The role of human resource management in the context of mergers and acquisitions

Abstract

When it comes to human capital in the context of mergers and acquisitions, the human resources (HR) department is mostly involved with the human resources due diligence. Human and organizational capital is one of the most expensive cost factors, and it would be only natural to expect HR to be best-prepared to analyze and evaluate it. HR could add tremendous value to the process, but it does so little. Early involvement of HR in M&A scenarios is still low and HR is rather perceived to give ad-hoc advice and provide technical service instead of profound strategic input and to manage change and communication successfully. Thus top management tends to rely on external specialists for human and organizational capital in order to link internal processes and structures to the business model in the marketplace. Global trends such as the digital knowledge explosion, fluid organizations and converging cultures affect the business environment drastically. The fast pace of new information technologies turns the work environment upside down and change has become the rule instead of the exception. Globalization calls for more permeable borders so that inflexible organizational systems and structures start to crumble or even break. Navigating through this changing and growing international landscape gets tougher. Additionally, business becomes more demanding with only technical expertise being no longer sufficient and internal customers call for a strategy and operating model aligned to business needs. If HR cannot deliver what is asked for, outsourcing is a threat. Thus HR is required to adapt and reinvent itself in this fast-changing environment in order to be prepared for multiple challenges. One of these is the increasing number of M&A in which HR naturally becomes involved. Often the extent of HR influence and involvement in M&A projects is low. The Leverage Model provides a framework of how to tackle M&A scenarios. It incorporates HR strategy and project organization as well as financial drivers, project management and

communication skills. The model is supplemented by a strategic cockpit with key performance indicators to create value and manage and control M&A project successfully. As the Leverage Model is a prototype, it must be worked out in more detail and adapted to the individual M&A scenario. The Leverage Model integrates the most crucial risk and success factors which have

proven to be stumbling blocks along the process. HR must face the fact that its self-perception and present performance compared to top management`s expectations do not match, in fact they are misaligned in major aspects. The Leverage Model is a means to define challenges, milestones and outcome and to drive the M&A process. This could be a first step on the way of becoming a sparring partner and redefining its own role.