Rajeshwar Vayyavur
Abstract
Consolidated workforce management concepts are rapidly emerging with several challenges in today’s HR industry, due to the complexity involved in integrating people, cultures, processes and technology together in a single organization and maximize the overall business performance. The industry research revealed that 50-70% of mergers and acquisitions fail miserably due to people or workforce related issues, the identified issues include: loss of key staff, difficulty to attract key talents during or after integration, lack of employee motivation, misaligned workforce structures, lack of shared vision, clash in combined organization culture and more ("Workforce Transition Dramatically Improved When HR is Involved Early", 2007). The purpose of this paper is to examine the current challenges in the management of consolidated workforce resulting from a merger and acquisition, and explain the role of HR to address those challenges and then further propose a maturity model for the management of consolidated workforce to improve the overall business performance, growth and profits.
Keywords: Consolidated Workforce Management, Workforce Management, Employee Management, Mergers & Acquisition, Human Resources, HR Management
Introduction
Consolidated workforce management concepts are rapidly emerging with several challenges in today's HR industry. Workforce Management Trend Survey 2013 – 2014, conducted with nearly 9000 organization across various broad range of industries, geographic distribution and company size, revealed that 68 percent of organizations are having consolidated workforce management under HR, which has increased 12 points from the previous survey (Workforce Software, 2013). Consolidated workforce management is basically the management of consolidated workforce from acquired and acquiring company after mergers and acquisitions. Companies consolidate through mergers and acquisitions for various reasons, such as to increase competitive advantage, business capabilities and market share, diversify products and services, cut costs and more. It’s quite challenging to manage the consolidated workforce due to the complexity involved in integrating different cultures, people, processes and technology together in a single organization and maximize the overall business performance. The industry research reveals that 50-70% of mergers and acquisitions fail miserably due to people or workforce related issues, the identified issues include: loss of key staff, difficulty to attract key talents during or after integration, lack of employee motivation, misaligned structures, lack of shared vision, clash in combined organization culture and more ("Workforce Transition Dramatically Improved When HR is Involved Early", 2007). This paper explains the critical role of HR to ensure that the consolidated workforce team is adapting to the new organization culture, processes and technologies to meet new business demands. The purpose of the paper is to examine the current challenges in the consolidated workforce management resulting from a mergers and acquisitions, and explain the role of HR to address the challenges and then further propose a maturity model using the best practices to effectively manage the consolidated workforce and improve the overall business performance, growth and profits.
Consolidated Workforce Management
Consolidated workforce management is critical for successful merger integration, as it enables to align two corporate cultures, people and processes to achieve maximum benefits within the organization. HR team has a significant role to manage these critical people aspects of integration by aligning different cultures, people and processes through detailed planning, execution, monitoring and control to increase effectiveness, accelerate results and sustain change benefits within the organization. However, the consolidated workforce management is complex, as there are several challenges to bring two combined organizations together and align them into a single company with a new organization structure by being transparent and fair in the selection and staffing process to transfer people from or to the acquired firms and eliminating the redundant people, providing right measures and incentives to retain people after the transition, and addressing associated related issues. Vancea (2011) analyzed several challenges related to consolidated workforce management, and emphasized that the problems may arise during the post-integration process due to human factors, cultural incompatibility and an inappropriate management, which may affect in retaining key people, transferring people from or to the acquired firms and eliminating the redundant people within the organization.
In the PricewaterhouseCooper's 11th Annual CEO Survey, 58% of CEOs stated that "people" is one of their top priorities during the merger and acquisition, while only 14% strongly agree that senior management in involved in addressing the people related issues adequately during the strategic consolidation ("People integration Capturing M&A value by making the most of human capital post deal", 2011). The below proposed maturity model for consolidated workforce management (see figure 1), is built on the four key elements which includes culture, communication, training and monitoring and control to address the current challenges in the consolidated workforce management and improve overall organizational performance and effectiveness.
Figure 1: Maturity Model for Consolidated Workforce Management
Organizational Culture:
Organizational culture is one of the most important element in the consolidated workforce management. Without a good culture, no organization can succeed. A good culture encourages employees to work collaboratively towards the organization strategic goals. Cultural issues arises mainly due to clash in combined organization culture, misaligned structures, lack of shared vision, lack of trust in the company and more. HR team has an important role to develop a positive culture and environment, with effective organizational structures and relationships, considering strategic and tactical vision of the company.
KPMG (“Post Merger People Integration”, 2011) emphasized Tuckman’s theory for group (i.e., consolidated workforce) development using the four stages: forming, storming, norming and performing. In the forming stage, the consolidated workforce or employees may be confused and uncertain about the existing goals and rules of the organization. HR needs to address this issue by clearly defining roles and responsibilities of employees in the new combined company, discussing on background of organization and its structures, processes and cultures and helping the employees to agree on existing organization rules, policies and procedures to work more effectively in the new company. In the storming stage, employee may have disagreement over priorities and existing leadership. HR needs to conduct a joint workshop sessions to openly resolve issues related to structures, processes and cultures to bring more clarity in the organization with direction and purpose. In the norming stage, employees may have some consensus and trust in the established leadership and the organization with existing defined standards, policies and procedures. HR needs to evaluate the decision making process by maintaining flexibility and reviewing goals and processes. Lastly, in the performing stage - team members are open and helpful with their existing roles and responsibilities and are performing the work without any major issues. Now thing are going well, and HR needs to continue working closely with the management team to encourage delegation and innovation to achieve the desired results toward organization growth and profits (“Post Merger People Integration”, 2011).
Communication:
Communication is another important element of consolidated workforce management. Its HR responsibility to communicate on all important aspects of merger to their employees so that they are better informed about the changes and integration process. Lack of communication can lead to employee frustration, productivity loss, low morale and more. The communication to the employee can be in forms such as emails, intranet etc. The effective communication avoid unnecessary rumors within the organization, which may lead to unproductivity and many other issues. According to Schuler & Jackson (2011), acquired companies are more satisfied with the HR communication related to the initial personal on-boarding welcome letter, and other communication related to benefits options and payroll. Therefore the communication process is quite essential to be transparent and retain and motivate key employees. It also plays a critical role in the change and integration process, where the employee know how to be part of the change and integration process.
Training:
Training is another important element of consolidated workforce management. If employees are not trained properly on acquired processes, policies, procedures and technology, they get frustrated and their productivity goes down. Schuler & Jackson (2011) emphasized that training stimulates the learning process, and establishes responsibilities and partnership agreement within the organization. Its HR responsibility to ensure that employees are working effectively within the organization after the merger using policies, procedures, processes, tools and technology. In order to accomplished this goal, HR need to conduct an assessment on all the changes that result from the merger, then develop revised training material and identify individuals or group who needed those training. The training should be mandatory for new employees from acquired company, to get them up to the speed with organizational processes, policies and procedures, tools and technologies. In most of the case, HR needs to work with other departments to run the training needs on the processes and technologies. The training can be in any form, one–on–one instructor led training, web–based training, or revised training guides. Therefore the employee training is quite critical to make employees familiar on processes (such as submitting expenses, timesheets, etc.,) and reporting procedures and technology platforms etc.,
Monitoring & Control:
Monitoring and control is another important element of consolidated workforce management, as it helps to measure, and stimulate employee performance with the ultimate goal to improve performance within the organization. HR’s performance management practices, such as performance appraisal, feedback training, coaching, knowledge and information sharing etc., helps to improve employee’s engagement, commitment, trust and motivation with the organization. Den Hartog et al. (2004) stated that performance management is used for day-to-day management, support and development of people by setting objectives from an individual employee level to department and organizational level using various techniques such as performance appraisal systems, strategic reward systems, training and development programs, feedback, communication, and coaching, employee career management, performance management and organizational culture management and more. It's clear that performance management through monitoring and controls helps to proactively manage employee performance in order to improve the overall organization performance and effectiveness.
Conclusion
The paper presents some of the pertinent issues in consolidated workforce management and recommends the best practices to address those issues to improve business performance. The outcome of this study provides a maturity model to address the underlying the consolidated workforce integration issues to increase the success rate. The proposed model shows a positive correlation between merger success/failure by considering the four key elements - culture, communication, training and monitoring and control. The model combines case study (large numbers of variables, qualitative data, rich in detail, small populations) and empirical studies (small numbers of variables, quantitative data, generalizable, large populations) to include more in-depth data for each merger. Moreover, the proposed model is built on best practices and previous experience and researcher work towards improving the success of firm's mergers and acquisitions. The future research study recommendation would be to consider larger successful mergers with supplementary primary data (such as interviews) and secondary data to understand the solutions which worked to address the people issues. Moreover, the future research should consider also other associated people aspects to extend the scope and dimensions of the maturity model to more proactively address unidentified issues and to meet future needs of consolidated workforce management.
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