AI-enabled employee integration strategies
October 2024 | TALKINGPOINT | LABOUR & EMPLOYMENT
Financier Worldwide Magazine
October 2024 Issue
FW discusses AI-enabled employee integration strategies with Javier Rodriguez Gonzalez, Chau Woeste, Devang Bhandari, Anthony Conforti and Matt Bishop at KPMG.
FW: To what extent have you seen an increased adoption of artificial intelligence (AI) by companies across the board? Is there a rising demand to explore AI technology for the employee integration process?
Rodriguez: Right across the deal cycle, we are seeing dealmakers and service providers adopt artificial intelligence (AI)-based analysis to help identify integration challenges. The reality is that dealmakers are under great pressure to move quickly, and AI can help reduce their time analysing data. They are also under pressure to unlock value, and AI can help identify value creation opportunities and risks much earlier in the deal process. At this stage, around a quarter of all deals being made today have been influenced in some way by employee integration insights generated by AI. It is worth differentiating between dropping AI on top of your existing employee integration processes and using AI to create entirely new employee integration insights and processes. While dealmakers have been quick to pilot the former with tools like CoPilot, adoption of the latter is where dealmakers have the potential to uncover the greatest value and competitive advantage.
“Responsible and trusted AI will be a key challenge for dealmakers as they seek to use AI in their employee integration strategies.”
FW: How can AI help companies to optimise employee integration strategies? Where can it boost speed, efficiency and accuracy?
Woeste: Increasingly, dealmakers are using AI to crunch through huge amounts of data to uncover important insights quickly and efficiently. For example, a firm recently helped a large technology company use AI-based sentiment analysis to do an outside-in view of how its culture matched up with an acquisition target as part of due diligence. The target and the buyer were vastly different, and the target was much more positive on a number of factors in terms of its working environment when it came to employees’ careers, their ability to make decisions, their agility and speed. The findings were presented to the deal team on a Monday, then to the chief product officer on Tuesday, and on Wednesday to the executive committee. By Thursday, the acquirer was busy redesigning its employee integration strategy. AI enabled the buyer to make faster decisions and speed up the employee integration process at the same time.
“Understanding the reliability of data and identifying any biases within those is key. Companies need to start with a strong data foundation.”
FW: What types of AI-powered tools can be used to improve the employee integration experience?
Rodriguez: From a deal perspective, many companies are using a wide range of tools to enhance employee integration across the deal lifecycle. Pre-deal, specialists can help companies use AI to assess the cultural fit of the two organisations, their people and their work patterns to accurately identify and address potential conflicts that may arise post-deal. In the pre-integration phase, dealmakers can be helped to use AI tools to assess whether individual employees are likely to thrive in the organisation based on culture and value elements. And then post-deal, we are seeing significant uptake in tools that can help companies spot potential employee integration failures early, allowing action to be taken before an employee leaves the organisation. Of course, lots of organisations are also implementing point solutions like chatbots and using AI to turbocharge their existing processes. But in my view, some of the greatest value is coming to those that use AI tools to rethink their entire employee integration process and come at problems in entirely different ways.
“While uptake of AI in dealmaking has been significant, there are a number of challenges slowing its adoption on the employee integration side.”
FW: What kinds of challenges typically arise when adding AI into new or existing systems for employee integration? How can companies overcome such obstacles?
Bhandari: While uptake of AI in dealmaking has been significant, there are a number of challenges slowing its adoption on the employee integration side. Data is a big one. AI can help you sift through a massive amount of unstructured data. But it is not very good at knowing if that data is reliable or not. Particularly in relation to employee integration, there are concerns that historical data may contain or reinforce biases that could influence the integration’s success. Many dealmakers are also concerned about the lack of auditability in the way that AI analyses data and influences decisions. And all of this leads to challenges with trust. AI is exciting and everyone wants to see quick results. But one of the best ways to get value from AI in the employee integration process is to ensure you have the right data foundation and governance to inspire trust and confidence in decision making.
FW: Since AI systems process and analyse increasing amounts of personal employee data, how important is it to maintain data privacy standards that comply with regulations? What are the key components and lines of communication required to operate an effective AI governance framework?
Bishop: Data privacy is always a top concern, and companies have got to have the right controls and monitoring in place to help ensure that the organisation is aligned around the principles, policies and procedures for protecting data. AI can make that more complicated, but not entirely different. Data privacy is one thing. Data ethics is something else entirely. We know that historical data reflects and reinforces biases. And, left unchecked, this can lead to unethical outcomes and decisions. Responsible and trusted AI will be a key challenge for dealmakers as they seek to use AI in their employee integration strategies. The problem is that terms like ‘responsible AI’ mean different things to different players. At this point, deal teams should be talking to their service providers to ensure they are aligned on a set of shared principles about what responsible AI means and how it is activated.
“Increasingly, dealmakers are using AI to crunch through huge amounts of data to uncover important insights quickly and efficiently.”
FW: What essential advice would you offer to companies that are considering AI to improve their employee integration strategies?
Conforti: Understanding the reliability of data and identifying any biases within those is key. Companies need to start with a strong data foundation. What makes the application of AI in the employee integration process so interesting is how rapidly it is evolving. It is not just seeing new technologies emerge, it is also seeing new processes, approaches and ideas. And that makes the field very exciting yet also very challenging to stay on top of – particularly for smaller deal teams. For the time being, therefore, my advice to companies would be to leverage the experience, knowledge and insight of advisers, consultants and service providers to help ensure they have the tools and capabilities they need to stay competitive. The last thing a company wants to do is experiment with AI at deal speed and in a deal scenario.
“Around a quarter of all deals being made today have been influenced in some way by employee integration insights generated by AI.”
FW: Looking ahead, what are your predictions for the application of AI in employee integration over the coming years? What innovations are on the horizon?
Bishop: Most companies have moved from experimentation to application. For the next several years, I suspect the focus will be on applying AI to all the different steps that are already in the employee integration process. That should make integrations happen faster. And it should make the process more efficient. When it will get really exciting is when people realise that AI can unlock completely different ways of enhancing employee integration – from the early stages of the deal, where AI can help assess a target’s cultural fit, through to post-deal integration strategies that use AI tools to help ensure key employees are retained and thriving. These are tools and capabilities that simply were not possible before AI. Looking ahead, I would say the real innovation will be less about how AI speeds up processes and more about how it can unlock potentially untapped value, for dealmakers and for investors.
Javier Rodriguez Gonzalez is a senior partner specialised in the development and implementation of value creation strategies both in deal and non-deal situations, covering a wide range of industries considering services such as diligences, mergers, carve outs, turnarounds and business transformations across American, African, European and Asian countries. He can be contacted on +34 618 89 21 94 or by email: jrodriguezgonzalez@kpmg.com.
Chau Woeste leads the ‘People in Deals’ practice in the UK. She has over 20 years of experience from industry and consulting, with a track record in advising senior clients on all aspects relating to people and culture in large, complex integrations, separations and joint ventures. She can be contacted on +44 (0)786 767 3946 or by email: chau.woeste@kpmg.co.uk.
Devang Bhandari leads the deal advisory & strategy practice at KPMG Global Services, which provides delivery capability across the deal lifecycle as well as strategy propositions to member firms globally. In addition to this, he is currently the global chief operations officer for KPMG’s ESG advisory practice and is focused on working with clients on their ESG & climate strategy and transformation. He can be contacted on +91 124 669 1100 or by email: devangbhandari@kpmg.com.
Anthony Conforti has over 17 years of consulting experience and has advised clients on a broad range of domestic and international human capital issues. He served as the end-to-end human capital leader for many large-scale global M&A transactions, representing both private equity investors and corporate clients. His extensive experience in workforce transformation, compensation, benefits and other traditional HR subjects enables clients to accelerate both operational and economic impacts through employee integration and transition, workforce planning, process improvement and business simplification. He can be contacted on +1 (917) 438 3641 or by email: anthonyconforti@kpmg.com.
Matt Bishop is a partner at KPMG in the US, serving as the chief technology officer for the advisory function. He has more than three decades of experience in client-facing and internal technology and leadership roles, helping enterprises address a wide range of business challenges related to IT and broader technology enablement. He can be contacted on +1 (214) 840 2749 or by email: mbishop@kpmg.com.
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