Accelerating the transition to the future of work through M&A

Posted by Ami Louise Rich, Vivian Breaux, and Laura Bow on February 21, 2019.

Incorporating a vision of the future-state workforce into deal planning helps organizations capitalize on the disruptive change encountered during an acquisition or divestiture to accelerate workforce transformation and redefine the way work gets done.

Recent technological advances such as automation, artificial intelligence (AI), and the rise of the contingent workforce have served as a catalyst to change historical norms about our workforce (who conducts work) and the workplace (where work gets done). Such rapid changes to the traditional ways of doing work are requiring many organizations to build digital capabilities to meet the business challenges of the future. This new digital work environment, often referred to as the “future of work” (FoW), requires organizations to have an intentional human capital strategy designed to build and maintain a competitive advantage.

M&A has long served as a business lever companies use to pivot their competitive strategy or increase operational efficiency. However, HR leaders should not overlook the ability of M&A to achieve transformational workforce goals as well. M&A deals are frequently viewed as detached events, requiring significant HR involvement, but not necessarily included in an organization’s overall human capital strategy. By leveraging the necessary organization transition that occurs during M&A deals, HR leaders have access to a powerful accelerator capable of driving FoW-aligned changes deep into the organization. Viewed with this lens, such workforce transformations can not only maximize deal value, but can also accelerate a human capital strategy aligned with FoW goals.

During a recent Human Capital DealMakers event held at Deloitte University this fall, we had the opportunity to discuss with 30+ HR leaders how M&A transactions can help support their companies’ FoW human capital strategies.

Defining the future of work
Three factors are considered to define the Future of Work:

  • What Work can be done by smart machines and robots? The continued growth of automation as well as cognitive and AI technologies drives the need for a new organization structure. As machines take over certain job capabilities, organizations and teams must adjust to effectively complement the new breakdown of work and seek talent with skills to fill the gaps.
  • Who in the Workforce can do the work? Companies, employees, and customers are interacting in new ways. There is a movement away from the organization-led, traditional model of full-time employment to the employee-led, open model of contractors, freelancers and crowd-sourced tasks. In addition, as organizations evolve, they must continually augment their workforce to align skills with changing work needs. Leaders at Human Capital Dealmakers noted one HR strategy to adapt to these changes and drive retention in the changing environment is to focus on hiring experienced, skilled employees and letting them define their role. In addition, HR should adjust the processes to access talent needs (either through employment or contract/contingent workers) and provide the tools for continuous development of the existing workforce.
  • Where can the work be done to maximize productivity? The use of the remote and distributed workforce has dramatically increased with the support of tech-enabled virtual work environment. Accommodating virtual work can give organizations access to a broader talent pool in distributed locations and can enable the organizations to boost engagement and productivity by flexing to employees’ needs.

Opportunities to drive to the FoW in M&A
A large M&A transaction creates reverberations throughout an organization and its workforce. HR leaders can take advantage of this disruption to drive FoW changes throughout the deal life cycle. In each phase of the M&A Deal life cycle below, FoW drivers can be woven into the deal execution strategy.


M&A Strategy and Target Screening

  • Define the future operating model inclusive of FoW goals during target assessment and selection.
  • Explore targets that may have FoW capability you seek to encourage, such as a well-developed remote workforce or business processes supported by automation.
  • Prioritize aligned FoW values between Buyer and Target to generate buy-in to reach FoW goals through the integration.

Due Diligence

  • Evaluate target business units against the FoW factors (Who, What, Where), assess opportunities to incorporate transformational change, and calculate organizational costs including investments required for FoW transformative activities.
  • Identify opportunities for workforce transformation through organization design in alignment with FoW concepts (such as considering whether certain job tasks could be automated).

Transaction Execution and Integration

  • Enable the combined leadership team to drive FoW concepts by identifying critical skills, identifying high-potential leaders, and conducting leadership labs to activate the team.
  • Use the organization design process strategically to select those employees critical to your future workforce, while meeting synergy targets with groups who are not aligned to FoW goals.
  • Retention is a priority issue in M&A, and it is also a growing concern in the future of work landscape. Thoughtful communication and change management planning through integrations is a critical workstream and can be leveraged for FoW-related initiatives.
  • New roles crafted through organizational design may be a tool for retention by presenting a fresh challenge to critical talent looking for growth.

The case for future of work in M&A
During the Human Capital DealMakers discussion, HR leaders considered how situational changes during previous deals forced the HR deal planning team to make what felt like a risky jump into new HR enabling technologies, often unintentionally resulting in furthering their transition to the FoW. However, what initially felt like a risky move turned out to be a critical step in enabling the organization to better adapt to workforce changes post-deal close.

The consensus from this discussion? Set an intentional Human Capital FoW deal strategy at the outset and use the transaction to enable these goals and further longer-term workforce transformation goals.

As changes in the business and technological environment continue to accelerate, the old adage that leadership “must think 3–5 years ahead” poses a larger challenge. By taking what may seem like a risk to drive FoW concepts and workforce transformation through a transaction, not only can organizations maximize deal value, but they can also capitalize on the disruption to drive competitive advantage and retain top talent who want to be part of a company at the tip of the spear.

Ami Louise Rich is a principal Deloitte Consulting LLP’s Human Capital M&A practice. She has advised clients on more than two dozen transactions on topics ranging from operating model, organization design, culture integration, change management, and HR functional integration across the full M&A life cycle.

Vivian Breaux is an M&A professional in Deloitte’s Human Capital practice with a focus on organization and operating model design, change management, and communications across all deal environments.

Laura Bow is a senior consultant at Deloitte Consulting LLP with a focus on Human Capital issues in an M&A environment, including employee experience, organizational change management, and HR strategy & transformation.

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