The role of Human Resources during the due diligence process is critical to enable organisations to identify any critical people issues which may be ‘deal breakers’ for a M&A to go ahead. Involving Human Resources from the start, ensures an effective due diligence process is undertaken on the human element and reduce any imminent risks during the integration process.
The strongest and most effective M&A’s are those which take a holistic approach to due diligence, looking at everything from finance, commercial and operational data, to strategy, people, and culture.
As part of the due diligence process, Effective human due diligence should cover an in-depth review of all HR Operational risks which include:
1. Regulatory and Compliance
- Legislative requirements to ensure alignment to NES and applicable industry awards
- Review of employment agreements and ‘special’ arrangements,
- Review of all HR processes and reporting requirements; and
- Review HR Policies and Procedures.
2. Workplace Relations
- Review of any current or historic employee disputes;
- Identify performance current issues and trends on historic performance issues;
- Review performance management framework and performance culture; and
- Analysis of employee turnover.
3. Organisational Culture and Development
- Review leadership structures;
- Identify leadership capability and alignment to organisational values;
- Identify barriers to strategic success through the review of culture surveys, employee feedback and exit interviews; and
- Review organisational values and alignment to culture.
4. Remuneration and benefits
- Analysis of current remuneration structures and policies;
- Review compensation banding against role and responsibilities; and
- Review of reward programs including STI and LTI program.
5. Workforce Planning
- Evaluate recruitment and retention strategies;
- Identify training and development strategies and costs;
The provision of an effective human due diligence review is imperative in preventing the common pitfalls of M&A’s such as:
- significant loss of talent immediately following announcement of the change;
- internal conflict due to unaddressed differences in decision-making styles;
- decreases in productivity and market share;
- loss or significant damage to organisational culture and brand due to lack of cultural alignment and clarity (and communication) on purpose of acquisition and business strategy etc.
Human due diligence lays the groundwork for smooth integration. Done early enough, it also helps acquirers decide whether to embrace or kill a deal and determine the price they are willing to pay.
To discuss how performHR can support you in ensuring human due diligence is a golden asset in your next merger, acquisition or restructure, phone our office on 1300 406 005 to speak with one of our experienced team members today.