This article was updated on August 3, 2018.
When global mergers and acquisitions (M&A) happen, getting the transition right is a major challenge to all involved. HR leaders need to be aware that firm productivity can drop during times of change due to loss of vision, engagement and other factors. It's important to get the transition right for both existing employees and acquired employees who are vital elements to ensuring a successful M&A transaction for your organization.
Neglecting your talent can result in indirect HCM costs from deals. Your talent could decide to leave because of poor global mobility and lack of career advancement opportunities, while others may disengage because of frustration over canceled projects and the absence of HR of leadership during times of transition.
EY has identified five global talent management challenges that occur during mergers and acquisitions. Here's how HR leaders can rethink their approach for a successful transition and overcome these five major global challenges.
1. Keeping Pace With a More Global Workforce
The ADP Research Institute® report, The Evolution of Work: The Changing Nature of the Global Workplace, notes how organizations are now regularly searching globally for the best talent and 67 percent of employees view this positively. Your employees are excited about globalization. So how do you keep your employees from feeling like their global advancement opportunities are just as good, if not better, within your organization versus a competitor? Get ahead of global mobility by being strategic instead of reactive. A good M&A plan capitalizes on new market growth, strengthens corporate culture and improves diversity.
2. Investing Strategically in Talent Management
EY reports that adapting policies is a challenge for businesses. Other talent management struggles include attributing employee performance to business performance and investing enough to meet organizational goals. For global health care organization Cardinal Health, the key to surviving aggressive growth through M&A was using talent analytics and HCM technology, according to Gallup. To meet their needs on a global scale, they scaled up their talent management infrastructure with an integrated approach to strengths-based performance management systems, international benchmarking and global workforce planning.
3. Measuring the Success of Talent Management
When it comes to determining how effective a talent management program is, EY reports top-performing organizations lean on metrics like employee satisfaction, employee productivity, retention rates and external reputation. However, Deloitte notes the purpose of people analytics is also "employee listening" — bringing together data from employee comments. Ways to "listen" include managing workloads and using mobile and self-service tools. This can give deeper insight into employee engagement during an M&A transaction.
4. Changing Skill Requirements
Changing skill requirements comes with the increasingly global and tech-driven workplace, and M&A can bring this trend to a fever pitch. For example, Fast Company's Chris McGrath was employed during a large merger, and while his job was safe, he disengaged and ultimately resigned due to a lack of projects to work on, vision and clear directives on how to spend his days. Communicating with employees during an M&A transaction is crucial and requires HR to have the global oversight needed to understand the shifts in teams, roles and projects.
5. Having Robust Succession Plans
Most organizations are confident in the skills of their emerging leaders, but they may have a lag in adoption of talent analytics. According to the EY report, just 43 percent of top performing global organizations have a clear set of qualification metrics for leadership candidates. But robust metrics are important and succession planning cannot be driven only by finance. As your organization transitions, having the technology and structure to consider talent dynamics, diversity and new business objectives can be key to keeping your most promising workers engaged and advancing within the organization.
The success of merger and acquisitions depends on your people. HR's role in today's evolving workplace is to advocate for the human aspects of their organization and to avoid unnecessary costs associated with drops in engagement and spikes in voluntary turnover. By embracing a proactive and strategic approach during global M&A, HR leadership should be able to prevent unnecessary and expensive talent casualties and give the organization the foundation it needs for successful growth.