M&A integration planning – 7 key questions for HR leaders to ask

Published: 2 October 2024 | by Steve Allen

As an HR leader you sit at the centre of M&A integration. This is an opportunity to drive real business change — executing a plan based on your business’ goals positions you for integration and deal success. Steve Allan sets out the seven questions you need to be asking to prepare for success.

The work is done, the acquisition is complete. You have survived the early days, which have been filled with employee sessions, meetings with key leaders and rising talent, communications to your new colleagues and your own business to keep everyone calm and focused, and so much more. Surely now you can relax and go back to your day job as an HR leader? Then someone asks, “When are you kicking off the HR integration?”

There are seven key questions you should ask as you build your HR integration plan.

1. Why did we buy this company?

Not all acquisitions are the same. For example, some deals are driven by a need to acquire key technical skills and talent; while others may be focused on acquiring access to a target market. Whatever the logic of the deal, the HR leader needs to understand if there are specific parts of the acquired employee population that are crucial to deal success, or if there are specific ways of working in the acquired business that you want to nurture.

2. What have we bought exactly?

Deals can be complex. Have you bought an entire company or a division of a broader organisation? Are you reliant on the seller for transition support for things like payroll services? Many deals involve a mixture of structures, which can impose different requirements when it comes to employee consultation and consent to future changes. Understanding this allows you to know where you are starting from as you plan the integration.

3. What do we want to achieve by integration?

Typically, integration requires you to balance three goals:

4. What are the key steps to achieving this?

Whether you are starting from a pro-forma plan or from a blank piece of paper, building a detailed integration plan can be time-consuming. But it is essential.

Implementing the plan requires a blend of rigorous project management and empathy. You should map out the key milestones and dates: for example, when will employee consultation be launched?

This starts by identifying the key activities that you need to complete, and the key steps that you need to take to achieve this:

• For each step challenge yourself on what you need to have already done before you take that step. For example: before you can align rewards you need to align grades; before you align grades you need to have completed org design; before you can complete org design the business needs to have clarity over the operating model. You then need to return to map out the key HR steps for each of these dependencies.
• For each activity, identify the key parties involved and clarify who owns the activity, who has to provide input and how long each activity could take.

Building the plan up in this way takes time but will generate a granular HR draft project plan with all the necessary steps in the right order.

Once you have the draft plan, review it against the three questions outlined above:

• Does the integration plan support the key deal goals?
• Have we allowed for all the complexities of what we have bought? For example, some aspects of integration may require legally mandated consultation timeframes.
• Can we show where we will generate efficiencies or how the integration plan fits with business priorities and timelines?

5. How do we build in the other key workstreams?

Now that you have a workable HR plan, it needs to be checked against the other key workstreams, such as legal, tax and operations. Integration teams should come together in a cross-functional session to walk through their proposed plan and timing, challenging each other on dependencies and timings. For example, the legal workstream may have a plan to consolidate legal entities at a certain point, or there may be a plan to close down a site when a lease expires. These details may force changes to be made to the HR plan.

This stage requires the active participation of the business leaders who are ultimately responsible for commercial integration and who are also trying to run the business. With a little experience, the process can be much less painful than it sounds. But for large, complex deals the care taken at this point will pay dividends when it comes to carrying out the integration.

6. How do we keep the plan on track?

Implementing the plan requires a blend of rigorous project management and empathy. You should map out the key milestones and dates: for example, when will employee consultation be launched?

Staying on top of the details and sharing progress and concerns with other workstreams is essential. Of course, for many of the people contributing to the integration steps the deal is not their day job and their priorities lie elsewhere, so as the HR leader you will find yourself relying on their goodwill throughout this process. It is therefore essential to recognise conflicting priorities and to work consciously to keep the integration on track.

7. What about change management?

Your integration plan should have a heavy emphasis both on communication — so that people understand what is happening and when — and on change management. Crucially, by engaging business leaders in the planning, helping them to understand the big picture and giving them the confidence that you have their back on the details, you empower them to drive the communication with the employees.

Leaders who understand what is happening and when, and who know that there is a carefully planned process and that it is being managed by you, are much more able to engage with employees, keeping them focused on the business and maintaining momentum.