Role Of HR Outsourcing In Mergers and Acquisitions: Facilitating Smooth Transitions In UAE Companies

Mergers and Acquisitions are a go-to option for businesses to increase their market reach. These mergers ensure business growth but have their own set of challenges. Strategic HR initiatives are required when it is about merging two entities, which is a significant task.

An M&A can have adverse effects if the procedures are not appropriately managed. HRs can make the transition smoother and hassle-free. Learn about the varied functions of human resource management in mergers and acquisitions (M&A). They play a key role in helping streamline employee experiences and effectively support the process.

Introduction To HR Outsourcing In Mergers And Acquisitions

Mergers involve much more than combining business operations and financial assets. They involve merging systems, cultures, and people. HR plays a crucial role in laying the groundwork for mergers and acquisitions. By facilitating clear communication and addressing any issues that arise, HR can help guarantee smooth transitions during these processes.

HR outsourcing in the UAE is expected to grow at a CAGR of 8.96% between 2022 and 2027. During outsourcing, a company transfers specific HR and administrative duties to a third-party provider. Outsourcing ensures compliance, saves costs, and proves to be efficient. The growing number of businesses in the UAE and the requirement for efficient operations have increased the demand for HR outsourcing. 

 

Pre-Merger Preparation

Pre-merger preparation involves HR reviewing possible challenges and developing a strategy for handling them. 

 

• The first step is organizing an assessment. Employee demographics, organizational cultures, compensation structures, and benefits packages of both organizations must be compared. This will help identify areas that align or need improvement. 

 

• Ensure you establish a strong communication strategy. Transparent and clear communication is crucial during mergers and acquisitions. Effective communication is among the key responsibilities and functions of human resources management.

 

• Strategic HR initiatives also involve setting up integration teams consisting of representatives from both organizations. This approach helps with smoother cultural blending, business restructuring, and effective talent retention.

Harmonizing HR Policies And Procedures

HR’s due diligence in mergers and acquisitions involves ensuring employees comply with all relevant local regulations and legal requirements. In some regions, it’s essential to maintain the existing employment terms for new team members. Human resources responsibilities include staying informed about and accessing all employee agreements and policies.

Based on the state or country’s laws, HRs must present the offerings similarly or more advantageously. Having clearly defined entitlements is a great idea. It makes it easier to differentiate between different groups and provide answers. This way, you could keep things more organized and accessible than they were post-M&A. 

Managing Workforce Integration

Managing the workforce keeps the entire organization in harmony. Having information on both sides helps them seamlessly create a new structure. Begin by assessing your current workforce and picking your strengths. When considering the HR organizational structure, assigning the right people to the appropriate roles is essential. This will enable the workforce to function smoothly from day one of the merger. A key priority is ensuring employees can access their emails and other crucial information within their systems.

Here is an HR business plan that can be followed –

 

• Analysing the existing workforce
• Predicting the organization’s future needs
• Finding gaps between the current and future systems
• Planning and building strategies to achieve future goals
• Executing the plans and fulfilling goals

 

Businesses often follow the grading structure for assigning roles. However, the entire process must be logical and transparent. Employees’ questions must be answered adequately. Your HR strategy and planning must include discussions of all legal procedures and requirements.

Talent Retention And Development

Another critical aspect of M&A is retaining top talent. Talented employees must be recognized and offered a retention plan. Career growth and skill development opportunities can be offered to provide them with future assurance. This will also increase their commitment to the organization.

Effective communication plays a critical role in HR due diligence in mergers and acquisitions. HR should address employee questions about job responsibilities, job security, career development, and other key areas. HR can help alleviate anxiety and enhance employee retention by ensuring timely updates and keeping employees well-informed. 

HR Outsourcing For Cultural Assessments And Integration Planning

Integrating different organizational cultures is key in mergers. HR strategy and planning are needed to simplify the process. HRs can start by assessing the different cultures and understanding their values and methods. Converging and diverging areas can be identified for better unification. 

Human resources responsibilities also encompass fostering cultural awareness. This can be achieved by facilitating workshops, training sessions, and educational campaigns. HR strategy and planning should aim to recognize cultural disparities and encourage mutual respect between the two organizations.

The HR business plan should include project alliance and team-building sessions. These will break the ice and help establish a unified organizational culture. 

Importance Of Compliance With UAE Labour Laws And Regulations During M&A Transitions

M&A has become popular in the UAE as organizations strive for business expansion and a competitive edge. However, local and foreign investors may find compliance complex. Understanding the legal requirements is significant for successful transitions.

The key aspect of M&A transactions is the entity type. The UAE has several entities, including joint stock companies (JSCs), limited liability companies (LLCs), and free zone companies. Every type has its own rules, and knowing about them is crucial. The nationality of the entity involved is another critical consideration. UAE has unique rules for foreign ownership, which may significantly impact M&A. 

 

UAE’s legal framework is constantly evolving. The government has been trying to attract more investments and boost economic growth. It is among the key functions of human resource management to stay compliant legally. 

Post-Merger Evaluation And Optimization

Strategic HR initiatives also include handling employee layoffs during the merger. Accounting and technology are a few areas in which we are experiencing this. Here are some checklist points for HRs for post-merger evaluation and optimization –

• A termination agreement must be provided to the affected employees. It must include termination reasons, final check pay amount, etc. 
• The new HR business plan must look to simplify the merger process. Pay grades, occupational classifications, and job titles must be decreased to streamline the process. 

 

A simpler HR organizational structure helps make the merger more effective. The best approach is to stay open to changes and be flexible.

For Best HR cousultancy services reach out to TASC Corporate services.

Reference Links –

• https://peoplemanagingpeople.com/strategy-operations/organizational-design/hr-merger-acquisition/ 
• https://bnxfinancial.com/2024/02/navigating-mergers-the-critical-role-of-hr-in-smooth-transitions/ 
• https://hzlegal.ae/mergers-and-acquisitions-in-uae-navigating-the/ 
• https://www.linkedin.com/pulse/how-uae-transforming-future-hr-outsourcing-service-providers-/ 
• https://hrforecast.com/role-of-hr-in-mergers-and-acquisitions/