How to Prepare Your Post-Merger Integration Plan

During any merger, there are a lot of moving parts that need to be accounted for. One of the most crucial parts of the merger process comes after the deal is done, during the actual merging of the two businesses. This is commonly referred to as post-merger integration.

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During this integration process, HR has the monumental task of bringing two different workforces together in a way that will allow them to thrive as a new, unified organization long into the future. If things don’t start out on the right foot, the teams may never fully mesh, causing an increase in turnover, the loss of key talent, and eventually the collapse of the whole merger deal.

So what does HR need to consider when preparing a post-merger integration plan? In this article, we will explore all of the key components to a thorough and thoughtful post-merger integration plan, and what to watch out for as you navigate the delicate integration process.

Post-merger integration is the act of combining two merging organizations together under one banner. As you can probably guess, this process can be extremely complicated given the variety of staff and stakeholders at both organizations, like individual roles, teams, managers, contractors, partners, and clientele, that will need to be merged.

By integrating preexisting teams and creating a new, stronger one, your business will hopefully receive a boost. On the other hand, failing to successfully integrate teams is a common reason why many mergers fall short of their goals. Given how high the stakes can be, it makes sense to have every necessary step and task written down in advance so you have a guide to follow when you need it. Proper planning goes a long way in situations like this, so it’s important to do this step first.

Let’s break down the full post-merger integration process into its key phases and components, and discuss what you will need to cover in your post-merger integration plan.

If you’re preparing for a merger and are unsure how to get started, you can also click below to download our free mergers and acquisitions guide for HR professionals, which will help you create your own plan to successfully navigate the entire process from the beginning through the post-merger integration.

After a merger, one of the most crucial steps is creating new policies that help smooth over the transition. This means HR will need to compare each organization’s policies, compensation, and contracts to decide on new HR policies and practices. You may need a new promotion policy, leave and time off policy, layoff and recall policy, termination policy, equal opportunity policy, and/or employee code of conduct to name a few. This could also include formulating new mission, vision, and values statements for the combined organization.

People are going to have a lot of questions and there are a great many policies that will need to be addressed. They may differ from deal to deal, but it’s vital that they are all considered and evaluated consistently to ensure a good fit. Some policies might even remain the same because of best practices that both organizations use. But any policies that differ or are too dated will need to be updated as you integrate them to make them more enticing and accurate based on the latest research and HR trends.

Like the newly added policies, HR will also need to work with managers and the board to come up with new benefits and compensation plans for the newly integrated workforce. People are going to wonder about how their raises will be impacted, how they can take time off now, and how their healthcare, 401K, and other benefits will work under the new structure. Which benefits you will need to cover will vary and require thorough knowledge of the organizations involved. It’s vital that HR addresses these concerns before people start to leave the organization. 

Addressing any employee concerns will also help with this crucial part of post-merger integration: cultural fit. Possibly HR’s biggest role in the post-merger integration process is to make sure that the cultures of both organizations can come together instead of clashing against one another. This friction can spell disaster for a newly merging organization if the members of different groups cannot assimilate and work together towards a shared vision.

For example, one company may be driven by a sales mentality while another is more focused on innovation. Or decisions in one company may be top down while the other may be used to more participative decision making. HR must anticipate cultural challenges and take steps to integrate the two cultures.

There are many strategies for fostering positive culture integration and growth. One helpful tip is to evaluate the cultures before the merger during the due diligence process to uncover potential problems before they happen. This will help you address them properly in your post-merger integration plan.

Then work closely with managers to help bring people together and make sure you continually focus on corporate culture in your day-to-day activities. Create ways for people at both organizations to come together, ask questions, and discuss the realities of integration in a purposeful way. This dialogue can also connect employees with a larger support system as they work through the nebulous post-merger integration process.

In order to ensure the newly integrated teams work together smoothly, HR should also manage and monitor employee performance post-merger. This means facilitating the setting of clear performance goals so that the teams understand their responsibilities and what is expected of them. This can include devising an employee performance review process, incorporating various KPIs and other performance metrics, 360-degree feedback, and other tactics depending on how your business operates. 

For new hires or people in new roles, you’ll also need to have a plan to train and develop them so that they can completely perform their new roles. This training will enable these employees to meet their new goals and performance metrics. Again, this is something that is specific to your organization and will vary depending on the needs of different teams and leaders.

HR will also need to examine the new teams as both workforces are integrated together to see if there are any resulting redundancies. Unfortunately, mergers and acquisitions can cause a number of redundancies because you have whole companies coming together under one roof. This means that there will be a lot of people who are no longer needed at the new organization.  

One of the biggest challenges during integration is deciding which employees to terminate, who to redeploy, and who to retain, as well as effectively managing those processes. This means that you will likely have to deal with a lot of turnover in the first few months of the merger. You may have employees that will leave on their own terms, redundant workers that no longer have a role, and other reduction events that will become necessary post-merger.

HR’s role in this process is to work with the management teams to assess the skills, capabilities, motivations, and potential of employees involved in the merger or acquisition in order to identify where these redundancies lie and who will need to be redeployed or let go entirely. This process will take time to review various performance reviews and workforce planning strategies. 

Once the employees have been selected, then HR will be needed to guide the reduction process to offboard staff members using layoffs, retirements, and other available methods. Relocating key personnel or even entire departments may be necessary. 

If that’s not enough and you do need to hold layoffs, HR will also be tasked with determining proper severance compensation and benefits for those being let go. This includes providing them with additional support such as outplacement services to give them ample assistance and prevent damage to your corporate brand during these trying times.

The other tricky side of that coin is retaining and motivating key talent who are not terminated. While there may be a fair amount of redundant staff to let go of post-merger, there will also be top performers you will want to retain, some of whom might be unsure about their job or tempted to leave after such a major event.

HR can help stem this period of uncertainty, lowering the chances of their top talent being poached by recruiters attempting to lure them to other organizations. This loss of key employees, as well as any resulting damage to remaining staff morale and productivity, could seriously diminish the value of the merger deal and its chances of success.

Start the conversation with these employees early, explaining to them that their jobs are safe and they are valued at the organization. You may also want to consider offering them retention bonuses to encourage them to stay.

Be careful not to undercommit or fail to address their survivor guilt, which could increase the likelihood that they’ll consider leaving the organization. If you don’t protect your key talent, you could wind up with an inadequate workforce that is unable to provide the level of work needed, causing financial stress and even more layoffs. So it’s important for HR and management to approach this with a delicate yet persistent touch.

Throughout all of this, HR will also need to set up effective means of communicating with your newly integrated staff at every step of the merger—not only the post-merger phase—in a way that they can understand and engage with. Create a communication pipeline so that you can quickly get the word out about changes to any of these HR and other organizational systems.

Poor communication can create a large problem during a merger and its post-merger integration phase, and is often a major factor attributed to the failure rate of these business deals. No one likes being kept in the dark. By communicating efficiently with your staff and keeping them in the loop, you will find it’s much easier and less stressful to navigate the entire post-merger integration process, establishing a newly merged workforce with clear policies and a unified culture, as well as the ability to smoothly offboard redundant staff and retain key talent without all the headaches. 

This is why proper communication is so critical throughout the entire merger, including the post-merger integration phase. You need to be open about all of these changes and make sure that your staff can find information about all of them through a company intranet, with periodic team meetings, or by holding training sessions to inform the staff members. Maintain an ongoing internal communications structure to help manage employee expectations through the post-merger integration process. If HR is able to successfully address employee questions and concerns, they will substantially improve the new organization’s chances of success.

Although mergers can provide enormous potential for growth, they often struggle during the post-merger integration phase, which can significantly reduce their chances of success. That’s why HR is so integral to the success of a merger, and why their role throughout the whole process—and post-merger integration in particular—is so critical.

One of the best ways to ensure a smooth integration process is to prepare a thorough and thoughtful post-merger integration plan. Without a proper post-merger integration plan, it can be hard to make sure you hit every step and goal you want. So one of the best ways to handle post-merger integration is by using a post-merger integration checklist. A checklist can help you keep everyone on track throughout the delicate integration process.

This plan or checklist should address every aspect of integrating two separate organizations under one new banner, including establishing new company policies, compensation, and benefits, creating a unified company culture, merging both workforces, monitoring new team and employee performance, identifying and offboarding any redundant staff, retaining remaining key talent, and addressing any employee concerns with clear, continuous communication throughout the entire merger. All of these are essential pieces of the post-merger integration process, and each involves many smaller tasks that you won’t want to miss. So make sure to put your post-merger integration plan down on paper, and seek guidance from your management and legal teams to make sure you’ve covered all of your bases.

At Careerminds, we believe that you can never be too prepared for your next merger or acquisition, especially any that might result in workforce reductions. Our arsenal of resources, templates, guides, and industry-leading outplacement services can help you navigate the delicate post-merger integration process. Click below to speak with one of our experts and see if we are the right partner for your organization.

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Rebecca Ahn

Rebecca is a writer, editor, and business consultant with over 10 years of experience launching, managing, and coaching small to midsize companies on their business, marketing, and HR operations. She is a passionate people advocate who believes in building strong people, teams, and companies with empowering culture, content, and communication that facilitates meaningful results at every level and touchpoint. In her spare time, Rebecca is an avid traveler and nomad who also enjoys writing about travel safety and savvy. Learn more on her LinkedIn page.