“SuccessfulorganizationsapproachM&Asandpeopleintegrationinaverysystematicandmethodicalmanner....Companiesusestandardized,butadaptableintegrationplaybooksthatcontainstepbystepdetailedinstructionswithtools,templates,checklists,processdocumentation,andtipstocovereachmajorphaseoftheM&Afrombeginningtoend.”

People IntegrationCreating and Sustaining Value

ByRussellPodgorskiandDeirdreSherwood

Successfully integrating people after  Mergers and Acquisitions (M&A) are announced continues to be elusive and challenging for many organizations. Not surprisingly, when key people are not  integrated successfully, companies find it difficult to achieve their intended strategic and financial goals (Schweiger, 2002). Most M&A objectives are never realized because the people integration efforts are managed poorly. The failure rates are esti-mated to be as high as 70% in some cases (Omri, 2011). What is even more troubling is that 85% of major organizations sur-veyed indicated that their human resources professionals were underperforming at helping the business to integrate people (CEB, 2006). Mercer Management Con-sulting conducted research and discovered that companies utilizing people integra-tion playbooks through the phases of a merger were 50% more likely to create value for their respective organizations (Teten baum, 1999).

This article describes people integra-tion activities that high performing organizations engage in to create more value for M&A. Failures in people integra-tion strategies result in a failure to retain and motivate key people from the acquir-ing and target organizations, affecting the organization’s ability to achieve its financial and strategic objectives. Organizations adept at integrating people include those types of activities in their M&A playbooks, which allows them to repeatedly real-ize increased employee engagement and decreased negative turnover. This article also describes the roles and responsibilities 

for human resources and organization development departments needed to sup-port and implement the additional people integration activities. 

Case for Including People Concerns in M&A

As a talent acquisition manager in several large organizations, I have seen the effects of poorly planned organizational trans-formation. In one example, the company started a major reorganization across multiple states, centralizing shared services to gain cost reductions; and then within two years embarked on an aggressive M&A strategy to gain market share. The intention of all this change was to reduce costs, achieve economies of scale, decrease duplication, and create synergies across the entire organization while obtaining a com-petitive edge in the marketplace (Deloitte, 2009). The human resources organiza-tional structure was being affected by the shared services improvements at the same time they were expected to assist with the M&A activities. The transformation was messy to say the least, and overall there were repeated weaknesses for every effort: » The vision and strategy from executives 

was unclear and not well developed.  » Responsible human resources 

integration teams were not identified and there was no HR project leader selected to oversee each body of work.

 » There was no playbook and no work plan for HR activities to help manage the very complicated integration pro-cesses from a people perspective.

44 OD PRACTITIONER Vol. 47 No. 3 2015

 » Communication to employees was sparse and neither transparent nor meaningful. 

 » Cultural assessments did not happen, and this resulted in many challenges for the acquiring and target companies. 

 » Turnover increased because people were concerned and did not know if they would have jobs from one day to the next. 

 » Talent assessments were not conducted, and high performing talent was not identified and retained.

 » The recruiting and selection processes were not always planned and took a long time, which exacerbated other problems. 

 » Employees complained about unfair selection processes because leaders of the new organizational structure selected their prior employees. 

 » Displaced or affected employees had no internal support mechanism to help them find different jobs within the organization.

 » According to engagement surveys, employee morale plummeted to record lows.

 » When successful employees tran-sitioned into new roles, they were surprised by changes in compensation and benefits. 

 » Employees who moved to their new positions struggled to meet perfor-mance goals because performance management systems were not aligned across all organizations.

 » There were also major challenges with moving employees under different payroll and information technology systems. 

The results were lost revenues, unpro-duc tive employees, much firefighting and rework in HR/Recruitment, severe drops in morale in both the affected depart-ments and HR, and thousands of top talent employees leaving the organization.

Integration Playbooks

Successful organizations approach M&As and people integration in a very  systematic and methodical manner (Ashkenas et 

al., 1998). Companies use standardized, but adaptable integration playbooks that  contain step-by-step detailed instructions with tools, templates, checklists, process documentation, and tips to cover each major phase of the M&A from begin-ning to end. The playbooks should be stan dardized because many key tasks, goals, and  processes are repeated in each M&A, but vary in magnitude and scope  depending upon the unique features of each M&A. 

Human resource integration play-books should typically be stored in cen tral-ized, collaborative repositories, and should include activities such as organizational design, cultural assessments, cultural inte-gration tools, communication strategies, plans for the retention and recruitment of key people, talent assessments, employee 

engagement techniques, and much more. Once centralized, the playbooks can then become a resource to educate leadership about people integration activities, com-municate status and roadblocks to human resource tasks, and facilitate the definition of human resource professionals’ skillset requirements and level of effort for the M&A project.

A comprehensive human resources integration playbook will include objec-tives, activities, and deliverables. Each section of the playbook must be assigned to a human resource subject matter expert to own and manage the playbook content, utilizing the described tools and templates. The section owner must advise on the mag-nitude and scope of each task in relation to the unique scope of the M&A to ensure thorough but efficient coverage of the sec-tions’ requirements without unnecessarily overtasking the organizations’ resources. Additionally, the owner should ensure that their assigned section of the playbook is updated with status and progress notes on a regular basis. 

Human resources professionals play a role in all five phases of an M&A:1. Target Identification & Strategy 

Formulation.2. Due Diligence. 3. Integration Planning.4. Integration Implementation and 

Management. 5. Integration Evaluation. 

The following sections of this article briefly describe the five M&A phases and what people integration playbook tasks should be included in each phase. Then each section clarifies those tasks, defines human resources professional’s roles and responsibilities, and suggests helpful tools that can be used to facilitate the described work. 

Phase I – Target Identification & Strategy Formulation

In the first phase of any M&A, the target company is identified, strategies are formu-lated, and initial high level plans are made. To reduce the opportunity for failure, business executives must involve the chief 

Each section of the playbook must be assigned to a human resource subject matter expert to own and manage the play-book content, utilizing the described tools and templates. The section owner must advise on the magnitude and scope of each task in relation to the unique scope of the M&A, to ensure thorough but efficient coverage of the sections’ requirements without unnecessarily overtasking the organizations’ resources. Additionally, the owner should ensure that their assigned section of the playbook is updated with status and progress notes on a regular basis.

45PeopleIntegration:CreatingandSustainingValue

human resources officer early in the plan-ning (CEB, 2006) so everyone has a com-mon understanding of the financial and strategic goals. Once the chief of human resources understands the M&A scope, that person must communicate a shared vision and goals with the human resources professionals involved in the M&A work. 

The key people integration deliverable for Phase I is to create a highly functioning human resources team that is empowered to manage and implement the people inte-gration playbook:

Select a strong Integration Leader. The Integration Leader will be responsible for the overall execution of the plan and will ultimately be accountable for project outcomes. Additional duties include human resources team selection, assessing/managing and increasing team skillsets as needed, collaboration with stakeholders from the target company, and keeping the project on time and under budget (CEB, 2006).

Identify a dedicated core team. The Inte-gration Leader must determine needed skillsets for the specific M&A and then obtain adequate resources to achieve goals by the required timeline. Best practice companies include a diverse set of subject matter experts on their teams: project managers, benefits specialists, organization development personnel, business partners, and internal communications profession-als. For this article, the people integration core team will be referred to as the PIC team. Depending on the complexity of the M&A, other experts may be needed from compensation, payroll, immigration, relocation, recruiting, and/or training (CEB, 2006).

Educate the team. The chief human resources officer must ensure that the PIC team fully understands the M&A sched-ule and plan, its objectives/goals, and any financial or cultural issues already identi-fied. The PIC team must also understand the M&A playbook content, its role in defining the structure of the human resources and people integration activ-ity, and its scalability to the current M&A. Additionally, the team should be made fully aware of their roles and responsi-bilities as defined by the M&A playbook, including communication and documenta-tion expectations. The playbook must be reviewed and updated as needed to refer-ence shared tools, best practices, project charters, training documents, people inte-gration plan, and other related resources (CEB, 2006).

Phase II – Due Diligence

The purpose of due diligence is to examine the target company’s financial, compli-ance, and people related risks allowing the acquiring company to establish a bidding price. During this phase, the PIC team should help with the due diligence 

assessments of the target company in three ways: (a) assess the human resources finan-cial and regulatory compliance health; (b) complete a cultural assessment; and (c) conduct initial talent assessments of the target organization’s leaders for retention purposes. 

Assess the Human Resources Financial and Regulatory Compliance HealthDuring phase two, the PIC team surveys primary contacts at the target company to obtain detailed information about its financial and regulatory compliance health regarding human resource concerns. All of the tools and documents used in Phase II should be incorporated into the M&A playbook as well as helpful sugges-tions to support the work. For example, to enable a more streamlined communica-tion approach, it is best to identify a single point of contact at the target company and level-set expectations regarding account-ability, timeliness, amount of detail, and nondisclosure agreements. Once expectations are set, standardized human resources due diligence survey templates should be provided to the target company for completion. The due diligence survey should contain questions about general organizational size and make-up, ben-efits details, payroll expenditures, talent succession plans, number of open posi-tions, voluntary turnover data, organiza-tional charts, policies, union contracts, employment agreements, employee engagement data, equity plans, pending litigation, retirement plan information, and  severance agreements of leaders (CEB, 2006). An example Human Resources 

Table1.Tools for Phase 1

» M&AIntegrationPlaybook–PhaseI

» HumanResourcesSkillsAssessmentandImprovementPlan

» HumanResourcesCapacityPlanandMitigationStrategiesDocument

» CentralizedRepositoryforplaybookandpeopleintegrationartifacts

Best practice companies include a diverse set of subject matter experts on their teams: project managers, benefits specialist, organization development personnel, business partners, and internal communications professionals. For this article, the people integration core team will be referred to as the PIC team. Depending on the complexity of the M&A, other experts may be needed from compensation, payroll, immigration, relocation, recruiting, and/or training ...

OD PRACTITIONER Vol. 47 No. 3 201546

Due Diligence Questionnaire is included in Table 2.

If the target company is uncooperative during the due diligence survey process, then it is the responsibility of the Integra-tion Leader to intervene, and seek assis-tance from senior executives as needed. Once the survey information is returned, the PIC team must analyze the data to identify potential problem areas and alert the M&A leadership so mitigation strate-gies can be developed. Information dis-covered during the Human Resources due diligence survey could potentially impact the decision to continue with the M&A, so it is critical to compile the information into an executive summary that is easily understood by the M&A leaders. Often, the PIC team and Integration Leader will be asked to provide consultation on mitigation strategies. Some of the more likely mitiga-tion strategies could be incorporated into the M&A playbook as the business gains experience over time.

Complete a Cultural AssessmentA well-performed cultural assessment during the due diligence portion of a M&A can help to avoid cultural clashes between the two organizations when they come together, and thereby enhance the M&As ability to achieve the intended strategic goals. The culture of an organization influ-ences employee behavior, processes, and overall organization structure (CEB, 2006). The cultural assessment must analyze communication processes and styles, leadership philosophies and practices, and performance measurement systems and values. Seasoned organizational develop-ment staff on the PIC team should use focus groups and interviews at all levels of the company to evaluate the cultural com-patibility of the target organization.

The cultural assessment of the target company must be compared to the culture of the acquiring organization. The cultural assessment will be used in later phases of the M&A to build integration and com-munication strategies/plans. The cultural assessment data can be populated into a cultural compatibility/fit comparison score-card like the one in Table 3 to better support a review by leadership.

Table2.Human Resources Due Diligence Questionnaire

Due Diligence Preparation

0.01PleasesignandreturntheattachedNon-DisclosureAgreementassoonaspossible.

Please provide the following information and attach documents to provide detailed supporting evidence.

Employee Information

1.01Employeehandbook.

1.02Mission,Vision,andValues.

1.03Numberoffulltimeemployees:

1.04Numberofparttimeemployees:

1.05Numberofagencystaff:

1.06Numberoftempsonpayroll:

1.07PleaseprovideacomprehensivesetofOrganizationalcharts.

1.08Pleaseprovideacompleteemployeerosterwithjobtitlesandemploymentdates.

1.09Pleaseprovideacomprehensivesetofjobdescriptions.

Total Rewards Information

2.01PleaseprovideCompensationpaygrades.

2.02PleaseprovideExecutivecompensation.

2.03PleaseprovidedetailedexplanationsofIncentivePlansandcopiesofallcurrentagreements.

2.04PleaseprovidepolicydocumentsforSeveranceagreements,anddataforanyactiveseverancepackages.

2.05PleaseprovideHealthInsurancebenefitsdocumentationandSummaryPlandescriptions.

2.06PleaseprovideDentalInsurancebenefitsdocumentation.

2.07PleaseprovidePTOplansandbalancesforallemployees.

2.08PleaseprovideSickLeavebalancesforallemployees.

2.09PleaseprovideTuitionReimbursementpolicyanddetailsofpayoutforthepastfiveyears.

2.10PleaseprovideLifeInsurancedocumentsandreports.

2.11PleaseprovideShortTermDisabilitydocumentsandreports.

2.12PleaseprovideLongTermDisabilitydocumentsandreports.

2.13PleaseprovideRetirementPlanexplanationsanddataindicatingcurrentretirementbenefitstoretirees.

Regulatory Compliance Information

3.01Pleaseprovidedetaileddescriptionsofallaffirmativeactionplansandanyregulatoryincidentsoverthepast10years.

3.02Pleaseprovideanyhistoricalandcurrentlawsuitsoverthepast10years.

Employee Engagement Information

4.01PleaseprovideTurnoverdataforbothvoluntaryandinvoluntarydismissals.

4.02PleaseprovideRecruitmentdata.

4.03PleaseprovidedataonallemployeesonCorrectiveAction.

4.04PleaseprovidedataonallEmployeeEngagementscores.

4.05PleaseprovideLeadershipDevelopmenttoolsandresources.

4.06PleaseproviderecordsofTalentAssessmentsforthepast5years.

47PeopleIntegration:CreatingandSustainingValue

The tools and templates for the cul-tural assessment should be in the M&A playbook. Also, as the PIC team adjusts any tools/templates content to support each M&A, the playbook should be updated including helpful strategies for successful completion of the M&A work: for example how to select members of focus groups and how to conduct the meetings.

Conduct Initial Talent Assessments of the Target Organization’s Leaders for Retention Purposes. Top performing talent, especially in leadership, helps the organization achieve its goals, and it is critical to retain these people during and after M&A. It is vital to conduct talent assessments of leadership during the due diligence phase. Often key leaders and performers will leave during the M&A  process for other opportunities. Talent assessments can help the acquiring organization target key players for aggres-sive retention strategies.

The talent assessment process should be managed by the organization develop-ment professionals on the PIC team. Any talent assessment data obtained during the due diligence survey process should be reviewed. If recent talent assessments at the target company are not available,  performance evaluations, bonus payouts tied to goal attainment, or other related business documents can be reviewed to determine high potential and high per-forming talent. If the target company does not have that documentation, then the acquiring company can assess  talent through its own interviews, focus groups, or through the behaviors, con versations, and presentations during the M&A process. The PIC team should  collect, ana-lyze, and document resulting talent assess ment information. 

Additionally, the chief human resources officer must help the PIC team to identify the roles that will be critical to  success of the new organization. The information should be organized into four distinct categories: long term talent in a key role, short term talent in a key role, senior long term talent not in a key role, and junior talent not in a key role (CEB, 2006). The talent needs and inventory 

assessments should be consolidated into a comprehensive report for execu-tives. Retention strategies should then be developed and implemented to ensure key  leaders do not leave the organization. Again, successful retention strategies should be added to the M&A playbook as the PIC team gains experience in these areas.

Phase III – Integration Planning

After the deal has closed and official announcements to the public and employ-ees have begun, the process of merging and integrating two companies needs to be planned and executed properly. At this step the HR teams have ownership of significant activities that are essential for effective people integration. Those activi-ties include: (a) create a detailed human 

Table4.Tools for Phase II

» M&AIntegrationPlaybook–PhaseII

» HumanResourcesDueDiligenceSurvey,seeTable 2

» ExecutiveSummaryandDashboardforDueDiligenceSurveyFindings

» CulturalCompatibility/FitComparisonScorecard,seeTable3

» ComparisonReportbetweenKeyRoles/Talentvs.theTalentassessmentsintheTargetcompany

Table3.Cultural Compatibility/Fit Comparison Scorecard

Cultural Fit Index

Cultural Indicator Low Medium High

Focusonteamwork X

Changereadiness X

Importanceofdiversity X

Customerfocus X

Servingthecommunity X

Missionemphasis X

Importanceoflearninganddevelopment X

Changeresistant X

Focusonquality X

Innovationfocus X

Sizeoforganization X

Centralizedsharedservicesmodelforadministrativefunctions

X

Metricsdriven X

Leadershipmodel X

Governanceanddecisionmakingstructure X

(CEB,2006)

OD PRACTITIONER Vol. 47 No. 3 201548

resource integration work plan and success metrics, (b) leverage a change manage-ment model, (c) develop and be ready to deploy  communication plans immediately, and (d) optimize organizational design. The depth of planning and managing the integration depends on the size, scope, and complexity of the transaction ( Schweiger, 2002).

Create a Detailed Human Resource Integration Work Plan and Success MetricsA detailed work plan of the human resources integration tasks must be developed and owned by the Integration Leader of the PIC team. The core work for  implementation must mirror the tasks defined in the M&A playbook. The work plan must include specific tasks, due dates, and task ownership with enough detail for the Integration Leader to over-see the work and ensure completion of all deliverables. The Integration Leader must also make sure that all human resource personnel understand their tasks, deliverables, and due dates. The work plan must include the following integration activities as defined by the M&A playbook: » Change management. » Communication plans.  » Organizational design development.  » Cultural integration.  » Employee engagement and retention.  » Recruitment and building organiza-

tional capability. » HR Policies and Information Systems 

alignment.

Success metrics with specific goals must also be developed at this phase of the integration and should be based on the expected outcomes of the M&A. Employee 

integration metrics must also be included to quantify success. Appropriate integra-tion metrics might include: » Employee engagement. » Voluntary turnover.  » Retention of key talent.  » Employee performance scores.

Accountability structures such as regular status meetings and status report docu-mentation expectations must be estab-lished. The Integration Leader must be ready to drive adherence to the work plan dates and minimize any roadblocks that jeopardize success.

Lack of focus and attention to details during the Integration Planning phase can result in diminished returns for the M&A. The PIC team must build the work plan with that in mind; however, the timing of execution in M&As is often even more criti-cal. This means that the PIC team cannot allow analysis paralysis to jeopardize the timely implementation of the M&A activi-ties. They must remain sensitive to the needs of the organization and its leaders. Some of the more time sensitive elements are described below. 

Leverage a Change Management ModelM&As are significant change initiatives and will need to be planned and managed effectively to ensure value is sustained. There are several different change man-agement methodologies that can be used, but selecting the methodology is not as important as using one consistently. The PIC team is responsible for change man-agement regarding people integration, so knowledge and use of the methodology is a core competency. Regardless of the approach used, there are generally four 

core components to any change manage-ment process including: 1. Planning for change. 2. Managing the change. 3. Communicating to and engaging the 

organization.4. Measuring the success of the change. 

The M&A playbook should contain the appropriate change management planning templates with explanations of how to use them (CEB, 2010).

Develop and be Ready to Deploy Communication Plans ImmediatelyCommunication plans and message con-tent must be developed early. Best practice companies will be ready to initiate com-munication at a moment’s notice if needed, with a goal of reducing employee stress and fear prior to and during the M&A. The following list reflects the minimum communication points and can be adjusted based on the specific M&A requirements. For organizations that frequently use M&As as a growth strategy, their M&A playbook should establish communication plan patterns and content standards to ensure consistency for their stakeholders. 

Pre-Deal message. If details about the merger leak, it is imperative that a high-level announcement be on standby. This message content must include general information for employees and factual M&A strategies with no reference to rumors of an impending deal.

Post-Deal message. To reduce employee confusion, best practice companies suc-cinctly communicate information about talent implications. Key talking points are shared with line managers before sending the general communication so employee meetings allow for questions and discus-sion. It is vital to use multiple communi-cation vehicles such as email, town halls, voice mail, blogs, intranet, and webcasts. In all messages, two-way communications must be encouraged so employees can share their feedback.

Post-Close of the deal message. Best practice companies will tend to over 

Table5.Tools for Phase III

» M&AIntegrationPlaybook–PhaseIII

» ChangeManagementTemplates,i.e.,RACICharts

» WorkPlanTemplate

» CommunicationTemplatesforaVarietyofMedia

» OrganizationalChartTemplate

49PeopleIntegration:CreatingandSustainingValue

communicate once the deal is closed. Two audiences must be considered to ensure maximum success of the M&A: customers and employees. External communications to customers are developed and timed appropriately to improve customer reten-tion. Employee communication must be as comprehensive as feasible to reduce employee speculation and fear. To maxi-mize people integration effectiveness, best practice companies will cascade integra-tion plans, explaining how they will affect employees, and defining the roles that 

employees will play in the integration pro-cess. Slotting and recruiting plans with key milestone dates should be communicated as soon as possible so employees know if they have jobs in the new organization. (CEB, 2006).

Optimize Organizational DesignThe organization development lead from the PIC team facilitates the creation of the organizational design by working with key stakeholders to understand the busi-ness direction and vision, clarifying the structure of all levels of the organization. Design and implementation of the top two layers of the new organization structure must be started as soon as possible, and completed within 30 days of the deal being closed. This allows recruiting and  retention activities to commence. Additionally, when developing the organizational design, consideration should be given to the gover-nance structure to ensure adequate integra-tion and elimination of redundancy.

Here are some of the key questions 

that prepare the way for an optimal  organizational design:1. How are the two organizations 

structured at this point in time? Analyze organizational charts, management layers, job titles, and job descriptions.

2. If we compare both organizations side by side what do they look like? How are they similar or dissimilar?

3. Where is the newly formed organiza-tion headed in the future?

4. What do the answers to the first three 

questions suggest about the size and scope of the organizational design changes needed?

5. What organizational design ideas or vision are in the minds of the execu-tives at this time? How many manage-ment layers? Will there be a centralized support services model or not? (CEB, 2006)

The remainder of the integration activities enumerated in the work plan and success metrics sections above will be described in Phase IV – Integration Implementa-tion and Management. The nature of the remaining activities are longer in duration and are core implementation deliverables.

Phase IV – Integration Implementation and Management

The integration implementation and management phase executes the plan as defined in phase III. This work includes rebuilding the organization into a stronger 

more competitive company to achieve synergies as well as the intended M&A financial and strategic objectives (Schwei-ger, 2002). If done correctly, capable people are in the right roles, added to the appro-priate teams, and driving value into the business through their contributions. The key activities are: (a) integrate the cultures, (b) improve employee engagement and retention, (c) recruit to build organizational capa bility, and (d) align HR policies and information systems.

Throughout implementation, the PIC team should manage and monitor all of the implementation work, including tracking success metrics and making course corrections as needed. For example, if employee turnover is getting worse, it may be necessary to work with the business to create new mitigation strategies. Additionally, the work plan should be regularly reviewed and updated, and status summaries should be communicated at all levels of the organization. Regularly scheduled stakeholder meetings can help to gather status and quickly identify any roadblocks that need to be resolved.

Integrate the CulturesCultural clashes between the acquiring and target companies happen often, but they can be mitigated by following a more systematic cultural integration process (Schweiger, 2002). This work should build upon the information gathered from the prior cultural assessment in the M&A’s Due Diligence phase.

To begin, the Integration Leader must get clear direction from the executives in order to understand the desired vision and culture for the new organization (CEB, 2006). Then a deep-dive review and expansion of the prior cultural assessment should include the most recent collective knowledge of the target company’s culture and a review of business processes, hierar-chies, and organizational structures. The assessment should now incorporate a more complete picture and comparison of the two cultures.

After that is complete, a cultural integration plan can be conceived with the goal being to get teams from both organi-zations to work together collaboratively as 

Employee communication must be as comprehensive as feasible to reduce employee speculation and fear. To maximize people integration effectiveness, best practice companies will cascade integration plans, explaining how they will affect employees, and defining the roles that employees will play in the integration process. Slotting and recruiting plans with key milestone dates should be communicated as soon as possible so employees know if they have jobs in the new organization. ...

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early as possible. There is a highly effective four-step cultural integration process called Cultural Mirroring that should be incorpo-rated into every company’s M&A playbook (Schweiger, 2002):1. Increase communication. Identify 

key organizational team leaders from both organizations who need to work together. Ensure that they are intro-duced to one another and that they define roles and responsibilities for their future work together. 

2. Enable cross organization pollination. Set collaboration and communication expectations for the cross-organiza-tional teams, defining cross-company goals and target completion dates.

3. Clarify culture expectations. Remind all cross-organizational teams and leaders of their need for professional courtesy, communicate the new vision for the culture, and explain the core values within which the teams should operate.

4. Define and articulate the value in both cultures. As the vision for the new cul-ture is communicated, it is important to articulate the most valuable elements of the two organizations’ cultures, what they bring to the new organization, and how those elements will support the new cultural vision. (Schweiger, 2002) 

Integrating cultures does not happen over-night. It is an iterative process. To be suc-cessful, cultural integration planning needs to ensure that teams and leaders of both organizations are working collaboratively together on a regular basis.

Improve Employee Engagement and Retention M&A success requires the retention of high performing teams, individual contributors, and functional managers. Retention and improvement of employee engagement should follow a systematic process. That systematic process should be documented 

in the playbook, and should have the following steps at minimum:1. Conduct anonymous employee risk sur-

veys. For expediency, the survey should be provided electronically. Survey ques-tions should be designed to (a) assess employee perceptions of the M&A, (b) assess the need for course correction of M&A implementation activities, and most importantly, (c) determine if employees are thinking of leaving the organization. Effective examples of employee risks survey questions should be maintained in the M&A playbook.

2. Share the survey results. Responses need to be reviewed by managers. The PIC team should work with the functional manager to build a specific retention strategy for any team that appears to be at risk for high turnover. Functional managers should be asked to share the survey results with their teams, and any additional feedback supplied by the employees during those communication sessions should be shared with the PIC team. 

3. Complete talent assessments. Line managers also need to complete talent assessments to evaluate the talent on the team. This analysis will help to determine the capabilities needed to support the new organization as well as the key employees that are crucial to the success of the functional areas. 

4. Complete follow-up employee inter-views. Functional managers should also conduct individual interviews with each employee to determine where each is on the retention spectrum. If manag-ers identify critical risks during this process, they should work with the PIC team to define mitigation strategies.

5. Provide retention packages. High performing employees who are thinking of leaving the organization need to be flagged and provided with retention packages if necessary. 

All retention packages need to be developed and coordinated by the HR business partners on the PIC team. 

During the above work, the PIC team needs to monitor all activities and ensure that they are completed in a timely fashion per the defined work plan in Phase III. Regular status updates and risk summa-ries need to be communicated to the M&A leadership and executives. The PIC team should document all mitigation strategy activities on the work plan and monitor their implementation and effectiveness. Particularly effective mitigation strategies should be incorporated into the M&A play-book to support future M&A work.

Recruit to Build Organizational CapabilityOne of the most important factors in any M&A is the expedient redistribution of the best and brightest employees into the new organizational design. Managers must be tasked to hire and retain the best talent to make the new organization more competitive. Employees in both organi-zations will be understandably anxious. Many will not know if they will have jobs or not, and some are so talented they can find jobs anywhere. It is therefore impera-tive that recruiting teams partner with the business to move quickly to ensure that the right people are placed in the right position at the right time, acquiring and retaining top talent and intellectual capital (Tetenbaum, 1999). 

Many best practice organizations such as GE Capital complete this work within 30 days of the deal being closed, which is an optimal goal to strive for, and ensure maximum retention of top talent. GE Capi-tal has succeeded because they designed a streamlined recruiting process in advance to support all of their M&A engagements (Ashkenas et al., 1998). M&A recruitment processes should provide the following ele-ments at a minimum: » Determine which positions should be

posted vs. slotted. It is ideal for employ-ees to be slotted into their positions because this reduces apply/interview/hire activities and eliminates unneeded stress for employees and managers. Positions should be posted only if there 

Table6.Tools for Phase IV

» M&AIntegrationPlaybook–PhaseIV

» CulturalAssessment&CulturalMirroringModel

» EmployeeRiskSurveys

» TalentAssessments

51PeopleIntegration:CreatingandSustainingValue

are (a) job redundancies, (b) more people than positions in the budget, or (c) a new skillset needed in the new organization.

 » Develop a communication plan. The key to success is being transparent and communicating regularly about the recruiting processes and the jobs that will be available.

 » Develop notification and support services for exiting employees. If it is anticipated that employees will lose positions they should receive proper notice and support. The recruiting team should provide affected employees with career guides and other related tools to assist them in finding jobs inside or outside the company.

 » Identify affected employees that could fill other roles. When identifying types and numbers of posted positions, there is extensive coordination and many handoffs between the PIC team and functional managers. If employees will not be securing positions in the new organization, functional managers should strongly suggest that employees work with recruiters to locate other suitable roles. Recruiters and manag-ers should review talent assessments to identify high performing employees that could take on other roles in the organization.

Align HR Policies and Information SystemsThis is a brief section, but only because most HR organizations already intuitively provide adequate support in these areas. Obviously, alignment of HR policies and information systems in the newly formed organization are key to the success of the M&A. When updating HR policies, be sure to define and communicate a clear transition plan so employees know which pre-existing policies to follow and for how long. Communication about the status of the policies needs to be disseminated to employees apprising them of updates and changes (CEB, 2006). These communica-tion points should be incorporated into the overall communication plan so messages can be timed appropriately amongst all other communication. 

The HR information systems being used in both organizations also need to be evaluated for strengths and weaknesses to determine what should be kept, integrated, or eliminated. Include the Information Technology departments of both organiza-tions to capitalize on any integration and automated data migration opportunities. It might also be helpful to add historical experiential notes of particularly effective technology integration tactics in the M&A playbook.

Phase V – Integration Evaluation

The post implementation review and overall assessment of the integration is needed now. This is when organizations (a) conduct a post integration employee survey, (b) evaluate the PIC team’s services to their customers, (c) conduct an assess-ment of the effectiveness of the tools, and (d) update the playbook, and create improvement plans for future M&A.

Conduct a Post­Integration Employee SurveyThe most vital post-implementation activity is addressing employee concerns. People integration risks identified in the due dili-gence and integration planning phases will change over time. Employee satisfaction and morale surveys should be conducted throughout the M&A implementation and two to three months after the deal is closed. After the results of the assessment have been analyzed, retention strategies and mitigation plans should be reviewed and updated as needed. 

Evaluate the PIC Team’s Service to Their CustomersBest practice companies continually assess and track their human resources outcomes throughout the entire M&A, documenting their issues as they go along. This allows them to learn and make course  corrections along the way to maximize effectiveness and results. Another best practice is for the chief human resources officer to continually assess the PIC team’s performance by ask-

ing for  performance feedback from internal customers as well as the newly acquired  company. At minimum, the PIC team should conduct interviews of key  players who were a part of recent M&A process. Then the PIC team could conduct online surveys to obtain a broad set of feedback from line managers and other stake-holders. Some questions that should be asked include:  » Did the PIC team understand the objec-

tives of the M&A deal, and did they understand their role?

 » Did the PIC team collaborate with one another and deliver a coordinated service?

 » Did the PIC team know how to use M&A tools?

 » Did the PIC team manage conflict effectively?

 » Were the right resources and skillsets present on the PIC team to adequately address the integration scope? 

 » Were there enough PIC team resources available throughout the project?

 » Is there enough redundancy of PIC team skillsets to ensure adequate cover-age for future M&As? (CEB, 2006)

Another best practice is for the chief human resources officer to continually assess the PIC team’s performance by asking for performance feedback from internal customers as well as the newly acquired company. At minimum, the PIC team should conduct interviews of key players who were a part of recent M&A process. Then the PIC team could conduct online surveys to obtain a broad set of feedback from line managers and other stakeholders.

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Conduct an Assessment of the Effectiveness of the ToolsThe PIC team should also conduct a retro-spective on tools and methods used during the M&A. Were the tools as effective and comprehensive as they could have been? Did the acquired organization easily under-stand the tools and their intent? Were the tools easily scaled to the actual size of the M&A, i.e., were they over burdensome for the smaller acquired organization?

Update the Playbook, and Create Improvement Plans for Future M&AOnce the retrospective information from customers and tools has been compiled, the playbook and its supporting tools should be updated. The PIC team should engage also in skills enhancement and expansion training, to improve future M&A work. It is best to continually refresh skillsets to increase speed and flexibility of future M&As. 

New and Improved M&A Playbook

A comprehensive M&A playbook with people integration activities, deliverables, and tools has been developed with feedback from key human resources and M&A lead-ers. The following reflects their comments:  » The playbook content is rich and 

valuable. » The tools, templates, and step-by-step 

instructions made the playbook easy to use.

 » Several of the people integration con-cepts were anticipated and well-proven.

 » The value of the new tools and concepts could be proven through pilots and modified as needed.

 » Communication plans are critical, and the communications department needs to drive their development.

 » The last M&A phase, Integration Evaluation, is a critical component that should not be overlooked because it outlines the importance of monitoring and evaluating the integration and con-ducting a post implementation review. 

The M&A playbook with the people integration elements can be found at http://www.slideshare.net/RussellPodgorski1/people-focused-integration-playbook-48871636

Conclusion

For successful M&As to be realized, the people integration elements must be incorporated, and a strong human resources team and Integration Leader must be assigned the role of overseeing those integration activities. Well-planned and executed people integration pro-cesses can drive value into the business, and a comprehensive playbook can guide them to consistent success. This will create and sustain value so that the financial and strategic goals of the M&A are achieved. 

References

Ashkenas, R. N., DeMonaco, L. J., & Francis, S. (1998). Making the deal real: How GE Capital integrates acquisitions. Retrieved from http://hbr.org/1998/01/making-the-deal-real-how-ge-capital-integrates-acquisitions/ar/1

CEB. (2006). HR’s role in mergers and acquisitions. Arlington, VA, 2-117.

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Deloitte. (2009). Shared services for hos-pital systems. Retrieved from http://www.deloitte.com/assets/Dcom-Australia/Local%20Assets/Documents/Industries/LSHC/Deloitte_shared_services_for_hospi-tal_systems.pdf

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Russell PodgorskiistheSystemManager,ExecutiveRecruitmentforProvi-denceHealth&Services.Hebringsoveradecadeofexperiencerecruitingexecutivesandphysiciansforintegratedhealthcaredeliverysystems.Podgor-skispecializesincreatingoptimalrecruitingprocessestodrivestrategiesandvalueintothebusiness.Hehasbuiltsolidorganizationalcapabilitiesbylead-ingteamsthatrecruitedtalentasthecompanyrestructuredorinitiatedM&Astrategies.HeholdsaBAdegreefromColumbiaCollegeinColumbia,MissouriandaMasterofHealthAdministrationdegreefromSt.Joseph’sCollegeinStandish,Maine.HecanbereachedatRussell.Podgorski@providence.org

Deirdre Sherwood startedhercareerintelecommunicationsmanufacturing,workingforIntelandMotorola.ShewasaCertifiedQualityEngineerformanyyearsandherentirecareerhasbeendedicatedtoqualityandprocessimprovement.Sherwoodhasspentthelast15yearsinhealthcare,workingforbothhealthplansandhealthcaredeliveryorganizations.Mostrecently,shehasbeenworkingforProvidenceHealthandServicesasaBusinessProcessEngineer.SherwoodearnedaBSdegreeinIndustrialEngineeringfromNewMexicoStateUniversityandaMasterofHealthAdministrationfromSt.Joseph’sCollegeinStandish,Maine.ShecanbereachedatDeirdre.Podgorski@providence.org

53PeopleIntegration:CreatingandSustainingValue