Human Due Diligence

Topics: Management, Due diligence, Mergers and acquisitions Pages: 4 (1440 words) Published: July 7, 2009

Human Due Diligence

“The success of most acquisitions hinges not on dollars but on people” (Harding, Rouse, 2007). It is often said that people are the most significant and important resource of any organization, yet due diligence sometimes focuses on the corporate, financial, and legal dimensions of the deal while ignoring the people issues. Financial motivation are only a small part of the picture in most mergers, while success and failure of consolidations are profoundly connected to people involved-so human due diligence is critical. In any business, the people in the organization are its primary asset. Human due diligence is an in-depth analysis of the management team, staff, structure, issues, and managerial capacity of a potential partner. Human due diligence lays the ground work for a smooth integration. During merger negotiations and integrations attention and energy must be devoted to the real people issues. If not the most obvious consequence of making a deal without conducting human due diligence is a significant loss of talent right after the deal’s announced (Harding & Rouse, 2007). The philosophy of an organization is expressed in statements defining its business values and culture. It expresses how to treat and value people. 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. 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 programs in the new organization (Wells, 2004). In order to have real impact, HR 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...

Cited: Harding, David, and Rouse, Ted. (2007) Human Due Diligence, Harvard Business Review
Thornton, Craig and Ruskin, Dan (2004) Due Diligence: Learn from the past, but look toward the future, Strategic Assessment Universal Advisor, Issue 3
Wells, Susan J. (2004) Merging Compensation Strategies HRMagazine, May 2004 pp. 68,72-74,76,78.
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