Mergers and acquisitions (M&A) are a well-worn path to growth and competitive advantage.
Through our HR technology implementation work, we often advise clients during these organizational transformations and have seen the impact of M&A on groups such as HR, IT, and specialized Learning and Development groups within these businesses. From that lens, below we discuss the four questions that HR leaders responsible for managing their organization’s HR technology infrastructure should answer, when navigating the change inherent in integrating the talent management systems of two newly combined companies.
Are Our HR Technology Systems Interoperable?
In today’s cloud-based environment, switching applications within an organization’s HR technology lineup is a frequent occurrence, and M&A events are a common trigger for making such changes. Given this reality, prioritizing interoperable applications is key. Most cloud-based service providers provide API toolkits for customers to build their own integrations, some even doing the upfront development work by providing a marketplace of connectors that provide plug-and-play solutions for connecting multiple dependent applications together. While many vendors lead with the sales pitch that their suite of products (Core HR, Recruitment/Applicant Tracking, Learning, etc.) provide the best and most seamless overall experience for their customers, all have acknowledged the reality that, in order to compete in today’s HR technology market, a robust development toolkit is essential. This ensures they can play to their relative market strengths while giving customers the choice they expect when it comes to the array of options available in the overall talent management ecosystem.
Is a Big Bang HR Technology Integration Effort Realistic?
Prudent companies realize HR technologies are evolving constantly, and therefore do not see themselves as beholden to Platform A or Platform B. Just because two companies have invested resources into mastering a particular talent management platform doesn’t necessarily mean one of them is the clear-cut answer for the combined enterprise after they merge. Taking a stepwise approach to a longer term “steady state” is often a wise decision.
In one recent client example, two companies of equal size merged, with one (A) bringing multiple legacy platforms performing similar functions, and the other (B) relatively streamlined in terms of its HR technology investments. The decision was made to migrate all users and data into B’s platforms as an intermediate step. A subsequent project phase was then explicitly dedicated to a formal needs assessment and evaluation of whether further changes were necessary. This consolidate-then-migrate approach has proven effective, as they now have single-streamed their sources of data should they decide on further changes, lowered cost by reducing their technology footprint, and given their organization time to align as a combined group and harmonize their business practices.
Are Our HR Technology Platforms Fit for Purpose?
Everyone involved in decision making around IT investments is familiar with frameworks such as Gartner’s Magic Quadrant and thought producers like Josh Bersin. The prominence of tools and voices such as these, while helpful as starting points in understanding the major players in a particular slice of the HR technology market, can often lead to vendor selection exercises that do not truly answer the question: ‘Are these finalists on my short list because they have been plotted in the Leader quadrant, or because they legitimately meet the stated requirements of our combined organization?’ For a variety of reasons – a deliberate decision to serve only the needs of a certain size company, particular industry-specific requirements, or doing away with legacy LMS type features in favor of a less directed, more exploratory approach to learning – niche vendors often do not make the shortlist although they may actually be the right choice. Tools that do everything are not always the right tool for every organization, and time spent exploring niche players within a segment of the HR technology landscape can lead to investment decisions that save outsized time, effort, and resources years later.
Are We Acting or Reacting?
No one individual has the foresight to plan and execute an HR technology roadmap that is durable enough to withstand multiple rounds of organizational change in the form of M&A. In reality, the merger or acquisition event is often the dog that wags the technology lineup tail. That said, it is not the case that organizations are purely reactive in their HR tech investment decisions and cannot enter periods of far-reaching change with sound strategy in place. By making interoperability a non-negotiable requirement of any platform under consideration, mapping out a sensible stage gate approach to a longer-term definition of “steady state”, and keeping the focus on the business’ core requirements (supplementing with credible industry research and references), it is possible to weather the inherent changes that come when companies combine with other companies. It might even build a reusable rubric to dust off for future merger and acquisition events – something talent management professionals can reliably return to as their organizations continue to grow and change.
