HKIHRM 2015: Why people are key to ensuring M&A doesn’t fall flat
Author: Liana Cafolla | Date: 02 Dec 2015
Addressing leadership and employee experience is vital to a successful deal, says Telstra’s Rebecca Lucas
More than seven in 10 M&A transactions never achieve their full potential value, and many of those failures can be attributed to people-related cultural shortcomings during integration, according to Rebecca Lucas, general manager of HR Mergers and Acquisitions at Telstra Corporation, Australia’s biggest telecoms and media organisation. Based on intensive experience – Lucas’s team has overseen around 30 M&A deals in the last 18 months – the company has learned the hard way how to give integration the best possible chance of success
“The people components are really important,’’ Lucas told an audience of HR professionals at the annual conference of the Hong Kong Institute of Human Resource Management (HKIHRM). In M&A transactions, “we’re buying the capability of a certain group of employees.”
Four areas of integration are the most critical to realising the full value of a deal’s success: the culture of the organisation; the organisational structure; the communications plan and the leadership structure.
Telstra – which has around 36,000 employees in Australia and 3,000 more spread across 22 countries – deploys a detailed plan to respond to these needs.
Its first step is setting up a ‘playbook’ – a set of about 400 documents and templates that is robust enough to work globally, as well as to be scaled appropriately. The areas covered include checklists, FAQs, presentations, standard templates, communications and change management materials, retention and redundancy tools and other documents that are constantly being updated and added to for using during M&A processes. Maintaining effective content is an unending task, but that’s necessary to maximise its usefulness, says Lucas: “The playbook will always be a work in progress.”
Next comes a strong HR department. Lucas hired about 15 people to build her M&A team, including specialists in due diligence and integration, then designed an operating model to set out how they could work as a team. With multiple deals taking place in different markets simultaneously, the team needs to identify the right people in the organisation to work on different M&A deals at different times.
Planning how the new employees will experience the integration is a critical task: 3,200 new hires joined Telstra in the last 18 months, and many of them need to be convinced about the benefits, or even the identity, of their new employer. In Chennai, for example, a major telecommunications centre in India, the name Telstra means “absolutely nothing,’’ says Lucas.
Resolving leaders’ concerns and identifying their place in the integration is also key. One reason many integrations fail is because the leadership team of the new organisation leaves, says Lucas. HR also needs to identify the cultural differences in each market and how these will be reflected in employee benefits and offers. In some cases, packages are best left as they are because of difficulties in finding equivalents or reaching agreement with overseas unions.
The timing of discussions with new employees needs to be flexible and carefully chosen to fit with business needs. If the integration takes place at a particularly busy time for the new business, signing new contracts may have to wait, adds Lucas.