Mergers and Acquistions

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Human Resource Management and Acculturation: The Glue that Binds Mergers and Acquisitions Alexis Lake MGT 5005 Human Resource Management and Development October 12, 2016

About Me ¤ Marketing, Communications, Public Relations Professional ¤ Graduate Assistant ¤ Interested in mergers and acquisitions (M&As)

M&A Experiences

Growth of M&A Activity ¤ M&A’s increasingly popular in today’s business world ¤ “Managers of acquiring firms reported that only 56 percent of their acquisitions could be considered successful when measured against their original goals” (Weber & Fried). ¤ Others report “30 percent to 70 percent of mergers and acquisitions fail mainly due to people and culture issues” (Jain, 2013 )

A Path for Acculturation ¤ Phases of a M&A ¤ Traditional roles of human resources ¤ Various types of M&A activities ¤ Three different levels of acculturation

Fluctuating responsibilities of the HR function

Steps in a M&A 1. Pre-Merger (Due Diligence) ¤ Cultural and Risk Assessment

2. Integration ¤ Change Management

3. Post-Merger ¤ Reinforcement

Roles of Human Resources ¤ Administrative expert in creating new policies, procedures ¤ Strategic partner in long- and short-term planning ¤ Employee champion in communicating changes and retaining key talent ¤ Change agent in implementing the transition plan, creating trust, and integrating company cultures

HR should always have a seat at the M&A table

Integrating Mixed Emotions ¤ “What people notice first are the differences between the two cultures and what makes their own unique” (Marks & Mirvis, 2011). ¤ Acquired employees: fear, uncertainty, job security, excitement, growth opportunities ¤ Acquiring employees: superior, faster, some job security concerns

“Always stay humble and kind”

Types of M&A Activities ¤ Extension ¤ Limited relationship, financial investment ¤ Examples: Oakley & Luxottica, Facebook & Instagram

¤ Redesign ¤ Parent company prevails, strategy and culture changes ¤ Examples: Ray-Ban & Luxottica, Anheuser-Busch & InBev

¤ Collaboration ¤ Coming together to create a new company ¤ Examples: Sunglass Hut & Luxottica, United & Continental

Levels of Acculturation Determine the cultural end state

Pluralism ¤ Culture largely left alone ¤ HR largely acts as the administrative expert ¤ Benefits, payroll, compensation Challenges still exist…

Integration ¤ Most common and most challenging ¤ Cultures changes ¤ Move quickly ¤ HR performs all four roles, focus on: employee champion and change agent Constant communications and involvement

Assimilation ¤ “Merger of equals or an acquisition with the intention of selecting best practices from the partner organizations” (Marks & Mirvis, 2011). ¤ Collaborating with HR professionals “across the aisle” ¤ Assessment, policies, education, training Communicate and reward

Levels of Acculturation & HR Involvement Pluralism

Low

Integration

High

Assimilation

Higher

Post-Merger ¤ Reinforce and over communicate ¤ Surveys, assessments, lessons learned ¤ Model best behavior ¤ Train and reward

“The song that never ends…”

No One Size Fits All ¤ Approach every M&A differently ¤ Fluid role of human resources ¤ Continuous reinforcement

Results

• • • •

2 -3 year process Many employees retained Surveys conducted and overall positive results Lessons learned…

Results

• Too early to tell • Employees in “limbo” • Customer increase

Thank You! Questions?

Bibliography Bagdadli, S., Hayton, J., & Perfido, O. (2015, November/December). Reconsidering The Role Of HR In M&As: What Can Be Learned From Practice. Human Resource Management, 53(6), 1005-1025. doi:10.1002/hrm.21671

Hill, K. (2012, April 11). 10 Reasons Why Facebook Bought Instagram. Retrieved September 19, 2016, from http://www.forbes.com/ sites/kashmirhill/2012/04/11/ten-reasons-why-facebook-bought-instagram/#4ddf2f1a7407

Jain, R. (2013, October 24). Strategic Role of HR in Mergers and Acquisitions. Souvenir Journal of the Employers' Federation of India, 17(1), 97-99.

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Rouse, T., & Frame, T. (2009, November 9). The 10 Steps to Successful M&A Integration. Retrieved September 19, 2016, from http:// www.bain.com/publications/articles/10-steps-to-successful-ma-integration.aspx

Stanwick, P. A., & Stanwick, S. D. (2001, January/February). Human Resources: Your Secret Weapon for Post-Merger Success. Journal of Corporate Accounting and Finance, 9-14. Retrieved September 19, 2016.

United and Continental Airlines to merge. (2010, May 3). Retrieved from http://www.bbc.com/news/10095080

Vazirani, N. (2013, September). An Integrative Role Of HR In Handling Issues Post Mergers And Acquisitions. SIES Journal of Management, 9(2), 82-88. Retrieved September 19, 2016.

Weber, Y., & Fried, Y. (n.d.). Guest Editors' Note: The Role of HR Practices In Managing Culture Clash During The Postmerger Integration Process. Human Resource Management, 50(5), 565-570. doi:10.1002/hrm.20449