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Impact on Talent Strategy, Post M&A

Impact on Talent Strategy, Post M&A


by Dave Chew, Team Manager, TBC HR Consulting (S) Pte Ltd

How will the combined supply chains look like and what will be the impact of M&A on talent strategy? This article discusses in detail the talent crisis in Asia Pacific and the eroding vessel of SCM. A perception problem continues to remain in regards to roles and contributions of employees in the realm of manufacturing and supply chain, which makes their efforts towards profitable business outcomes, go unnoticed.

How can supply chain teams work in collaboration to maximise profits and be business growth enablers during M&A?

Moving to the challenges of shoring up a supply chain talent base, the Deloitte’s report titled ‘Supply Chain Talent of the Future’ states, “In times of change, when experimentation tends to be rampant and results are still far from conclusive, one source of guidance can be to look at the companies who are succeeding, and discover what they are doing differently.”

The survey by Deloitte further reveals little adoption of leading talent practices by supply chain organisations. An organisation that wishes for better talent should probably invest in better talent management.

Post-merger supply chain integration: Tackling the merger mania

Dan Dalton, a professor at Indiana University’s Kelley School of Business, reasons it out on why companies across the globe have been pursuing mergers and acquisition with keen business acumen in the recent past.

Professor Dalton says that, “Companies have gone on an acquisition binge because record profits and soaring stock prices have left them more liquid than at any time in the recent past, and there are only three things they can do with the cash: save it (an option that executives favour but investors frown on); pay it out to shareholders in the form of dividends (which investors like but executives don’t); or use it to grow the business by acquiring another company (which, if it works, makes both executives and investors happy).”

Why M&A’s generally do not work? “Anywhere from 65 per cent to 80 per cent of M&As never deliver a real return on investment,” according to Stephen Kaufman, a senior lecturer at Harvard Business School. “They end up destroying shareholder value rather than enhancing it.”

Another major problem area concerning M&A is integration of supply chain operations of two companies. This is a time-consuming exercise, which makes the companies into the deal rethink if they made the right decision to acquire in the first place.

“Indecision is the worst and most corrosive chemical in a merger,” adds Mr Kaufman. “Each minute spent trying to decide the best way to integrate is a minute spent paying for things that are not generating value. That’s why, it is better to be 100 per cent fast and 70 per cent right, than 70 per cent fast and 100 per cent right.”

Talent management during and post M&A

It is important for companies to do a cultural analysis prior to M&A, to understand talent management practices, strategise initiatives, create synergies and facilitate better integration between two companies post acquisition.

Also, companies should ensure clear, crisp and consistent communication with the workforce during, prior and post acquisition such as to retain key talent within the organisation, rebuild their trust and confidence with the new management post merger.

Selection of right leaders to bring about synergies in workings of the team post acquisition is critical for business growth.

Every M&A includes combination of products, technologies, services, operations, customer bases, and cost reduction and so on. What goes overlooked is the cultural implications on talent, leadership behaviour, talent succession pipeline, change of management at the helm impacting employee motivation during the transition period.

Strategic interventions by HR professionals help reduce the impact of mergers on employee performance, productivity, business profits and talent retention goals. Since the M&A transition period is marked by change, concern and uncertainty, it is important for business leaders to resist change and not get anxious with all the negativity and ambiguity that surrounds. These times can be challenging for business leaders, and this is when effective leadership skills have a role to play.

The workforce has to be brought to a single consensus by conveying accurate business plans post merger through clear communication channels and internal social networking platforms. The internal chaos and unrest among employees should be put to rest, such as to not allow any false rumours or gossips to be circulated.

It is important to win employee confidence and convince them as a matter of fact that these disturbing events will not create any disruptions on the work front nor lead to uncalled layoffs. This thoughtful move of M&A is made taking into consideration the growth of employees, business goals and maximising profits.

Stay closer to your team and be readily available for clarification of doubts, this will help them stay focused on their goals and priorities. Change is stressful and these can bring out the best and worst in people. Purposeful leadership with genuine intents for company’s good is the key to successful M&A.

Talent strategy: Role of HRM

To achieve an effective talent strategy and accomplish objective-decision making, the role of HR managers cannot be seconded. HR managers act as an intermediary link between the company and the employees to resolve issues and conflicts arising out of change in management.

While uncertainty hovers on top of the minds of every employee and productivity suffers during transition, it is important for HR managers to act quickly and respond to situations with a calm mind and realistic approach. Here is few reality takes that every employee should be prepared to confront during and post M&A:

1. Things will change, and sometimes at an accelerated pace. What’s more important during these times is to cope with the pressures of change and know that this is inevitable. Reduction of workforce, labour compensation plans, layoff or new job creations are bound to happen which will leave employees with a great sense of disorientation.

2. The role of middle management and front-line managers is on whom the success of an organisation is largely dependent. Assessing the potential of senior managers and winning their confidence votes through clear boardroom discussions will help the organisation to smoothly transition through the M&A phase.

3. Critical needs of the workers union and councils should be recognised and gradually met in order to seek adequate support and understanding during the course of mergers. Effective negotiation skills of managers always come to organisational rescue, to help resolve issues both at interpersonal level and on professional fronts. However, if a deadlock end is reached, and discontentment surfaces from few employees, it is always advisable to come up with a dignified exit strategy in place.

4. Do not assume that cultural integration post M&A is certain and will eventually happen over time. This never works in itself. HR professionals should conduct cultural analysis and talent study, to understand employee mindsets, preferences and considerations beforehand. Some degree of friction during acquisition is to be expected and unavoidable in most cases, however you can be prepared to foresee the areas wherein differentiators could come up.

5. Companies are required to fully engage with their staffers during the shift and ensure clear lines of communication are consistently maintained. Transparency should be followed to reduce the impact of mergers on talent through straightforward procedures, integrity and efficiency.

6. There is an increasing disconnect in collaboration between the HR managers and supply chain. “While it may be very difficult for supply chain leaders to get more mindshare from HR without a greater sense of urgency on others’ parts that a problem exists. Certainly, talent practices can be improved with a greater sense of joint ownership and greater agility on HR’s part to keep pace with the supply chain’s changing needs.”

About the Author

Dave Chew, Team Manager at TBC HR Consulting (S) Pte Ltd, with 12 years of experience in the recruitment industry, oversees the whole business process. He also leads a team of consultants who handles various recruitment solutions such as Temp & Contracts and Executive Search.