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02 Jan. 2013 | Comments (0)

In our last blog, we provided an overview of M&A best practices. Now we turn our attention to the critical role HR can and should play in the process. To realize the benefits forecasted during strategic planning, organizations have to do more than seamlessly execute the process elements of a robust M&A playbook. They must make the best possible use of all available knowledge resources. Too often, however, the HR function is marginalized, bought in too late, or completely disregarded – a decision that can come back to haunt senior leaders on both sides of the transaction. 

Why HR is Over-looked

Much has been written about the proverbial table, and why HR is often denied its seat. Some individuals, like Keith Hammonds in his Fast Company article titled, “Why We Hate HR,” blame the function’s incompetence and misplaced priorities. Others offer excuses, such as executive direction and an increasingly litigious business landscape. Regardless of your organizational realities, it’s important to understand, and if applicable, remedy the following factors that limit HR involvement:

  • Lack of Strategic Skills: Many business leaders assert that HR professionals lack the process knowledge, tools, and business experience required to effectively navigate complex, strategic projects such as M&A. While it’s hard to paint an entire profession with the same brush, the belief is understandable. Few HR degree programs, even at the graduate level, include more than a cursory exposure to core business competencies like finance and statistical analysis. Career HR practitioners can quickly find themselves lagging behind colleagues who were schooled in more traditional business disciplines.

  • Too Delivery-Focused: Even when an individual possesses the background required to effectively play in the space, the organization and department priorities can conflict with or prevent their involvement. Too often HR is measured and rewarded solely on the their contributions to transactional work, such as employee relations cases, training programs, and time to fill metrics. 

  • No Bandwidth: The focus on tactical delivery causes a bleed over effect with regards to time signature. In acute cases, even senior HR leaders can be driven into a reactive operational frame that consumes any “free” time earmarked for strategic endeavors.  
  • A Matter of Trust: While experience, focus, and time are legitimate reasons for excluding HR, often the issue is derived from a basic lack of faith in the function. This belief stems from the profession’s roots in personnel ­– a subservient, order-taking paradigm from which the field has yet to fully emerge. The question is obvious, “Why would you entrust something as complex as M&A to the team responsible for the corporate Christmas party?”

Building the Case for HR Involvement

Many HR professionals have made the case that you must get “the basics” correct before earning the right to play in the strategic arena. On the surface, the argument is logical, if you cannot accurately attract, train and retain employees for example, why would the C-suite entrust you to lead a two-company integration project, much less have input on due-diligence efforts?

Still, this thought is like comparing apples and oranges. Heart surgery and yearly checkups are both important medical services, but it would be unwise to let your general practitioner near a scalpel. Nor would you expect a surgeon to patiently answer questions regarding diet, exercise, and cholesterol levels. To effectively build the case for HR involvement, you have to take the personalities out of the equation and discuss the following indisputable business needs.

  • Cost Evaluation: When evaluating the dynamics of a deal, business leaders are often hyper-focused on share price, capital, plant and equipment holdings, customer portfolio, and other staples of business valuation. While most savvy professionals also consider people issues, such as union and worker council agreements and executive compensation commitments, few dig deeper. Strategic HR, when properly employed, can provide a robust analysis of human capital and knowledge management assets at both firms to properly evaluate the value of the transaction. It can also highlight unseen costs and potential risks that could directly affect ROI.


  • Culture Alignment and Integration: Strategic HR can also help the M&A team evaluate vital intangibles, such as corporate culture and the impact of leadership style – inconsistencies which can snowball into a deal meltdown. Performing a culture assessment audit during due diligence can keep you off of an extensive failure list which includes Daimler Chrysler, Sprint/Nextel, and AOL/Time Warner.


  • Change Management: Once a deal is given the green light, HR can help with the various change projects required to ensure that integration not only happens, but that it also lives long enough to bear fruit. Core activities in this space include key talent retention and robust communication planning. 

Tune in for our next blog in this series, which discusses what HR should do if they are provided with an opportunity to be involved in the M&A process.


View our complete listing of Strategic HR blogs.

  • About the Author:Tim Toterhi

    Tim Toterhi

    Tim Toterhi is an organization development professional based in North Carolina. He began his career in strategic sales and transitioned to HR via learning and development. Over the past 15 years, he …

    Full Bio | More from Tim Toterhi

  • About the Author:Ronald J. Recardo

    Ronald J. Recardo

    Ronald J. Recardo is the Managing Partner of The Catalyst Consulting Group LLC, a Connecticut firm founded in the early 1990’s that helps its clients grow their business, improve their performan…

    Full Bio | More from Ronald J. Recardo


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