HR leaders play a key role in helping organizations navigate the complex, dynamic landscape of M&A transactions. A recent Deloitte M&A Institute event created a forum for HR M&A professionals to gather, exchange ideas, share experiences, and gain real perspective from others in their unique positions.
Deloitte’s1 second annual Human Capital DealMakers Workshop brought 33 HR M&A professionals together from two dozen Fortune 500 companies across various industries to discuss some of the most pressing issues facing HR in a merger, acquisition, or divestiture environment. One participant shared what was a common sentiment, “This was a great opportunity for me to step back and think more strategically about how I would like to lead our company’s HR M&A function, and it was invaluable to have conversations with peers about their experiences.”
The workshop, held October 8–9, 2018, at Deloitte University in Westlake, Texas, had several key takeaways:
During a deal, culture is keeping HR up at night
Participants made it clear that culture’s impact on a deal was clearly on their mind. Even though culture clash is the No. 1 cause of deal failure,2 for most organizations, the slightest mention of culture can cause HR’s functional counterparts to stop listening. Through a TED Talk, one participant shared how she was finally able to help her executives understand that “culture is much deeper than the ‘fluffy’ topic it’s perceived to be.” Culture was a common theme across numerous sessions at the event, showing up in the Employee Experience panel discussion and in two breakout sessions—one on preserving the “secret sauce” when you acquire a startup, and the other on HR’s role in due diligence. Investing time and resources to study culture during the due diligence phase can pay dividends by curbing deal-breaking clashes. One participant shared, “Often we don’t even know who the target is, but by knowing our own culture really well, I’m able to guide the diligence team by asking the right questions to understand if the target would be successful with our cost-cutting mentality.”
Quantifying the impact grabs the attention of the deal team
“When HR gets a seat at the table in a deal we need to come with value,” said one participant. During an interactive Greenhouse Lab, participants shared numerous stories of how a positive employee experience can be the difference between deal success and deal failure, but often that’s not enough to convince internal stakeholders. HR can address this by quantifying the negative impact. How many dollars will it cost or how much time will it add to the project roadmap if critical talent has a poor experience and decides to leave? If HR can warn the business of the dollars associated with low morale, disengagement, poor productivity, stalled decision-making, and team friction, suddenly employee experience might be put at the top of the weekly Integration Management Office (IMO) status report.
Engaging HR early pays off
A participant shared, “[The Due Diligence breakout session] highlighted the value of HR and in engaging earlier in the deal in order to create greater deal value.” When brought in earlier in the process, HR can significantly impact deal decision-making by identifying potential deal breakers, transaction price adjustments, transaction agreement protections, and integration issues. It also gives HR more time to listen and learn. Another attendee commented, “A lot of times buyers don’t take the time to learn, thinking that tactically trying to listen to employees in 32 countries is impossible, but listening has been our biggest differentiator.”
The Human Capital DealMakers Workshop was an excellent opportunity for HR M&A professionals with diverse backgrounds to come together, understand current trends, and learn from others’ experiences. Regardless of attendees’ prior experience with M&A transactions, the workshop provided immersive learning experiences appropriate for all. One participant observed that “[You] learn with every deal…everybody in that room had loads to learn and loads to share.”
If you are interested in learning more about Deloitte’s Human Capital DealMakers Workshop, please email us at HCdealmakers@deloitte.com. Visit the Deloitte M&A Institute website for the calendar of upcoming events, training sessions, and Deloitte thought leadership.
1 Deloitte Consulting LLP
2 Harvard Business Review, 2018