For a merger to succeed, don’t forget the people

When communication with employees breaks down, it can make a deal look poorly planned and executed

In the exhilaration that comes with a merger and acquisition, especially one as significant as the recent Grab-Uber deal, it is easy for companies to focus on the headline numbers - the value, stake involved, costs, and new market share.

But in a rush to secure the deal, there is a tendency for companies to lose sight of the human dimension, as observed from the unfolding of Grab's buyout of Uber's South-east Asian business.

The Business Times has found that several kinks, especially with regard to the migration of people, have yet to be ironed out.

While Uber South-east Asia staff - over 500 of them - were assured by their top management on Monday that they will all be offered new roles at Grab, there was no explicit pledge on the side of Grab.

A statement by a Grab spokesman on Tuesday only said that it is "committed to try and find everyone a home at Grab".

Grab's head of people Ong Chin Yin also could not guarantee that there will be no layoffs after the next three months, stating only "there are no layoffs as of today (Monday, March 26 )".

One contract employee spoke to the paper on the condition of anonymity, describing the events on Monday as "stressful" and "emotional".

"All of us were more sad than angry. We were mostly in shock. People cried when we realised that it was possibly the last day that we would be colleagues," she said, describing the process as "brutal". They also had to help pack for colleagues who were away on holiday.

Grab's Ms Ong appeared in a LinkedIn video on Monday night, where she sombrely addressed Uber employees and urged them to attend a town hall the next day.

Even as one feels a measure of sympathy for the task she has at hand, there is also the sense that the integration of people has not been thoughtful enough.

For example, she had earlier said on Monday that the company had not reached out to Uber employees because it did not "have the e-mail addresses of Uber employees" yet.

It is certainly not far-fetched to assume that such preparations could be made earlier.

Observers say it is common for people matters to be sidelined in a merger or an acquisition. Mr Leong Chee Tung, chief executive of human resource start-up EngageRocket, pointed out that while it is likely that HR was under a gag order, it should have had sufficient time to prepare a communication plan.

"Having a clear people transition plan which is executed immediately would display strong leadership and care for people on both sides," he said.

Mr Ian Lim, partner and employment and labour practice head, TSMP Law Corporation, said early engagement is key. "When communication with employees breaks down, it can make the entire deal look poorly planned and executed."

Associate Professor Lawrence Loh, director, Centre for Governance, Institutions and Organisations, NUS Business School, warned: "The benefits may not be fully captured if there are misalignments in culture and HR practices. Or worse still, there may be regulatory roadblocks."

It remains to be seen if the Competition Commission of Singapore will give its stamp of approval on the merger, as competition law prohibits mergers that may result in a substantial lessening of competition.

This article first appeared in The Business Times yesterday.