Five years ago I sat through an onboarding meeting with the human resources team of a company that had just acquired the one I was working for and we heard what our new benefits were going to be - when they would go into effect, what they would cost, and what the net financial impact would be when we were enrolled. There were some slight changes, some good, some bad, but nothing in my view worth getting upset about. Much to my surprise, others in the room didn’t feel the same way.
I specifically remember seeing somebody in tears and only found out days later that, in the minutia of the new plan’s design, infertility treatment wasn’t covered in the same manner as our old plan. And for that particular employee, that was enough to move on. After that individual left, customers that were close to that person also found a new home, directly affecting our revenue. Years later, the general consensus on why the acquisition went so poorly, by almost any measure, was the frequently used catch-all, “not a cultural fit.”
Regardless of whether you are a Private Equity or a Strategic investor, managing the culture of the firm in which you’re investing matters and employee benefits and HR practices can swiftly, directly affect culture. The following are four areas where detailed Employee Benefits due diligence can uncover the potential for a “cultural mismatch.”
In the June 2016 issue of the Harvard Business Review, Roger L. Martin wrote that typically 70% to 90% of mergers & acquisitions are in his words an “abysmal failure.” Don’t let a mismatch of culture contribute to what is almost always a challenge. Include all Employee Benefits and HR Practices, not just the insurance offered, into your due diligence review.