HR centers of excellence provide specialized expertise throughout the M&A process by helping organizations navigate cultural, financial, legal, and logistical challenges while ensuring employee engagement and retention during complex transitions.
In a previous blog, I discussed the important role that a strong HR mergers and acquisitions (M&A) leader plays when you’re seeking to grow your company through a merger or acquisition. The HR M&A leader guides the development of HR strategies that align with the merger’s business goals, help to retain key talent on both sides of the deal, preserve culture, and more. HR centers of excellence (CoEs) are one of the best resources the HR M&A manager can have when developing these strategies.
An HR CoE gathers the best HR leaders from each function of the M&A team: workforce management, organizational design, total rewards, culture and change management, communications, and employee relations.
While each CoE has distinct responsibilities, their work must be coordinated to ensure a cohesive approach to integration. The HR M&A plays this role by helping to oversee, guide, and inform these teams so each function can help ensure a smooth transition to the new, combined organization that meets all business objectives.
The Strategic Value of HR Centers of Excellence
HR CoEs provide several strategic advantages throughout the M&A process and after. With the deep functional knowledge of experts in each area working together, they mitigate risk by addressing HR-related issues methodically, before they can grow and begin to negatively affect the business. This speeds up the integration process and reduces the time needed to achieve synergies.
Another important role that HR CoEs play is documenting the transition process, gathering materials in one place, and noting what worked well and what did not. These standardized approaches, or templates, can be reused in future M&A transactions.
However, the most valuable strategic contribution of HR CoEs is their role in talent retention. By addressing critical, human-focused functions such as total rewards, culture and change management, and communications, the HR CoEs encourage necessary employees to stay with the company through the transaction and after. As a result, the company retains the institutional knowledge it will need as a combined organization, even as individual team members change roles.
Core HR Centers of Excellence for M&A Success
Below are some of the most common HR CoEs that can help your M&A succeed. Your organization may have additional focus areas that your HR M&A leader can help identify, in consultation with other key HR and business personnel.
Workforce Management
The workforce management CoE focuses on determining what personnel you’ll need to operate the new, combined organization. Their responsibilities include:
- What roles are essential for the combined organization’s success?
- How do we identify redundancies while preserving institutional knowledge?
- How can we ensure appropriate staffing levels across all departments?
- What succession planning should be implemented to address potential attrition?
The workforce management CoE typically works closely with business leaders to understand departmental needs and develop staffing models that align with the deal’s financial and strategic objectives. This team also helps define which roles should be retained, modified, or eliminated based on the new organizational structure.
Organizational Design
The organizational design CoE develops the new operating model, creates new roles, modifies existing positions, and ensures an objective process for making talent decisions. Their responsibilities include:
- How will the combined organization be structured?
- What reporting relationships make the most sense for operational efficiency?
- How should teams be configured to maximize synergies?
- What processes need standardization across the organization?
This CoE typically creates detailed organizational charts, defines new role descriptions, and establishes decision-making frameworks that support the new structure. They work closely with business leaders to ensure the design supports both immediate integration needs and long-term business strategy.
Cultural, Change Management, and Communication
This critical CoE helps employees navigate change and stay informed throughout the integration process. Their responsibilities include:
- Assessing the cultural compatibility of both organizations
- Identifying potential cultural friction points
- Developing change management strategies to bridge cultural differences
- Creating comprehensive communication plans for all stakeholder groups
- Providing managers with tools to support their teams through transition
Asking leaders why employees join and stay with your organization reveals crucial insights into organizational culture and potential expectation mismatches.
Cultural incompatibility is harder to assess than benefits or compensation. But identifying it early lets leaders proactively manage the change throughout integration, preventing costly misalignments later. Undefined culture creates serious problems: turnover, deteriorating relationships, mistrust, performance issues, and public complaints.
This CoE’s communication role is particularly crucial because regular, transparent communication helps reduce anxiety and maintains productivity during the transition period.
Total Rewards
The total rewards CoE evaluates and communicates changes to compensation plans and benefits. Their responsibilities include:
- Analyzing changes in control agreements
- Harmonizing executive compensation structures
- Evaluating benefits programs, including healthcare networks
- Aligning pay mix (base and bonus) across the organization
- Standardizing long-term incentive eligibility
- Revising sales compensation plans
This CoE typically involves analyzing potentially expensive deal components from the beginning. They conduct comparative analyses of compensation and benefits programs to identify gaps and determine the most appropriate approach for harmonization.
The team also develops communication strategies to help employees understand changes to their total rewards packages, which is critical for retention and engagement during the transition period.
Employee Relations
The employee relations CoE ensures a fair selection process and addresses complex personnel issues. Their responsibilities include:
- Developing objective criteria for retention decisions
- Creating severance and outplacement programs
- Ensuring compliance with employment laws across jurisdictions
- Managing performance issues during transition
- Establishing processes for handling employee concerns and grievances
When operating efficiencies are an expected outcome of the deal, some employees will not move forward with the combined organization. Ensuring a fair selection process and treating impacted employees with dignity and respect reflects your organizational culture and influences how remaining employees view the new company.
This CoE often works closely with legal counsel to ensure all actions comply with relevant employment laws and regulations, particularly when the deal spans multiple jurisdictions with different legal requirements.
Integrate Your HR Center of Excellence
Now that you’ve created your HR CoEs, how can the HR M&A leader help them work together?
Start by scheduling regular coordination meetings. These allow CoE leaders to share updates, identify dependencies, and address cross-functional challenges. A master timeline that identifies how the work of each CoE interconnects and affects the overall integration schedule will also help everyone keep on track and understand how their functions affect the whole.
To build consistency and ensure that expectations are clear, CoEs can develop standardized documentation, assessment tools, and reporting formats. Similarly, team members should be on the lookout for ways to share their insights and learnings with each other and with other teams.
Finally, CoEs need clear processes for resolving the inevitable conflicts that arise and for addressing problems that span multiple CoEs.
Metrics for Measuring CoE Effectiveness
HR CoEs must develop metrics to monitor the health of the integration process. These metrics should include standard HR measures like turnover, plus more specific metrics tied to the deal’s success, such as:
- Workforce Management: Time-to-fill critical positions, retention of key talent, building bench strength in critical roles
- Organizational Design: Time to complete restructuring, employee satisfaction with new reporting structures, efficiency metrics
- Culture and Communication: Employee engagement scores, communication effectiveness surveys, cultural alignment indicators
- Total Rewards: Pay equity measures, benefits enrollment rates, compensation competitiveness
- Employee Relations: Voluntary vs. involuntary turnover, legal claims, employee relations case volume
These metrics proactively identify issues and let your organization make changes prior to escalation. Financial success metrics and the amount of time required for a deal to become accretive have direct links to HR outcomes, again illustrating the importance of effective HR CoEs.
Effectively Manage an M&A with HR CoEs
HR centers of excellence represent a structured, specialized approach to managing the human aspects of mergers and acquisitions. Establishing these focused teams — whether permanently or temporarily — creates the necessary infrastructure to address the complex challenges that arise during integration.
These CoEs work together to ensure cultural alignment, effective workforce planning, clear communications, appropriate total rewards strategies, and fair employee relations practices. Their collaborative efforts directly impact retention of key talent, employee engagement during transition, and ultimately, the realization of synergies that drive deal value.
For organizations engaging in M&A activity, investing in HR centers of excellence is not merely an HR best practice. It’s a strategic business decision that significantly improves the odds of achieving successful integration and realizing the full potential of the transaction. By providing specialized expertise throughout the M&A journey, these centers help transform what might otherwise be a disruptive process into an opportunity for organizational growth and renewal.
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