HR is often overlooked or underutilized during M&A projects. This article identifies reasons for the oversight, associated risks, and ways to change the paradigm.

To realize the benefits forecasted during strategic planning, organizations have to do more than seamlessly execute the process elements of a robust M&A playbook. They must make the best possible use of all available knowledge resources. Too often, however, the HR function is marginalized, brought in too late, or completely disregarded – a decision that can come back to haunt senior leaders on both sides of the transaction.

Why HR is Overlooked

Much has been written about the proverbial table and why HR is often denied its seat. Some blame the function’s incompetence and misplaced priorities. Others offer excuses, such as executive direction and an increasingly litigious business landscape. Regardless of your organizational realities, it’s important to understand and, if applicable, remedy the following factors that limit HR involvement:

1. Lack of Strategic Skills:

Many business leaders assert that HR professionals lack the process knowledge, tools, and business experience required to navigate complex, strategic projects such as M&A effectively. While it’s hard to paint an entire profession with the same brush, this belief is understandable. Few HR degree programs, even at the graduate level, include more than a cursory exposure to core business competencies like finance and statistical analysis. Career HR practitioners can quickly lag behind colleagues who understand more traditional business disciplines.

2. Too Delivery-Focused:

Even when an individual possesses the background required to play in the space effectively, the organization and department priorities can conflict with or prevent their involvement. Too often, HR is measured and rewarded solely on their contributions to transactional work, such as employee relations cases, training programs, and time-to-fill metrics.

3. No Bandwidth:

The focus on tactical delivery causes a bleed-over effect regarding time signature. In acute cases, even senior HR leaders can regress into a reactive operational frame that consumes any “free” time earmarked for strategic endeavors.

4. A Matter of Trust:

While experience, focus, and time are legitimate reasons for excluding HR, often the issue is derived from a fundamental lack of faith in the function. This belief stems from the profession’s roots in personnel ­– a subservient, order-taking paradigm from which the field has yet to fully emerge. The question is obvious: “Why would you entrust something as complex as M&A to the team responsible for the corporate Christmas party?”

Building the Case for HR Involvement

Many HR professionals have made the case that you must get “the basics” correct before earning the right to play in the strategic arena. On the surface, the argument is logical; if you cannot accurately attract, train, and retain employees, why would the C-suite entrust you to lead a two-company integration project, much less have input on due diligence efforts?

This argument, however, compares apples and oranges. Heart surgery and yearly checkups are important medical services, but letting your general practitioner near a scalpel would be unwise. Nor would you expect a surgeon to patiently answer questions regarding diet, exercise, and cholesterol levels. To effectively build the case for HR involvement, you must take the personalities out of the equation and discuss the following indisputable business needs.

1. Cost Evaluation:

When evaluating the dynamics of a deal, business leaders are often hyper-focused on share price, capital, plant and equipment holdings, customer portfolio, and other staples of business valuation. While most savvy professionals also consider people issues, such as union and worker council agreements and executive compensation commitments, few dig deeper. When properly employed, strategic HR can provide a robust analysis of human capital and knowledge management assets at both firms to properly evaluate the value of the transaction. It can also highlight unseen costs and potential risks that could directly affect ROI. 

2. Culture Alignment and Integration:

Strategic HR can also help the M&A team evaluate vital intangibles, such as corporate culture and the impact of leadership style—inconsistencies that can snowball into a deal meltdown. Performing a culture assessment audit during due diligence can keep you off the extensive and ever-growing list of M&A failures.

3. Change Management:

Once a deal receives the green light, HR can help with the various change projects required to ensure that integration happens and lives long enough to bear fruit. Core activities in this space include key talent retention and robust communication planning.

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