Hitherto, company is facing huge problem during M & A (Merger and Acquisition), albeit of applying all good strategy, it is never fully possible to buy out the core of the firm: Its people.
A cultural fit is an important issue which needs to be addressed among the two merging companies. Employees on both sides need to be coached on cultural norms, food habits and even festivals and socio-economic conditions of each other.
This has meant that the HR function has an increasingly important role to play, even the due diligence stage of an M & A, to be able to access the cultural fit of the transaction, particularly where the objective is complete integration of the acquired or merged entity. They have to answer all their problems and fears relating to their jobs “what will we look like”, “do we have the right mix of people”, “will I still have my job”, ”Whether my job is secure or not”.
Sensitizing employees on both sides, the HR department must make it clear there is no “LOSSER”. Training should be provided to staff, for them to get a feel of their new environment, and make them comfortable in new environment. Sudden removal of top management in an acquired firm leads to instability.
HR should firstly address the cultural fit problems, then compensation details, working out compensation structure and, finally implementation process.
A sept 2010 study by Mercer, entitled “Asia on the By side”, 35% of respondents identified “human capital integration”, 25% identified “financial reporting integration”, 16% find “lack of employee engagement” and “leadership/management retention issues”.
A Wipro technology has made 21 acquisitions and all were successful, because their HR ensures smooth transitions during acquisitions. Company should come in about cultural integration, compensation structures and charged or new roles of employees have to be worked out the best practices of each company have to be blended.