the correct use of computer power management systems, or promote the importance of turning off computers, printers and lights when leaving the office. More widely, building green responsibilities directly into job descriptions could provide a two-fold benefit; first ensuring green policies are explicitly part of an employee’s responsibilities, and second, providing routes for employee feedback on ideas which could help to improve environmental efficiencies. Employees who are familiar with their own job roles may be best-placed to identify green opportunities and proactively suggest improvements. Increasingly, new recruits are likely to consider the green credentials of employers. If HR has a vested interest in a company’s environmental practices, it could position the business as a more attractive proposition to new talent. In this respect, being green could be strategically valuable to tomorrow’s HR.
Mergers
Acquisitions
“greening”