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The Role of Human Resources in Mergers

We are all aware of both the opportunities and obstacles inherent in the nonprofit strategic restructuring process. Any significant structural transition will impact the people at all levels of the organization. As a result, a particular area of consideration that holds both promise and peril is that of human resources, or HR. A highly integrative restructuring - anything from a joint venture to a merger - is all about transitions, and the needs, perceptions, concerns, fears and possibilities of people all become magnified during transitions. If the organization's leadership does not articulate its knowledge of the dynamics and emotions felt throughout the organization, and provide a clear vision of the future and the path to get there, then the likelihood that any strategic restructuring effort will be successful will be seriously diminished. This is especially true for mergers, where the degree of change is greatest. Thus while these concepts are applicable to all forms of strategic restructuring, we will look in most detail at the role of HR in mergers.

Let us start with an operational definition of what HR is supposed to do in your organization. We define HR as:

The practices and policies an organization needs to carry out the people aspect of its mission, and to maintain effectiveness, cohesion and safety. The HR function articulates roles, relationships, boundaries, and expectations within the organization.

HR provides constancy, communication and clarity in an organization's continual process of rearticulating the boundaries and interplay of person, role and system. More simply put, HR assists managers, staff, and leadership in creating clear expectations and avenues to define and resolve conflict.

Randy Schuler from New York University's Stern School of Business has described the strategic contribution of HR as consisting of the five "P"s: philosophy, policies, programs, practices and processes.

The philosophy of an organization is expressed in statements defining its business values and culture. It expresses how to treat and value people. In the nonprofit world an organization's philosophy has to convey the value that the organization places on human dignity. Articulating your organization's philosophy is the first step in melding culture in a merger.

The policies of an organization express its shared values. In practical terms merging personnel policies means rewriting those of the merging organizations to fit the new organization. More critically, however, it establishes guidelines for action on people-related business issues and HR programs in the new organization.

The HR programs in an organization are its human resources strategies. These strategies coordinate efforts to facilitate change, and to address major people-related business issues both pre- and post-merger.

The practices are the actions and activities of those in managerial, operational and leadership roles within the organization. These are particularly important in a merger, and contribute heavily to its success or failure.

The processes in human resources are the formulation and implementation of the previous four elements. They define how HR activities are carried out.

An effective HR function with developed expertise can provide the guidance and the process skills necessary to maneuver the challenges of a merger. The biggest challenge for the nonprofit sector is that the HR function tends to be underdeveloped in relation to the programmatic and finance functions in many organizations. HR has typically evolved out of the finance office, and is given the mandate of keeping things legal, keeping the records, and meeting the increasing external demands of state and federal agencies. Few nonprofits have had the luxury of a highly evolved HR function.

HR, in order to have real impact, must be able to take the lead in proposing, creating, and integrating best practices with regard to people, culture, rewards and performance. This means building credibility with all the varied constituencies and stakeholders within the organization. It means that HR is the first place that employees and managers look to solve challenges, develop solutions and model being an agent of change. Such an HR function plays a critical role in implementing a successful nonprofit merger.