Tailored HR Strategies Drive Performance
Serial acquirers Cisco and SuccessFactors attest to HR's playing a key role in helping to achieve post-merger goals
The need to retain talent and create positive employee experiences during the acquisition process is becoming one of the biggest strategic needs for the technology industry.
Retaining talent, capitalizing on synergies and mastering smooth and productive integrations are the goals of most mergers and acquisitions. For the technology industry in particular - a highly competitive and fast moving sector that leverages M&A as a means to grow - these objectives have become even more central to business strategies because companies are increasingly being acquired for their talent, and integration success or failure directly impacts future financial performance. This is why attention to human capital issues during expansion decisions is becoming one of the biggest strategic trends in the technology industry.
Tasman Consulting LLC recently spoke with human resources (HR) and corporate development executives from SuccessFactors Inc. (NYSE: SFSF), Salesforce.com Inc. and Cisco Systems Inc. (Nasdaq: CSCO), all current clients of the firm, who examined how these goals are achieved and the key aspects of dealmaking that are critical for HR M&A professionals.
Among the main tips cited by the experts are: the importance of a unified approach between HR and corporate development teams, the focus on creating a positive employee experience during the transition process and the attention to culture assessments and integration. This can be facilitated by solid advanced planning, transparency, and a targeted effort to engage the acquired company early in the process.
The importance of the partnership between HR and corporate development relies on the role of both areas during the entire lifecycle of the deal - from HR negotiations all the way through to integration planning and execution, explains Judy Blegen, VP applications and business process design at Success Factors.
"I am a firm believer that integration should lead with HR. The excitement of the announcement wears off and all people, regardless of level, need to have their personal questions addressed before they can effectively focus on the heavy lifting that is integration," Blegen says, adding that HR can bring value early in the deal process by highlighting important areas of cultural alignment or misalignment, helping the team remove obstacles and clear hurdles to get the deal done.
"I've actually seen deals fall apart in HR negotiations because there was just too much of a cultural misalignment," she says.
During SuccessFactors' acquisition of Plateau, the company had to integrate globally in a tight time frame, while managing strict cost synergy goals. Tasman brought the leadership teams from both companies to work together on all of the employee organizational planning. By quickly aligning the teams on clear goals and having them work together through hands-on interactive sessions, the firm was able to meet the time frame while maintaining employee morale. Tasman also introduced them to the cultures of each firm and helped them adapt to the styles of each organization. The time and energy spent at the beginning stages made employees happier in the long run and helped the company meet its financial targets.
Angela Whatley, director of employee success M&A at Salesforce.com, agrees that in order to drive a successful integration in a fast-paced and growing company, being clear about the plan from the outset is crucial. "We must help employees identify what's changing in the acquisition process and what's not changing. Also, get the key talent engaged," she says. Regarding international deals, she also provides a practical tip: it is important to keep in mind the tax structure in the country in which the company is dealing and how the employing entity is going to be structured inside the company.
"This drives a lot of the integration," she says.
And don't underestimate the unknown. "No matter how many deals you've done, or how sophisticated your processes are, there are always unknowns that you can't control," states Whatley. She further explains that there are many intangible factors, such as leadership styles, that do not appear in the data room during due diligence, which can change the whole process of integration.