The thought of an imminent deal can be a stressful time for employees from both parties. M&A brings about change that can create insecurity among the employees as they have to adapt to new management, culture, losing their job, additional workload & many more. There’s a risk of value destruction if people aren’t considered in the transaction as Human Capital is of great value in organizations. When one company acquires another, there will be a level of overlap that exists between many of the roles performed by employees at both companies. Many of these employees will be surplus to the requirements of the company. Even after the employees who are in surplus leave, there are bound to be HR issues among those who remain. The nature of human resources is such that the list of issues is never-ending, here are some of the most common issues that a newly created entity might have to face.
1 Cultural Issues: Almost everything is new to the employees who are moving to another company. The best way to get a deeper perspective & understanding of this is by thinking of a homestay in a foreign country.
2 Wage disparities: There are high chances of there being wage disparities that existed between the companies that are about to merge. Employees might have a dialogue about this with one another, and these disparities which seem to be small have the potential to cause significant resentment.
3 General disillusionment: The big change that is coming on the way itself is a source of disillusionment among employees. The nature of M&A is such that some employees aren’t going to stay because of a myriad of reasons. This is when we only focus on the negative. However, there are several positive impacts that M&A has on the employees & these are the ones that the management will try to emphasize on, and exploit. They include:
4 New Job Opportunities: Opportunities will come to light in larger companies that would probably not exist in smaller ones. These will allow the employees to work in a foreign subsidiary or move into a senior function and explore parallels.
5 New training opportunities: A new filter is provided to the employees who are consistently enthusiastic & looking forward to being upskilled. M&A often involves training to adapt to the new systems in place, giving the well-performing employees access to a new skill.
6 Better perspectives: Employees gain better perspectives merely by virtue of being employed at a bigger, growing company. The recognition of the larger company can open doors for people in ways that might not come across by working at smaller less well-known companies.