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David Marsden Pearson

Brook Graham, part of Pinsent Masons

Principal Consultant

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How to ensure good diversity and inclusion throughout a merger

David Marsden Pearson gives tips on how good D&I policies can be maintained during an M&A transition, and why this is so important.
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According to recent data from Refinitiv, a busy summer of merger activity produced deals worth $1.52 trillion between June and September 2021 – a 38% increase compared to the same quarter last year. In fact, more deals were generated than in any quarter on record.

This tells us that a huge number of businesses have merged with others, and even for those businesses that haven’t merged, restructurings are commonplace.

Whether a merger or a restructuring, both strategies have a drastic impact on the makeup of a business, including bringing major changes to processes that individuals rely upon.

Times of transition can be extremely difficult. Everybody from the bottom to the top is presented with new challenges and must figure out the new status quo. One risk of this is that important initiatives may be uprooted and forgotten about.

Merger activity produced deals worth $1.52 trillion between June and September 2021.

Take diversity and inclusion (D&I) for example. D&I continues to climb up the corporate agenda. Businesses are under pressure to improve D&I and, perhaps more importantly, demonstrate progress through hard numbers and regular reporting.

A lot of headway has been made on D&I in the workplace, but there is of course no guarantee that your business – which might have excellent D&I credentials – is merging with a business that can say the same.

Mergers can threaten to undo a lot of the good D&I work that a business has done and disrupt the systems that were carefully laid out pre-merger. However, there are steps that can be taken to remedy this.

What’s the solution?

HR professionals have a pivotal role to play. They may find themselves in a position where everybody around them is scrambling, focusing on getting the new entity up and running.

HR professionals need to ensure they are proactively feeding into senior conversations and reminding their colleagues of the importance of D&I, so that it doesn’t get lost in all the noise.

Due diligence

Due diligence is a vital pre-merger step to take. HR professionals need to make sure they have done their research and, in the case of a merger, properly understand the nature of the business they are merging with.

How does the entity compare with your own business on D&I? How far along in its D&I journey or lifecycle is it?

The better an understanding you have of who you are merging with, the easier you can anticipate issues (rather than just fighting fires) and put the right initiatives in place early.

The better an understanding you have of who you are merging with, the easier you can anticipate issues.

Armed with this information, you will also be in a better position to handle those conversations with senior colleagues, such as board members.

Importantly, doing this ‘due diligence’ isn’t just about reading the other company’s diversity and inclusion policy.  After all, a policy is just that – a policy.

Words on a piece of paper can never substitute for an honest face-to-face conversation. HR professionals will often find themselves in a position where their HR department is merging with another company’s HR department.

Instances such as this provide the perfect opportunity to speak with new colleagues about their approach. Moreover, seeking expert advice – for example undertaking a D&I diagnostic – is a clever way to take a strategic approach to the issue.

Upskilling

Another key component to ensuring a smooth post-merger transition is making sure all staff are upskilled.

The effectiveness of D&I training has been debated over the past year, sparked by examples such as the UK government scrapping its unconscious bias training programme; commenting that there was ‘no evidence it changes attitudes’.

But research suggests that diversity and inclusion training can be effective if undertaken in the right way.  For example, there was a recent large-scale meta-analysis of all forms of diversity training, which showed that awareness of biases usually does increase amongst participating individuals.

The key to success is approaching a training programme the right way. It is not a tick-box exercise, employees need to get something material from it. A half-day training course is unlikely to have much impact on something like unconscious bias, which is deep-rooted and complex.

The key to success is approaching a training programme the right way – not just as a tick-box exercise.

The process has to be skills-based, integrated and practical, and it’s also important that staff practise regularly after receiving training. HR professionals should bear this in mind when organising training sessions for staff.

This is one reason why D&I consultants, Brook Graham, recently launched its Conscious Inclusion Hub.

Issues like unconscious bias can seem daunting, and this can deter employers from trying to tackle them. Brook Graham found that employers tend to engage more when the information and advice is being delivered to them in bite-sized format, and when it’s backed up with real-world examples; for example, what a properly-run inclusive interview looks like.

This is all important in the information-rich and time-poor environment that most businesses and their staff operate in.

It doesn’t end at diversity

It’s also important to understand the distinction between diversity and inclusion. It is entirely possible that both businesses that are merging are at a similar stage on their D&I journeys, yet still run into issues.

It is often the case that even where both businesses have good diversity, it is still important to create an inclusive culture so that the advantages of that diverse workforce can be experienced.

HR professionals need to ensure that the workplace has a culture of ‘psychological safety’.

One of the greatest benefits comes from increasing ‘diversity of thought’ – which is where the way people interpret and interact with the world reflects their identity, culture and personal experiences – and is one of the main reasons that businesses with more diverse teams outperform their competitors.

This can only come, however, when everybody in that workforce – from top to bottom – feels safe and empowered enough to share those ideas amongst their colleagues.

HR professionals need to work with everyone in the business to ensure that the workplace has a culture of ‘psychological safety’ where people feel they can share their ideas regardless of their seniority, background or personal views.

Conclusion

The overarching takeaway is that HR professionals need to recognise the pivotal role they play in any merger or acquisition. This is particularly important at a time when diversity and inclusion is right at the top of the agenda and businesses are under scrutiny.

Keeping one’s finger on the pulse of D&I and ensuring it does not drop down the priority list when everybody else is trying to get used to the new post-merger business environment, is something that an HR professional will be thanked for in the long run.

It is always worth investing time and effort into getting it right, as well as considering what help an expert D&I advisor could provide.

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David Marsden Pearson

Principal Consultant

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