Using HR Data Strategically for Mergers & Acquisitions

I love the field I work in.

I love it because the big data space is literally endless.

I know this sounds somewhat Treky (or is it Trekky?), but the only thing holding us back in using big data for making workforce and HR-focused business decisions is our own imagination. And while the business applications are endless, some applications yield higher value and returns than others.

One area that has not received much attention but which nets high value outcomes is using HR data for mergers and acquisition due diligence and implementation planning.

With cloud-based workforce and business analytics solutions, HR Due Diligence can now be delivered affordably within days, as opposed to months or years and half-a-million dollar investments. The key is to rapidly connect HR data sources to business outcomes data, and visualize the results in a way that tells the story and enables further analysis. This translates to faster, better, more cost-effective and evidence driven decision-making. This makes workforce analytics a powerful input into the mergers and acquisition space – where time, clarity, insight and prediction are of the essence.

So what’s the value in using workforce analytics for mergers, acquisitions and investments?

Value lies in the key nuggets of people-related information locked within many business systems that give a whole new perspective on organizational health and most importantly, the business outcomes created by that organization’s key people. Through analytics we can connect and use HR and business data to identify key value creators.

Once identified, we can begin to uncover what makes our top performers so successful in the organization. In simple terms, if we understand the make-up and source of our top performers, maybe we can go and find more of them, get them in the door faster and accelerate our business results.

Two Sides of HR Due Diligence for M&A

In the M&A context, there are 2 sides to HR Due Diligence:

  • Pre-Merger Assessment
  • Post-Merger Implementation

In pre-merger assessment we can leverage workforce analytics to get a gauge on the health of the organization. We can look at:

• Leadership characteristics, succession planning, cultural traits and behaviours, and the business model mentality

• Who does what? Who are the key employees? Most effective teams? Biggest value creators? Fastest value creators?

• What is the health of these key value creators? What is the cost and rate of turnover?

• Whether there are business units that are achieving results on paper but are actually unhealthy and leaving large opportunities on the table (employee and customer churn, higher cost of sale, lower productivity, lower margins, etc.)

Output from workforce analytics can provide insight into these questions. Here you see a simple heat map derived from the combination of several data points: we can begin to understand employee turnover, by performance rating and tenure.

Turnover Analytics Heatmap

This type of data is readily available from many organizations - but buried and locked away in several different data sources or systems. It includes core HR system data (SAP, PeopleSoft, home grown systems, etc.), the performance tracking system data (possibly from spreadsheets), and supplemented by sales data and workforce planning data.

By connecting these data points, you start to tell the REAL story. Workforce analytics can be a powerful input into de-risking M&As.

In Post-Merger Implementation, armed with these data points and with knowledge of the gaps, we can get better at determining the right path for implementation and integration.

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Ensuring that HR data is part of the larger M&A due diligence process means that key inputs can be contributed in 3 critical areas:

  1. Making smarter hiring decisions
  2. Retaining key talent
  3. Understanding how people create value within a business.

With this type of information delivered in a timely fashion, key questions can be answered which will help you both de-risk your M&A investment and find material opportunities to create more value.

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