Human Resources: Proven Process for Mergers and Acquisitions When Dealing with the People

I think Change has become my middle name. In March 2015, after seven years as general manager of Allegra in Tucson, I left my position to dive into retirement. After a full year of freedom, I am now slowly taking on some consulting assignments. When a few of my favorites have called for some help, I couldn’t say no. This industry has been in my blood for 41 years, so I would say I’m quite hooked.

Anyway, the majority of the new requests have been to help with the hiring of people. Bill, my partner in business and in marriage, has been working with more companies over the last six months on hiring employees than we have in quite some time. I mention this because it is definitely an indication that the economy is turning up, which is very good news. We have clients calling that we haven’t worked with in several years asking for help in adding additional staff. They remember how our processes helped in the past, and they want to get back on track to find more good people.

While hiring is in resurgence, mergers and acquisitions have been taking place for quite some time and there looks to be no slow-down in this area. Since I have been involved with several mergers or acquisitions in the past, and currently involved in a few, I thought it would be helpful to share the process we use here at TG & Associates to help these transactions go as smoothly as possible and drive success.

In the typical merger or acquisition most of the planning effort is focused on the numbers, the equipment, and the legal implications. Later, rather than sooner, the acquiring organization realizes that significant human resource problems can emerge. A study from the Society of Human Resource Management identified that:

• Three of four mergers and acquisitions fail to achieve the anticipated strategic and financial objectives.
• Only 43 percent reported success in achieving the expected pre-deal synergies.
• Only 49 percent reported achieving growth in market share.

The major obstacles to merger and acquisition successes were:

• Inability to sustain financial performance (64 percent)
• Loss of productivity (62 percent)
• Incompatible cultures (56 percent)
• Loss of key talent (53 percent)
• Clash of management styles (53 percent)

Three of the five obstacles listed above fall squarely within the people management arena, which clearly defines why the first three objectives did not reach their expectations.

So just as you would thoroughly evaluate the equipment, if part of the package, hire an accountant to help evaluate the numbers, and obtain legal advice before signing any agreements. If you are managing the merger or acquisition, you should put as much effort into evaluating any staff you may acquire. Any person you plan to have as part of your new team needs to be vetted -- no exceptions. This means if you bring on the owner/CEO, they need to be evaluated as well. Generally, in a merger of equals, there are no equals.

After evaluating people that you may bring onboard, you will need to then evaluate your existing staff the same way so that you will have a clear picture of what the new combined team will look like. There may be some people that will have to be eliminated, so by having black and white data to look at, you will be able to make better decisions for the team and for the success of the business.

The process for evaluating is pretty straight forward and follows the same process we recommend for hiring new candidates. You must interview and evaluate all employees. Share with them your goals and the values of the combined organization so they have an opportunity to decide if this will be a good fit for them as well.

Next, you need to identify the behaviors and intelligence of all personnel. Have each individual take the Wonderlic test and Personality Profile Assessment. The Wonderlic will indicate how smart the individual is and how quickly and how much the person will be able to attain. The personality profile will give you valuable information on their work strengths, motivators, fears, communication style, and how they react under stress. Once you have personality assessments on all of the staff, you can use these as a basis for compatibility assessments to see how they can best combine their strengths.

We highly recommend that any person who is in a management or sales position be given an Emotional Intelligence assessment. EQ is a set of competencies that describe a person’s ability to read the environment and adapt accordingly. High levels of emotional intelligence result in managers and employees who are able to relate well to each other and therefore able to accomplish more. Daniel Goleman, in his book, Working with Emotional Intelligence, wrote, “Compared to IQ and expertise, emotional competence matters twice as much. This held true across all categories of jobs, and in all kinds of organizations. On average, close to 90 percent of the success in leadership positions was attributable to EQ. Emotional intelligence is an essential ingredient for reaching and staying at the top in any field.”

By having this information on all current and potential staff, you will be able to make informed decisions on who needs to be on the team, and you will also know what the dynamics will look like. You need a mixture of staff, not clones of each other. To be successful you need the right people in the right seats.

Show genuine respect for all the people involved and treat them with honesty, dignity, and fairness, even if the truth sometimes hurts. Remember, there is no greater advantage than having the right people on your team.

Debra Thompson is President of TG & Associates, a consulting firm specializing in “The Human Side of Business” specifically for the Graphic Industry. Her company provides Virtual HR Services and Customized Staffing Solutions. Contact them about the use of Personality Profiling and Emotional Intelligence Testing to improve communication and cooperation in your workplace. Debra can be reached at 520-751-8922 or email her at [email protected].