HR intricacies in Mergers & Acquisitions of hospitals

Ankush Gupta

Mergers and Acquisitions are the new paradigms of hospital industry. The acquisition of Delhi-based Escorts Heart Institute and Research Centre by Fortis Group of Hospitals will mark the beginning of an era of inorganic growth in hospital sector. This acquisition may encourage smaller players to acquire nursing homes, thus giving them a corporate management leading to an accelerated evolution of Hub & Spoke model.

Merger and Acquisitions cannot be successful if the employees from both the organisations become obstacles to the integration process as they have their apprehensions about the organisation culture, leadership and management style. The biggest HR challenge in merged entity is to facilitate people integration and transform the diversified skills and knowledge into transfer of learning within the member organisations. Key talents in both the organisations may feel insecure as to:

Organisation policy on right sizing the merged organisation

HR departments of both the organisation should play a vital role in convincing the employees that acquisition has been done to leverage the competencies and knowledge of employees for accelerated growth and growth cannot take place without the most important capital i.e. human asset. It becomes paramount for the HR department to take employees into confidence and defuse the employee’s hostility to the merger process. HR should foster sense of job security by giving clarity on the right sizing policy of the merged entity.

Organisational hierarchy in the merged organisation

Organisational hierarchy will pose a challenge to the HR department of the parent organisation as the employees of both the organisation would like to understand their control and command over the functions. Reporting relations and span of control will lead to discomfort in the merged organisation and may lead to loss of key talent.

Job responsibility in the merged organisation

Employees will like to see a unified job responsibility charter implemented in the merged organisation. Redesign of job roles is the biggest exercise that will involve detailed job analysis and rewriting the job roles for all the job profiles.

Disparity or ambiguity in the job responsibility will not add only add to chaos and confusion, but will also foster frustration and demotivation amongst the employee.

Terms and conditions of employment

If a powerful and cash rich hospital/company acquires a hospital, it is obvious that employees expectations in the acquired hospital is enhancement in their salary. Management should strike a balance between the new job roles and enhancement in the salary.

Benefits apart from the salary in the merged entity

As per the legislative compliances applicable to the hospitals, employees also know that social security benefits will remain the same. They are more worried about the benefits which vary from hospital to hospital like the leave policy, food subsidy, uniform policy and medical benefits. Merged entity should work towards standardisation of these benefits across all the units. It may be a double edged sword as the benefits in the acquired organisation may be better than the parent hospital and in the process of unification of these benefits Parent hospital may have financial implication in the existing business.

Performance Management System and carrier progression in the merged organisation

Sooner or later, attrition rate in the merged entity may go up because of the huge expectations from the employees of the merged organisation. It is advisable to have a unified performance management system and carrier progression plan focused on selective retention because it is not possible for any organisation to meet the expectation of all the employees. It is also possible that the parent hospital ensures that all these questions can be answered by implementing the concept of strategic business unit where in the parent hospital and the acquired hospital have different set of resources, policies and protocols.

From the organisational point of view, both the parent hospital and the acquired hospital will want more support from the employees in terms of time for integrating the policy and should respect the emotions and sentiments of the employees. Practicing and preaching the concept of “One Family” in both the organisation will reduce resistance to change and will open minds to accept the merged entity.

The writer is Senior Manager HR & Administration, Dr L H Hiranandani Hospital, Mumbai.

Email: gupta_ankush11@ hotmail.com