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Big Issues and Small Challenges with Mergers and Acquisitions

August 9, 2002
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Review the topics listed below. As you consider each item, use the relevance scale to assess the extent to which the issue or challenge is now (or soon could be) a factor in your organization. Note your thoughts in the area labeled Implications for Action. You can use this section to form a personal opinion on key issues or use it as a group tool to bring to the surface and address emerging issues for your organization. 

Working in a Global Environment 

1. Many mergers and acquisitions today involve companies headquartered in two different countries. This can complicate the transfer of best practices, since managers generally assume that their knowledge bases apply universally. They do not always take into consideration that performance drivers vary from culture to culture. 

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
· Not at all

Implications for Action (make notes here)

 


2. Language barriers between the participants of a cross-national merger must be readily countered. Information concerning the deal must be translated into both languages so questions can be answered in real time. Employees of both cultures must be educated in the other language so that communication between workforces can be effective and productivity can be facilitated. 

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
· Not at all

Implications for Action (make notes here)

 



Strategic Planning

3. Often human resources professionals are not sufficiently involved with the evaluation of target companies before deals are signed. If they are not participants in the development of an M&A strategy and the screening of talent and culture very early on, they will have to play catch-up later on, fixing problems that might have been avoided had they been involved initially.

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
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Implications for Action (make notes here)




4. The importance of communication, employee retention, and training and other components of integration is fairly well known. However, integration activities should be customized based on feedback from the affected employee populations. Communication must work in both directions, up and down the organization.

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
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Implications for Action (make notes here)



5. Even the most talented business leaders are generally not experts in the various stages of a merger and/or acquisition. Moreover, given ongoing demands of the business, they do not have unlimited time to devote to merger activity. Retain the services of a qualified consultant who understands the company’s merger goals and has the skills to help achieve them.

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
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Implications for Action (make notes here)




6. A significant challenge is to ensure that ongoing business is not adversely affected by M&A activity. Monitor employee performance to ensure that customer needs continue to be met. Solicit customer feedback to verify that all is well on their end.


Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
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Implications for Action (make notes here)




7. Integration planning and implementation should begin as early as possible, well before the deal closes. If integration is started early, there is a better chance for a seamless transition.


Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
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Implications for Action (make notes here)




Communication and Training

8. Once integration is underway, companies can forget to stop and check their progress. It can be challenging to redirect integration activity but it must be done to ensure desired results. Check employee perceptions of integration progress by regularly soliciting their feedback.

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
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Implications for Action (make notes here)




9. Merger training is often overlooked and can present obstacles if not implemented promptly. For example, a group of acquired employees may need assistance in participating in automated benefits enrollment. Without necessary training, it will take longer for new employees to feel part of their new work environment.

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
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Implications for Action (make notes here) 




10. Managers must not only be given adequate information; they must also be trained in appropriate dissemination techniques. They must learn how to coach and remain sensitive to the feelings of their staff. They must learn about change management and how to deal with resistance. If people are made to feel that their feelings are normal and are given opportunities to openly discuss issues, their concerns can be faced head on.

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
· To a great extent
· To a moderate extent
· To a minor extent
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Implications for Action (make notes here)




11. Employee productivity often falls where major staffing decisions are being made. The fear of making a mistake can cause a drop in creativity or efficiency, as people become increasingly cautious. Also, the time taken to talk to other employees during the period of uncertainty can affect productivity. 

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
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Implications for Action (make notes here)




Attraction and Retention

12. HR representatives must work closely with representatives of other functions to ensure that staffing decisions are made strategically. They can help these functions to develop ways to retain desired employees, align compensation and benefit programs, and communicate desired information.

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
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· To a moderate extent
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Implications for Action (make notes here)




13. The assessment and selection of employees after a merger or acquisition must be based on revised operational requirements. When cuts are made too quickly, valuable human capital can be lost and the process of attracting new employees or re-recruiting former employees can cost significantly more than retaining original employees in the first place.


Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
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Implications for Action (make notes here)




14. Lack of information concerning whether or not their jobs will continue fosters fear in employees. This fear can create an atmosphere of distrust and competition for jobs. Employees can feel that either their co-workers from their own company or their counterparts in the "other" company are potentially stealing their jobs. This can create anger and resentment. People are less likely to be effective during this time, especially in a team environment. 

Extent to which the above Issue/Challenge is a Factor in Your Organization (circle one)
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Implications for Action (make notes here)





It is important to remember that employees often have a great deal of loyalty to their own firm. Make the transition a time of celebrating the company’s history and reassuring employees, wherever possible, that what they valued about their previous company may be transformed but will not disappear.

SOURCE: Reprinted with permission from "Best Practices in Mergers and Acquisitions," Watson Wyatt Data Services. For more information, visit www.wwdssurveys.com or call 201/843-1177.

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