Amid the contracting of the economy due to COVID-19, many organisations are considering reorganisations and mergers and acquisitions (M&As), as a way to survive this period. M&As are often a huge hurdle for organisations, with numerous challenges being raised by the process. Differing employee terms and conditions, alongside policies and processes, are often discussed in the early stages of the merger.
We discuss how cultural due diligence is key to the success of the project, determining from the outset if, and how, two cultures can be harmonised. Assessing job descriptions is a crucial part of this process, driving efficiencies from the outset.
Cultural due diligence
M&A growth strategies are premised on the promise of accelerated growth, gaining a competitive edge and accessing new markets. However, the success with which these objectives can be achieved collectively will vary greatly between different organisations. Often the combined culture as a result of how well they are brought together is the pivotal factor in determining the long-term success of the M&A and how well people from different factions work together.
The external advantages need to be carefully balanced against the internal alignment between different departments and how the company will function as one. Integrating systems needs to be as smooth as possible to offer continuity in customer experience instead of undermining the combined success of each organisation. Those who are willing to step back and objectively examine how well two different company cultures can align will reap the benefits in the long run.
Those looking to go through a merger or acquisition must identify at the outset if two different cultures would be compatible. This was the experience of one of our Housing Association customers, with negotiations falling through on this basis alone. The leadership team was honest and objective in their decision to step back from the proposals when a ‘best of both’ solution to integration was not possible.
Tackle the inconsistencies in HR practices from the outset
It is important to understand the extent to which processes can be aligned from the outset. We have recently acted on a successful M&A in the FM industry, harmonising absence pay policies and undertaking the data modelling around pay structures to rationalise roles throughout the new organisation. We helped put into place systems to support ‘one culture’ that unites all staff. The risk with M&As is that growth is achieved through a series of organic steps that results in different parts of the organisation continuing to follow their own set of processes and policies. The long-term effect of this is that career paths, pay levels and job responsibilities may vary between each location, undermining employee progression and efforts to establish a strong employee value proposition.
Job descriptions, reviews and training are vital. Employers need to consider whether these documents are up to date in order to address inconsistencies and whether jobs have changed, potentially taking this to full job evaluations soon after a M&A and ahead of restructuring. Assessing organisational design should be undertaken as soon as possible, as it is important to ask, ‘how reliable is the current structure for where we are now and what we want to collectively achieve?’
Scrutinising job descriptions can help with merging organisations’ roles and responsibilities. They can also flag if there is a need to properly redefine job roles where companies have grown organically. Similarly, the impact of restructuring has wide-ranging ramifications throughout a business on its culture and employee morale. Therefore job descriptions are a good place to start to assess an organisation’s efficiency and whether minimal changes can be made to address any overlaps in job responsibilities. Clearly, in the last four months, this has not been a focus for people, but it is an increasingly pressing matter for HR for organisations that need to cut costs and weather the aftershock of the pandemic.
One unified approach
Often organisations report that they avoid carrying out full job evaluation audits because of the scale of the task. However, creating a clear system across the organisation provides an important framework that acts as the basis of a successful harmonisation in the long-term. It drives efficiency as each individual can have confidence in their role and responsibility, being clear about where they ‘fit’ in the organisation. Promoting this sense of ‘belonging’ can bring together disparate divisions so that they are all clear about how they deliver customer success.
Full job evaluations make it easier to drive efficiencies, identify overlap between teams and people and reduce running costs to help protect organisations against further loss at an already tumultuous time. The benefit of this can only be compounded over time, as organisations who are aware that they are running efficiently can target pay decisions to any specific recruitment and retention issues they face in the future and reward teams/contractors where projects have gone well. This provides the whole organisation with more agility to respond better to market changes.
Don’t let it spiral
Determining whether M&As or reorganisations are necessary will be particularly acute over the next six months as we see increasing redundancy levels once the furlough scheme and financial support from government starts to ease.
To ignore an organisation’s lack of pay framework runs a real risk of equal pay claims in tribunals and undermines employee retention in the long-term. Without clear job descriptions that can be written to delineate roles and responsibilities, inefficiencies arise and employee morale is impacted. This takes away a sense of purpose and pride over one’s work if there is overlap or internal competition between teams. Similarly, if there is no parity of pay or a clear route of progression mapped out to drive career development, retention and attraction becomes an issue. Not having one unified system of pay and benefits becomes too big a risk to ignore.
Get in touch
If we can help with any aspect of writing job descriptions or HR training to deliver how vital accurate job descriptions are in times of M&As and reorganisations, we would love to discuss this further – call us today.
