- What unique skills do the employees have?
- How does the target’s talent compare to the quality of our own?
- What is the background of the management team?
- What will happen if some of the management team leave?
- What is the compensation philosophy?
- How much pay is at risk at various levels of the firm?
- What are the reporting relationships?
- How are decisions made?
Getting access to talent data may take some effort, and many companies ignore
the talent question in the early stages of the M&A process. They do not take
the time to define the type of skills embedded in people who are critical to the
success of the deal, relying instead on financial performance data as a proxy.
However, without early assessment, companies may acquire targets with
weaker than expected skills or talent that has a high likelihood of departure. A
consequence is delays after the merger announcement in deciding on the struc-
ture and management team in the acquired company, which fuels post-merger
anxiety and confusion, leading the most valuable contributors to leave.
At the same time, the audit may also uncover significant weaknesses that may
call for replacement candidates (external local hires or expatriates) to be ready to
step in immediately after closing the deal. Without advance planning, this may
not be possible. And with each replacement there is a potential termination,
which again has to be carefully prepared, based on local rules and practice.
Effective communicationCommunication is always a vital part of any process of change, but it is critical
in cross-border acquisitions where cultural differences may intensify tensions
due to misunderstanding and distance. Furthermore, in the design of the com-
munication process there are two additional objectives that are particularly
important in acquisitions. On the one hand, an aim of communication is to
alleviate the anxiety and stress that accompany every acquisition, and on the
other hand it provides feedback to top management about the progress of the
integration process and any potential roadblocks.
While some M&A are public knowledge during their pre-merger/acquisi-
tion phases, many are not, and their public announcement triggers shock and
anxiety in the workforces of the companies involved. Even if the deal is known
to be in the works, rumor mills of possible layoffs, reassignments, etc., drain
energy and productivity. Feelings of superiority, victory, or power may be gen-
erated among employees of the acquiring or dominant partner; conversely, feelings
HRM in Cross-Border Mergers and Acquisitions 101