How to Align Your Workforce for M&A Success

Integration between your company and the one you have acquired depends on an executable plan of your vision.
By David Braun
October 25, 2022

Across the construction industry, mergers and acquisitions (M&A) deals have grown over the past two years. In 2021, deal volume grew by 14% over 2020 translating into deal values from $354 billion to $505 billion. Deal values have continued to grow with Q2 2022 showing a sharp rise of 78% over Q1. M&A deals and the construction industry are trending together and creating opportunities for the C-suite, investors, partners and suppliers.

But what will an M&A mean for each workforce? If the key decision makers have the vision to see why this is a smart move, won’t it be obvious to the employees at both companies? Maybe, but maybe not. That is why taking a page from architects and general contractors, and having a blueprint to follow, can make all the difference in whether or not you reach a successful outcome.

Depending on the purpose of the expansion, mergers of construction companies will bring together similar or separate core competencies or a mix of both. This can often be the biggest challenge of the entire M&A transaction, especially if the two companies have different approaches to construction-industry challenges. For example, most construction projects will require a blend of skilled and unskilled labor. To maximize both productivity and profit on the jobsite, you need to know the breakdown of skilled versus unskilled workers on payroll. How are employees compensated (if at all) for downtime due to weather or stoppage due to building supply issues? Understanding how things have been done in the past must be respected and recognized (even if they are changed) to make sure an integration gets off to the right start. And, ultimately, that will be essential because if the merging of the workforces isn’t done right—the long-term future of the deal could be in jeopardy.

The old adage that companies are only as good as their people has never been more true than in the promise of an M&A deal. Even if the teams of laborers, engineers or equipment operators all hold similar skillsets in terms of experience and management, that will not necessarily guarantee synergy. Planning and thoughtful consideration must accompany this M&A step. If the company leaders are successful, the integration will breed a climate of mutual respect that keeps morale high and performance on the upswing.

Merging two workforces should not be viewed as a last, but rather a beginning phase. To be successful, companies need to lay an integration foundation by preparing ahead of time. Unfortunately, even though often the primary assets of construction companies are tied to its talent pool and human capital, in construction industry M&As there is often more of a focus directed on how to combine technical systems and external relationship processes. While this is important, if the two workforces aren’t positioned to operate as one, the entire M&A process is vulnerable to failure.

Here’s some advice on how to combine two existing construction company workforces to create one in which every individual operates in sync as a part of a productive, committed and aligned team.

Establish and communicate internal processes. When it comes to payroll, health benefits, retirement, training and expense reimbursements, vacation schedules and other direct employee needs—communication will be key from the onset. Knowing what to expect in terms of paperwork, timing, eligibility, etc. will all be of primary importance to your workforce and there should be an “overshare” of how these processes will work across finance and HR. Minimize possibilities for confusion or concern by communicating every conceivable variable and scenario based on individual department requirements. If you have decided to consolidate accounting/payroll departments, make sure this is communicated in advance, so everyone knows what to expect across all areas and functionalities so even seemingly obvious details are not overlooked.

Recognize differences in multi-generational workers. In some ways, the construction industry has remained the same over the decades in terms of RFP bidding, vendor approvals for state and federal contracts, and procurement and supply chain partnerships. However, the technology used in this process has advanced significantly; as has the tech in how projects are developed and planned, and the ways equipment can now be tested and operated using automation, AI, VR as well as wireless controls and apps. While many senior and more experienced workers will have learned basic familiarity, the workers newer to the workforce will be able to lead these efforts and this may result in a disruption of integration hierarchies. This will also come into play when it comes to senior workers favoring in-person or phone contact with clients and suppliers over virtual meetings or texts. The first step is to be prepared for what will be obvious differences based on the role technology plays for each generation. Bring departments together for an idea exchange and hold team-building exercises that will showcase the strengths and value of each generation for the integration to be positioned for both mutual respect and joint innovation.

Shared sensibilities and expectations. This is a different issue than bridging multi-generational workers because same-age workers may have totally different ideas on what constitutes appropriate dress code, working hours, client communication, project timelines, budgetary requirements, laborer break schedules and even after-hours availability to co-workers and customers. Cultural integration can have big implications when merging two distinct groups of people who are used to following their own approaches. For construction executives to be successful in this aspect of the M&A, they must first fully examine their own culture and how it is similar or opposite from the newly acquired business. Depending on the size of each workforce, completing a Cultural Assessment Survey may be useful as a way to truly distinguish your blueprint from the other company. Compromise and understanding should always be present as long as established standards are recognized and followed. If in fact there is a stark difference in cultural adjustment, consider adding or enhancing existing morale boosters like employee recognition and rewards programs to make the other “new” ways of doing business a bit easier to accept.

Ultimately, your best chance at workforce integration with your construction company and the one you have acquired is to have an executable plan of your vision for both teams to merge and operate in sync. For an optimal outcome, it is always recommended to try and adopt a shared methods structure in which the best practices from each of the two companies are jointly identified and mutually embraced to become the agreed upon way of doing things. Set aside ego, listen to both workforces, and be open to new ideas. This will greatly increase your chances for a successful M&A transition of integrating two construction company teams into one.

by David Braun
Capstone Strategic is a leading mergers and acquisitions strategic consulting firm that has successfully facilitated over $1 billion of client transactions in over 30 countries across more than 100 industries, including construction, machinery, equipment and technology. David Braun can be reached on LinkedIn.

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