During the past four years, Teaneck, New Jersey-based Cognizant, which has 58,000 employees in 40 locations globally, has averaged one acquisition per year.
To maintain that pace, it’s essential to Cognizant that deals go through quickly and smoothly. That’s why Cognizant’s corporate development team has traditionally involved HR before, during and after the transaction, says Jim Lennox, assistant vice president of North American human resources at Cognizant.
But last year, Cognizant’s executives decided that just having HR involved with acquisitions wasn’t enough. They needed a person within HR dedicated to support all M&A activity for the company.
“Our corporate development team realized that having one HR person dedicated to M&A would be great because that person had been through the process before and understood it,” says HR manager Harsha Jalihal, who was chosen for the position. “Also, working with one person is much easier.”
Cognizant is among a growing number of companies assigning HR executives to M&A activity, says Len Gray, head of merger and acquisition consulting at Mercer. While companies have increasingly understood the importance HR plays during mergers and acquisitions, they also realize assigning an HR executive helps them stay ahead of human capital issues that can arise, he says.
“This is a direct recognition of how important HR is to a deal being successful,” Gray says. From merging cultures to retaining key talent to realigning benefits plans, many companies have faced the challenges, he says.
In a recent Mercer study, “M&A Beyond Borders: Opportunities and Risks,” companies across the globe cited organizational cultural issues and human capital integration as the two most significant challenges they faced in previous transactions.
In her new role, Jalihal says she is involved with a potential acquisition from the initial due diligence phase all the way through to helping with change management issues once the deal is done.
As the HR point person, she helps collect and analyze information on the potential target company, including talent, compensation, benefits and performance management as well as its culture and organizational design, she says.
Jalihal also plays a key role in integration planning, which involves deciding which employees will join Cognizant, as well as reviewing employment contracts and benefit plans.
After the deal is complete, Jalihal is still busy assisting with employee communications, workforce reductions and employee engagement, she says.
While her new role requires project management skills and the ability to think strategically, Jalihal believes it’s a position any good HR generalist could take on.
“The best experience for this position is the hands-on learning,” she says. “But you do need to understand HR.”
Having an HR background is important, particularly with details like benefits rollovers, Lennox says. “It can get quite technical,” he says.
Another benefit of having an HR point person is that Cognizant can stay ahead of the pitfalls that occur during takeovers, he says.
“That was kind of serendipitous,” he says. “It was a byproduct we didn’t expect.”