Creating Deal Success Through People: Mastering M&A Culture and Integration Issues

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As the global economy begins to pick up momentum, many companies are turning their attention back to the marketplace and weighing options to grow their businesses faster and more effectively than competitors. One possibility is with a merger or acquisition (M&A). The right M&A presents a potentially attractive path for companies seeking rapid growth, without sacrificing efficiency. Key is how well the new entity operates, especially the performance of its workforce.

Towers Watson research reconfirms that when organizations address people and culture issues early, strategically and with discipline, they improve their chances of achieving a more successful deal. In our most recent global survey of M&A success, those respondents that rated their company’s deal as successful in meeting its primary objectives had recognized the importance of people issues and had brought HR into the deal early. These companies emphasized critical people-related skills and metrics, such as effectively and openly communicating with employees throughout the transition, creating and implementing strategies to retain key employees, and focusing on cultural alignment between different organizations.

This white paper takes a closer look at these success factors and the specific steps companies need to take in order to address key people issues early and effectively, and deal with cultural integration, including:

• Identifying key “ready now” resources within the organization that can be called on — quickly — if and when a merger or acquisition opportunity surfaces.
• Building internal relationships with likely integration leaders who can help elevate the people and culture issues to the senior management level.
• Ensuring that HR’s priorities are aligned with those of the business.
• Ensuring — before the fact — that HR has the necessary skills to support a merger or acquisition when it happens.
• Analyzing and assessing both legacy cultures with rigor in order to understand how to “create” the right culture that will support new strategic priorities.
• Measuring key “people indicators,” such as employee engagement, talent acquisition and retention, in addition to financial metrics.

As M&A activity begins to rebound, now is the time for organizations to take a step back and make sure they do not overlook the increasingly important people side of the transaction.