Project Management for HR: The Secret Behind a Successful M&A Deal

A merger, acquisition or divestiture is an extremely complicated undertaking — and no component is more important than managing the complex series of workstreams and milestones necessary to integrate or separate organizations.

When it comes to human capital-related issues during a deal, it’s vital to focus on two key areas: First, the many aspects of integration or separation need to be looked after through different workstreams. Second, the progress of various workstreams needs to be tracked consistently and in a coordinated way. This is where a project management office comes in. The creation of a central office provides a clear route to raise issues and escalate within each workstream.

“The need to approach this transformational work properly really doesn't change whether a deal involves 100 employees or 10,000 employees,” says Alexander Miller, associate partner in Aon’s Human Capital Solutions practice, who specializes in human capital M&A deals. “While it’s a matter of scale, issues around benefits, compensation programs and how to communicate changes to employees, for example, always exist.”

Best Practices for a Central HR Project Management Office

The HR Project Management Office (PMO) is, in effect, a steering committee that supervises the entire deal process and ensures all the crucial steps owned by HR are carried out. The PMO structure typically includes an executive sponsorship layer consisting of the chief human resources officer and the management of the acquiring or divesting company, with representation from the finance and business development executives of the impacted organizations.

The HR PMO coordinates across all the workstreams necessary to either combine or separate two businesses, including total rewards, employment law, HR systems and payroll, talent and organization and employee communications. It works with the other workstreams and functions involved in the deal — such as IT, finance, sales and the supply chain.

The HR PMO establishes the cadence of status reporting, detailing progress against what is expected of the HR workstreams across a range of timeframes — weekly, biweekly or monthly. This is in line with the overarching PMO that covers all aspects of the deal. It also creates an issue-tracking, resolution and escalation process so the workstreams can funnel up to the PMO or the executive sponsor level for key decisions. Every team has the chance raise any red flags or impediments to progress it’s experiencing on a weekly basis. This way, parties can identify risk early to either request resources or avoid any obstacles.

A successful deal depends on advanced preparation, centralized planning and follow-through. “Some companies begin planning around factors like benefit decisions months in advance of announcing a transaction,” says Bruno Monteiro da Silva, executive director for the EMEA region in Aon’s M&A and Transaction Solutions practice. “In a typical deal scenario, we might have four, five or six months of time between announcement and a target close date, but we're working with a lot of clients to see how we can accelerate this work by preparing well in advance of announcement.” 

Project Management Goes Beyond Ensuring Deal Completion

Effective project management of the HR function in a merger, acquisition or divesture can help ensure a deal goes through on time. But there are many other benefits. These include identifying any hiccups in the process of the deal early and resolving issues quickly so that employees have a smoother transition once the deal goes through. This could mean the difference between employees’ health insurance being in place on day one post-deal, seamlessly getting the new company’s first payroll up and running or issuing clear communication about the benefits and values underlying the transaction globally.

For more insights on how to navigate the people components that are impacted by corporate dealmaking, please see our article 8 Ways to Achieve a Winning People Strategy During M&A.