BEIJING, August 7 -- Hewitt Associates (Hewitt), a global human resources services company, on Friday named leadership assessment, cultural fit, and employee communications as the greatest challenges to the success of merger and acquisition (M&A) deals in the Asia-Pacific, including China.

    The announcement results from a two-month M&A Asia-Pacific Study recently conducted by Hewitt exploring the relationship between human resources (HR) issues and the long-term success of M&A transactions in the region.

    "When it comes to M&As, companies always think about capital, legal aspects, and contracts, and HR-related issues are not considered highly, but integration of HR plans and policies as well as communication of these changes are the key areas causing problems in completing M&A deals successfully," said Christian Doeringer, general manager with Hewitt South China.

    The study shows only 28 per cent of interviewees have formal systems for HR integration.

    However, many companies are starting to understand the need to address HR issues during both due diligence and integration phases of any merger, acquisition or joint venture, he added.

    Starting from March to April, Hewitt carried out the M&A study among 73 large-scale companies in Asia-Pacific region's 11 nations, the same as it did three years ago in the European Union.

    The study shows Asia will continue to see an increase in M&A activity, with 59 per cent of respondents saying they would most likely invest in Asia as opposed to other regions in the near future, and 44 per cent are extremely optimistic about M&A activity in Asia over the next two years.

    According to the study, 34 per cent of interviewees believe leadership assessment is one of the most critical HR factors during M&As. However, almost half said they still only had a rudimentary process for leadership assessment, relying on candidate interviews and review of personnel files.

    "Leadership is important and complicated; they set the tone for a company. If they are not competent, the integration would be a disaster," said Doeringer.

    Cultural fit emerged as the most important and complex HR integration issue during an M&A deal. But 52 per cent of respondents indicated they didn't believe cultural integration would take more than six months, and only 13 per cent said they had formal cultural integration assessment processes in place.

    "The assessment about cultural fit should start at the beginning, last for six months, 12 months and even longer, it should be done in a formal way to make sure integration goes well," said Doeringer.

    (Source: China Daily)