Step 8: Develop M&A Staffing & Retention Plans

M&A Talent Selection Plan

Agenda

• Approach
• Acquired Co Employees Impacted In 3 Ways
• Required Co Employee Selection and Placement
• Engaging with Acquired Co Employees Pre-Close
• Rules of Engagement
• Selection Process for Functions Being Scaled Back
• Step 1: Workforce Planning Results in Acquirer Talent Needs
• Step 1: (Cont.) Workforce Planning Identifies Acquired Co Positions Being Affected
• Step 2: Candidate Pooling Identifies the Talent to Be Assessed
• Step 3: Selection Will Be Driven by Assessment of Experience and Performance
• Step 4: Employees Not Selected Will Be Considered for In-Placement and Out -Placement    
• Guidelines for Selection
• Service Eligibility
• In-Placement Services
• Pre-Notification

Staffing and Retention Integration Project Plan

Over 70 Staffing and Retention Activities Grouped into these Categories:

• Finalize Organizational Structure for All Functions
• Deploy a Staffing Process to Assess, Select, and Announce All Levels of the Organization below the Management Team
• Management Team Design Tools to Retain Key Talent Prior to Close and Throughout the Transition Period
• Develop a Process for Managing Reductions in Force and Administering Separation Packages and Outplacement Services
• Design an Issue-Free Day 1 From the Employee Perspective
• Provide the Communication Team with Guidance on Messages Related to Retention, Severance and Staffing

The Argument Against Waiting to Make Staffing Changes

The top management in the acquirer might argue that it is best to allow some time to get to know the abilities and potentials of the management team in the target organization. But that assumes that those people will hang around long enough for such a familiarization process to occur. Often, they do not.

Be Willing to Be Unfair in M&A

Mergers always require you to make sacrifices. It’s a time of tradeoffs. Compromises. Less than perfect solutions. So far as the people issues are concerned, it’s like watching a card game—some win, some lose, some break even.

You can care deeply—for everybody—but you can’t keep from damaging some careers.

Deep inside, managers know this is the case. Obviously, everybody can’t come out on top. But when it comes down to deciding how the two work forces will actually be integrated, the people calling the shots usually feel compelled to make a show of fairness. Instinctively, they want to come across as acting equitably, to be seen as even-handed in the way they assign people to the various positions.

This sort of behavior is fully understandable. But as it turns out, it’s not particularly good management. In fact, if being “fair” to current employees is a top priority, merging is probably a bad plan. It’s sort of like wrestling with the decision of whether or not to declare war. How can you justify it if you’re unwilling to sacrifice some lives? Nobody ever said that mergers are the kinder and gentler way to corporate growth...

Pride and Prejudice: The Politics of Merging Boards of Directors

Some 200 years ago, Jane Austen–one of Britain’s best-loved authors—wrote a famous novel about marrying. And money. Deep down that’s actually what mergers are about, too, so I thought to myself, “Maybe her classic, Pride and Prejudice, has parallels for merger integration.”

After all, “corporate marriage” is the most common metaphor used when people talk about combining two companies. And as for the part about money, well, M&A is always based on a financial proposition.

Since Austen’s story about 18^th century England focuses on social class, let’s look at merger integration from that angle. In the hierarchy of power and status, the Board of Directors is the uppermost class…the top rung of the corporate social ladder…the highest level of governance. 

So how do pride and prejudice affect the integration process in boardroom society ..
 

Interviewing Guidelines for Staffing NEWCO

As a hiring manager, you may have participated in the interview process when hiring externally at ACQUIRER or TARGET. The staffing of NEWCO will be somewhat different from what you’ve experienced previously. You will be asked to interview ACQUIRER and TARGET employees to gain a better sense of their overall skill set and competencies. During this process you need to keep an open mind about where they might be fits within your division and the new company. This will be an emotional time for people who are being interviewed; therefore, please be conscious of the fact that many of the candidates will be nervous since there is uncertainty about their future job status.

Unfortunately, there may not be a position in ACQUIRER for some of the candidates you interview. Let the candidate know that someone will get back to them as soon as a decision has been made. The interview process will move much faster than our typical external interview process. No job offers or eliminations will occur until after the merger has been completed ….
 

Most Onboarding in M&A: Too Little Too Late

Acquiring and merging a company is like hiring en masse. You spend a ton of money on the deal, and your payroll immediately explodes because of this huge new batch of employees.

But these people didn’t come looking for a job with your firm.

You need a well-crafted onboarding program to protect your investment. However, most acquirer’s assimilation efforts are too late, too little, and too poorly executed. This is a major failure in risk management.

Practically all acquirers perform at least a few basic onboarding tasks. But often the acquired workforce receives little beyond a Day 1 data dump and a pile of paperwork to fill out.

How to Manage Staff Reductions and Separations in Mergers

In a merger, acquisition, or takeover, reductions may be required immediately after the announcement of the transaction, or they may be required after work is transitioned from a department. In either case, you should prepare for the following necessary actions:

This requires an evaluation of major tasks performed within a department and the labor hours required to accomplish those tasks. The due diligence review of all departments should have provided historical data from the organization to facilitate the staffing decisions, whether those are transaction numbers, dollar volumes, number of accounts, number of employees, or other quantitative factors. In this process, it is important to consider the tasks, not the individuals assigned to the tasks. The end result should produce the staffing projections for the combined organization.

When calculating staffing projections, it may be helpful to use required work standards and management ratios ...
 

Ten Common Mistakes Managers Make During Job Status Notification

Job status notification is a difficult challenge that warrants careful planning and handling. Avoid the following typical mistakes when communicating job status information following the close of the deal:   

Mistake # 1: Not being prepared.

Antidote: Get ready.

• Know specifically what your role and responsibilities are regarding this process.
• Thoroughly understand the three different categories of employees (continuing, transitional, and separated) and review the process for dealing with each scenario.

Mistake # 2: Not acting calm and relaxed …                       
 

Mergers and Acquisitions: The Process for Making Staffing Decisions

First, the new owner should not be tempted to “go with the familiar person.” This tactic does not sufficiently minimize the risks involved.

Second, there is real danger in deciding to “Do nothing and wait for the dust to settle.” It may, on the surface, appear that in employing this approach one is exercising sage restraint. But some good people may choose to leave while the merger is still stirring up dust. Others will have been waffling along with a wait-and-see attitude. And some will have done damage that could have been prevented by a more timely termination or reassignment. Undoubtedly, the organization will have lost some momentum unnecessarily while also wasting an excellent opportunity to motivate people.

Third, sweeping personnel changes that follow closely on the heels of an acquisition, and which proceed without any systematic appraisal of those people being terminated, come at too dear a cost.

Acquirer's Approach to Talent Selection

Although the integration will bring some job eliminations and job changes, the majority of roles within the combined organization will not be impacted. A necessary part of any integration is defining the new organization and opportunities as well as eliminating duplicate roles. When this occurs, we will communicate with impacted employees their specific options. 

Our goal is to share the majority of organizational decisions within 90 days after Close ...

Why Not Evaluate the Acquired Company's Management on Corporate Profits?

This is the most traditional approach, and it is good so far as it goes. Certainly, it does pay respect to salient—even critical—data. But good numbers can mask weak talent. The acquired company may for all practical purposes have been a one-man show. There may be no backup. That in itself is bad enough, but it becomes even more critical if the front man happens to depart in the aftermath of the acquisition.

There are too many external biasing factors that deserve consideration for the acquirer to simply assume that incumbents truly do deserve full credit for the current set of numbers. A quantitative analysis can be misleading in a variety of ways.

A Product of Good Times

A benevolent economy may deserve most of the credit for the acquired firm’s good financial performance. So the question that deserves thought is whether there is much proof that …
 

Build a Powerful Onboarding Process

When an acquisition will be integrated and its current corporate identity reshaped, the parent (or surviving) firm has an obligation to bring acquired employees into the fold. This calls for comprehensive, sustained onboarding. People in the acquired firm need to develop a feeling of citizenship in the new corporate structure. They need guidance on what to expect and how to fit in. They need help in making social connections that can provide a new sense of belonging.

Yes, it takes time and money, but the return on investment is huge. Acquirers that skimp in their onboarding efforts pay a far heavier price in the long run as they wrestle with integration problems which easily could have been prevented.

Four Key Benefits of Onboarding

A well-crafted onboarding program can be your best counter-offensive against the chronic and troublesome merger dynamics of ambiguity, a weakened trust level, and self-preservation …

How to Design the New Post-Merger Organizational Structure

1.    Evaluate and, if necessary, refine the business strategy. Strategy should drive structure. Strategy should provide fact-based, clear, compelling, boundary-setting answers to these questions:

• What products/services will we offer and not offer?
• Which products/services will we emphasize?
• What markets will we and will we not serve?
• Which markets will we emphasize?
• What competitive advantage(s) will cause us to be successful?
• How will we measure our strategic performance?

 
2.    Identify the business processes that are most critical to the successful implementation of the strategy. Strategy and business processes should be the two primary drivers of …