These are the thoughts and takeaways from the latest ER Think Tank (ERTT) held on Thursday 20th March 2014 hosted by Ericsson’s Fiona Cording (Head of Employee Relations) titled ‘ER’s Strategic Role in helping Guide the Business through Mergers, Acquisitions and TUPE’.
The following summary has been prepared to reflect a segment of the discussion held amongst senior HR and ER professionals from leading national and international businesses. Specific company details, experiences and examples have been omitted from this summary as all discussions are held under ‘Chatham House Rules’.
Over the passed few years we have played witness to some particularly low merger and acquisition (M&A) activity levels. However, as global market uncertainty has decreased, the landscape for M&A activity has become far more appetising and we have seen it dramatically pick up with some sizable deals being struck. As such, many businesses are having to respond to rapid integrations and the implications of:
- Acquiring large volumes of employees
- Making redundancies
- Balancing and addressing cultural differences
- Organisational restructuring and realigning
- Integrating employees’ terms and conditions
- Being ‘day one ready’
- Changeable TUPE regulations
… whilst juggling various other HR related challenges and ensuring a smooth transfer.
Managing conflict between the commercial and people aspects of a deal
Transformational change is a business process and therefore should be led by the business, not HR. However, it’s of course HR and ER’s responsibility to provide advice and educate around the ‘people’ element of any deal, before anything’s been contractually agreed! HR need to be fully involved in the commercial conversations from the offset to avoid tying the business up in commercial restrictions later down the line. However, it unfortunately often comes down to whether HR is viewed internally as a strategic partner or a barrier, as to whether they’re offered a ‘ticket’ to these initial conversations. All too often HR are involved in the very latter stages of a deal and relevant elements of the transformation plans have not been given due consideration in business case documentation. Typically, there seems to be a degree of tension between HR and the Sales reps who want to rush the deal through and therefore fail to neglect the people-based implications.
If HR is frequently left in the dark when it comes to early deal negotiations, it’s highly advisable to vamp up internal networking to build relationships with key colleagues involved in the transformation; such as the Sales reps. Furthermore, it’s crucial that HR is speaking the language of the business to build credibility and justify the importance of their involvement.
When it comes to transformation, transparency is absolutely key. It’s paramount (for both existing employees and ones being TUPE’d) that the reasons for change (economic, technical or organisational) are validated and communicated clearly. Employees need to feel united and that they’re working toward the same goal, rather than experiencing ambiguity around the future direction of their employer. Business is now done in such an open market that it’s simply not an option to over promise and under deliver – if you do, you can guarantee that everyone will know about it! Be clear on how you will be managing the transfer, what stages are involved, how individuals will be affected and importantly, hold these conversations as soon as possible to allow people the time to adjust and ask any questions they might have.
Think carefully about the medium you use to deliver your message; face-to-face engagement should never be under-valued in these circumstances as employees want to be treated humanly. However, think about what’s culturally accepted in your business; if the majority of conversations are handled remotely (over Skype or the phone) then your chosen communication medium might be slightly different.
Transforming from day one
Past experiences of transformation would suggest that it’s absolutely better to implement change from day one in terms of line-manager alignment, systems integration etc. Delaying the overall transformation by segregating TUPE’d employees will delay the integration and is likely to impact negatively on the morale and engagement levels of ‘new’ members of staff.
It is worth noting that integration strategies will vary depending on the overriding reason for the transformation. If the TUPE transfer is supporting a commercial agreement spanning 5-10 years, it’s potentially not cost effective to fully integrate acquired employees if they’re to be moving on when the agreement ends.
Engagement of transferred staff
When on-boarding new members of staff it’s crucial to keep their welfare high on your priorities. Many businesses focus too heavily around customer engagement and neglect the needs of employees. A happy and engaged workforce will deliver a better service and will therefore positively influence the customer satisfaction objective.
Existing employee engagement
Whilst it’s vital to pay due attention to the engagement of transferred employees, it’s important not to forget your existing workforce. When communicating with staff before, during and after a transformation, this group of stakeholders need to understand and be bought into what the merged or acquired business will be contributing to their original company. What does the transfer mean for them and how does it affect the direction of the business? It’s also worth being aware that some employees might naturally fear the competition if they’re concerned that their opportunities for progression / promotion are being hampered – these concerns also need to be managed accordingly.
Following transformational change, like TUPE transfer, the importance of the line-manager shouldn’t be overlooked. These individuals are integral to integrating new team members, setting expectations with regards to behaviours and generally influencing how engaged their teams are. Coaching line-managers before the transformation goes ahead will impact the effectiveness of change.
For organisations that recognise unions, managing engagement with these bodies is crucial by keeping your elected trade union reps and forum groups in the loop and informed with transformation plans. Whilst it’s generally agreed that unions’ power and relevance is reducing, it’s by no means less important to endeavour to keep them on-side. From an ER standpoint it’s important to be mindful of TUPE transferred employees who are union members. It’s crucial to manage their integration with existing employees and visa versa for new employees who are entering a heavily unionised environment.