Paul Kau Member Name
Director/Senior Environmental Scientist
Anne Faeth-Boyd Member Name
Associate and Senior Consultant
Combining the environmental, health and safety (EHS) risks and cultures of two organisations following a merger can seem daunting. When you are also dealing with the regular day-to-day requirements of running your business, the challenge could even feel overwhelming. Yes, it is going to be hard work, but you can succeed if you follow the principle of ‘plan and prioritise prior to proceeding’.
Plan out your ‘play’
Between due diligence and Day 1 is the pre-closure phase. Depending on the circumstances, this phase can last anywhere from a day to more than a year but is usually a couple of months. This is when EHS planning gets into high gear and you formulate your strategy for a successful integration.
As you continue to learn about the acquired organisation, continually assess your due diligence assumptions. Are they still valid? Transition all the actions and activities identified from the due diligence into a customised ‘integration playbook’. The playbook needs to provide guidance and tools for each integration activity, including the timing, owner, Key Performance Indicators (KPIs)and review milestones.
Assign a dedicated integration leader and team members responsible for deploying the playbook. In parallel, the acquired company should assign EHS coordinators at each location to support, deploy and provide guidance and feedback on the effectiveness of the integration plan and rollout.
Plan the Day 1 activities and communications. Work with organisational leadership to emphasise the importance of EHS as a core company value. Communicate EHS policy on Day 1. Structure and responsibility, hazard communication and escalations, and emergency response protocols should also be introduced early.
Plan orientation sessions for the EHS team to introduce the company’s integration playbook, roles and responsibilities, budgets, audits, assessments, augmented support needs, management system programs, tools, training, corrective action closure processes, integration milestones, metrics and management reviews. Such sessions to standardise operations will also provide opportunities to critically assess and potentially improve current practices. Stress that everyone has a role to play in the organisation’s EHS culture. Assign EHS integration objectives and targets into the performance goals of impacted personnel, although such targets will need review throughout the integration period and planning for voluntary and involuntary staff departures be developed.
Conduct and learn from audits and assessments
EHS compliance audits and (Phase I/II) environmental site assessments (ESA) should be completed within the first month after acquisition, if not completed pre-acquisition. Consider the audits a learning exercise. The audits will provide insights into your long-term compliance obligations.
You might be working in unfamiliar geographical regions or with new legislative requirements, so it is best to use third-party resources with local legislative knowledge. As the name of the company’s legal entity may have changed, the audits should also confirm whether any permits need to be updated, transferred, re-issued, or closed. Take advantage of any governmental voluntary self-disclosure processes (e.g. the US EPA’s eDisclosure).
Within the first 60 days, plan hazard assessments for higher risk activities based on learnings from the compliance audits, site tours and review of injury records. Coordinate risk management assessments (with your insurance provider) to confirm that building protection systems, life safety systems and business continuity programs are aligned with company policy and applicable local codes. Assess if any changes will be needed to bridge and continue workers’ compensation.
Update, integrate, and optimise resources
The activities outlined above will provide an organisational and site hazard and risk baseline for the acquired assets and will also confirm budgeting estimates. It’s likely that new learnings will be found that were not anticipated in the due diligence. Once the audits and assessments have been completed, update your playbook, share your learnings, and reemphasise your EHS priority initiatives.
You are likely to find yourself on a tight deadline to close identified compliance items, mitigate high-risk hazards or implement critical corrective actions. To balance resourcing needs against the volume of actions, you will need to fully optimise all your available resources. Could corrective actions be closed out using the same organisation that identified the findings? This would leverage the insight they gained in initial assessments. Could short-term temporary resources fill in any gaps while long-term plans are being formulated and deployed?
Communicate, track, and have an exit plan
Implementing the company standards, protocols and tools will merge the two organisational cultures. The elements of the management system program must be introduced early and combined with training and leadership support. Effective, regular communication is essential. Tailor your communication to your stakeholders (e.g. impacted employees, integration teams, leadership, governmental authorities, etc.).
Hold regular management reviews during due diligence, pre-closure planning, audit, assessment, and deployment phases, with established timelines and metrics.
Finally, define the integration exit strategy. Develop metrics and processes that need to be achieved for a successful integration – for example, achieving a predetermined audit score based on compliance and company standards, confirming that a stable well-running EHS resource structure has been implemented, and verifying that the practices of your newly merged organisation are fully embedded in the EHS management system and performing well against metrics and operating plans.
The EHS aspects of an integration are demanding but also rewarding. Both parties are dealing with unknowns, from compliance to company standards to resourcing needs. With a detailed playbook and clear goals, your merger is poised for a smoother path to success.