The Best approaches to managing the People and Culture aspects of an Integration

The Best approaches to managing the People and Culture aspects of an Integration

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M&As provide great potential for growth that can’t be achieved as quickly through organic development. In my experience, M&As are always a challenge from the perspective of people and culture, but when organizations pay close attention to the people aspects of a merger or an acquisition, they greatly increase the chances that the deal will achieve its full potential. The biggest challenges and how to resolve them to keep teams productive, engaged and moving forward include:


1. Leadership is not stabilized quickly enough
Settling leadership roles quickly to identify who can then help stabilize the rest of the organization is an important step. It might also provide the opportunity to make changes in the leadership that aren’t necessarily related to the deal. In a context where change is already expected, there are opportunities to look at teams and departments who might be underperforming or could use a shakeup and position the move as part of the broader integration process.


2. Not enough time is invested in building relationships
Investing time in building great relationships with the organization being acquired can pay dividends later on and will ensure the transition is seamless. Too often, leadership teams turn inwards and fail to build relationships with their new colleagues. The best integrations ensure the leadership teams of both organizations come together through the integration process to talk about joint objectives, make plans and start to work together.


3. Culture is not at the top of the agenda
From culture and ways of working perspective, to win ‘hearts and minds’, it is worth spending time figuring out the two cultures of the organizations and to what extent to knit them together. Careful integration of teams is often fundamental for the success of any merger or acquisition and it’s worth considering this from a leadership, purpose, vision, values, behavior, communications and symbols and artifacts perspective. It’s important not to try to resolve every culture difference or issue immediately – it is impossible from a leadership perspective, and situations inevitably evolve and change over time.

4. Communications are not delivered consistently

Often employees see change as unsettling. It is important to communicate effectively and openly with all employees throughout the transition. Specifically, it is important to communicate with employees about the necessity for the change, explain how the change benefits them, and manage the stresses and strains that accompany change.  The communication plan must have at its core how to generate employee buy-in to the plan, identify those populations most impacted by changes, and decide on sponsorship and stakeholder management approaches.

5. Organisation design is not driven by the future state operating model

M&As provide the opportunity to think through the design of the future operating model.  In my experience companies don’t always use this opportunity to design and optimize areas of the business.  As such the organization design activity tends to be driven by achieving cost synergies.  To ensure success it’s worth thinking through the operating model and from this determining the organization structure, value capture plans, processes and supporting systems, and decision rights


6. Not enough time is spent getting Day 1 right
The first big milestone of any merger or acquisition is ‘day one’ and having in place a clear blueprint for how you are going to operate that everyone buys into.  Every detail is important and needs to be communicated and understood appropriately. Getting ‘day one’ right is an important step in creating momentum and credibility in the organization, so it’s not one worth investing time and energy in.


7. There is too much change and it’s not well-sequenced
It’s also important not to do too much and not to try to run before you can walk. Integration is a complex, gradual process and too much change too quickly is one of the most common mistakes I see. The change needs to be paced and sequenced appropriately, balancing the need to achieve synergies with the need to win hearts and minds.


8. The symbols of change are not visible to everyone
Finding symbols of change to introduce new ways of working can help smooth the integration process. To support the implementation and adoption of the integration, it’s important to ensure that the integration is at the forefront of colleagues’ minds. The best way to do this is through a steady cadence of visible acts of change or “symbols of change.”  These will introduce the new way of doing things – for example, sharing success stories, leadership being visible at key customer sites or co-creating a new vision, mission and values together.

9. Talent retention and employee experience is not prioritized
To retain talent from both organizations, it pays to understand the potential reasons that could lead people to leave and the concerns of the team with regard to the acquisition. Engaging through positive change and mapping opportunities for growth and development that the acquisition may bring are helpful steps. This includes identifying early on where development support for example, where coaching or mentoring is needed.  Comparing benefits, compensation packages and union contracts and deciding on policies and practices is important in considering the future employee experience for all employees.


10.  There is a perceived lack of fairness in determining who stays or goes
It’s important to determine early on the new organizational structure and then have a clear process for determining how roles will be selected.  Critical is having a fair and transparent process that selects the ‘best person for the job’ to ensure people don’t feel they have been left out or feel decisions have already been pre-determined. 


11.  Success is not measured from a people perspective
Often the temptation is to only report on the success in achieving the financial value case of the deal – ‘Did we achieve the cost and growth synergies?’.  It’s important to measure success from multiple perspectives including people, for example ‘Did we create an effective and efficient new organization?’ ‘Did we retain key talents and attract new ones to the combined organization?’ and ‘Did we create and maintain a positive culture throughout?’ Having an integration scorecard from multiple perspectives helps in defining success on broader terms than just financial.

Having these 11 elements baked into the people and change workstreams greatly increase the chances that the deal will fulfill its potential.  That’s why, the way people, culture and change are managed can make or break an M&A deal.

Author

Karen Thomas-Bland

Founder and Director – Seven Transformation Ltd.