Human Resources: Workforce Transition Dramatically Improved When HR is Involved Early

As an HR leader, it is your responsibility to help your executives navigate change and avert risk. Whether your organization is experiencing organic growth, mergers & acquisitions, outsourcing initiatives or reductions in force, it has been proven that getting HR involved early in the process ensures more effective & efficient workforce transitions and helps to reduce the time and expense associated with employee realignment.

Workforce transitions include mergers & acquisitions, voluntary events such as retirement, outsourcing, offshoring, and reduction in force. The activities surrounding these events are diverse and typically include pre-event analysis, event process support and post-event management. And no matter how insignificant they may seem, these types of events affect your workforce in dramatic ways including confusion of roles, employee disengagement, lost productivity and increased risk of losing top talent.

One area that typically causes organizational disruption is a merger or acquisition. Historically, HR was brought in after the deal was done to “figure out” where all the people should go. Duplicate roles, management and departmental overlap and clashing cultures all had to be addressed with the pressure of declining productivity, deteriorating morale and a host of “people issues” that hadn’t been anticipated.

In fact, industry research over the last 15 years indicates that 50-70% of all mergers, acquisitions, and other corporate transformations do not achieve their desired level of success, primarily due to people issues. The people issues cited include:

key staff losses and the downstream impact of those losses
difficulty in attracting talent during and after the integration
major dips in productivity when the impending deal is announced
culture clashes that paralyze the combined organization
under-estimating compensation and benefits exposures
over-estimating synergies and cost-cutting opportunities

HR M&A Emerges
HR M&A refers to the set of increasingly formal and well-developed processes and tools for proactively managing the people-related risks and opportunities inherent in M&A deals. As a professional discipline or functional area, the acronym “HR M&A” can now be found on organizational charts of some of the most successful companies in America, particularly those (like GE and Cisco) who have formalized internal HR M&A practices into business units.

This is a direct result of corporate deal-makers learning the hard way that systematic and intense focus on human capital issues during Due Diligence, Integration Planning and Integration Execution is the #1 way to prevent an under-performing or perhaps disastrous deal. But being thorough and committed to successfully combining complex business entities is not enough. Organizations that grow through merger or acquisition need to develop the specialized expertise needed for this high risk / potentially high reward undertaking; and they need to fully leverage the innovative HR employee transition tools and processes that are now emerging.

A new breed of workforce transition management software is now helping organizations to make data-driven employee decisions, manage effective and timely communication, and automate workforce restructuring events and ongoing employee separations. From mergers and acquisitions, to outsourcing, retirement programs and reductions in force – even major separation events – these new tools enable faster, more effective and auditable decisions around retaining, redeploying or separating employees.

HR M&A activities can be grouped into 4 areas based on commonality of subject matter and the skills needed to successfully manage both predictable and unpredictable issues that may arise. The 4 areas of HR M&A focus and expertise are as follows:

HR Due Diligence Support including risk identification and management in the areas of compensation & benefits, pension and/or insurance costs and liabilities, HR process & technology, change management and cultural fit, and identification and retention / re-recruiting of key value contributors.

HR Policy and Plan Alignment with new business goals, merger objectives, merged company target profile, and with legal / regulatory / best practice standards.

HR Service Delivery Assessment or defining and organizing the combined HR function; e.g., roles and responsibilities, organizational structure and reporting lines, skill and competency gaps, out / in-sourcing analysis and planning, HR process changes needed, and HR technology platform analysis / planning / migration.

Strategic Change Management including steps to meld corporate cultures, change readiness and visioning, proactive communications planning and delivery throughout HR M&A Life Cycle, workforce productivity focus, and customer relations focus.

A recent survey by Towers Perrin and SHRM of 450 senior HR executives at major corporations determined a direct correlation between HR involvement and M&A success. It further suggested that the earlier HR is involved in the process, the greater likelihood of success.

The data in the Towers / SHRM study showed that HR was involved during Due Diligence in 72% of the successful deals and only 39% of those that failed. During Integration Planning, HR participation among the successful dealmakers was 85%, compared to 53% for the unsuccessful companies.

In fact, virtually all recent M&A research shows a growing inclination to involve HR in planning and integrating M&A transactions, with some organizations even involving HR in pre-deal target selection and due diligence activities.

Vurv Decision Manager - Execute workforce transitions with less risk and more profit
Vurv’s one-of-a-kind decision management software brings decision support, employee communication, automation and compliance to workforce restructuring events and ongoing employee separations. From mergers and acquisitions, to outsourcing, retirement programs and reductions in force, Vurv enables faster, more effective and auditable decisions around retaining, redeploying or separating employees.

Decision Manager allows organizations to develop a comprehensive plan for achieving workforce transition goals with what-if scenarios, cost analysis and voluntary or involuntary event classification. Visibility into performance data, competencies, geographic information and individual role data help organizations identify the internal resources necessary to execute the plan, while a robust, flexible set of tools with configurable workflows and role assignments facilitate the definition of a project timeline and the design and rollout of a clear communication plan.

In addition, Vurv’s Decision Manager will help HR engage earlier in the process by providing tools to validate and support decisions with adverse impact reports that ensure compliance with federal, employment, and corporate governance laws. It also includes features that streamline the employee notification process with automatically generated notification packages and self-service portals that reinforce the communication strategy at every step of the process, and provide real-time acceptance visibility.

Using an application like Decision Manager can significantly reduce payroll expenses, benefit processing time, reduce the risk of firing and rehiring and allow organizations to quickly regain assets when necessary, all while reducing liability with auditable records and valuable insights into diversity targets, decision drivers, and transition-related performance metrics.

The emergence of tools like Decision Manager reinforces the call to HR to participate in shaping the strategic direction of the company through continuous, data-driven workforce planning and talent deployment.