12/07/2011
The human dimension of mergers and acquisitions - posted by Hatty
I’ve always found it interesting that when organisations merge, often no stone is left unturned when it comes to raking over the financial and commercial aspects of deal. Often, too, there is attention paid to senior leadership and whether or not they are deemed to meet the needs of the new combined business. (As an aside, I think there is a lot to be looked at in terms of the criteria applied here, but that’s probably another matter for another time!)
Anyway, what often aren’t looked at that closely are the human dimensions of the organisations being brought together. This I find ‘interesting’, as actually what makes the difference between success and failure is the ability of these two groups of people to find common ground and work together to deliver the objectives of the new business. It is estimated that 50%-80% of mergers fail to meet their objectives, financial or otherwise, and there is strong evidence to suggest that failure to understand the human dynamic of the merger plays a big part in this.
One issue in this area is skills and capability (again, assuming the criteria being applied are appropriate). This is relatively straightforward to assess. However, the less tangible aspects of the issue are things like will, intent and cultural compatibility.
I am of the opinion that will and intent are in fact products of an integration that’s gone well, and an integration that’s gone well is one that has involved and included the people that are doing the work day-to-day; one that’s taken account of their needs, their opinions, their misgivings; one that’s provided them with a voice. Share the vision and the purpose of the merger, help people to see, understand and shape their role in the new world and you are far more likely to have a workforce that’s rooting for the success of the new organisation. Ignore this and at best you will lose the cream of your talent – for them there will always be choices – and at worst you will face long-term problems with attrition.
Let’s then look at cultural compatibility. This is not as nebulous as it sounds as there are a number of key indicators that collectively go a long way to defining the culture of an organisation. For example:
· ‘True’ values – the real things that underpin the way the organisation works
· Prevailing leadership style
· Organisation structure/design – e.g. is it hierarchy led or process led?
· Approach to performance management
· Formal and informal communications style
· What’s implicitly and explicitly rewarded in terms of style, actions, behaviour etc
· And so on…
Research can be designed that uncovers these kinds of aspects – both what is documented as ‘the way we do things’ and also what is more below the line in terms of ‘what really happens here’.
So, what can be done with this information? Well, in an ideal world, this kind of due diligence would take place along with the other DD activity – in other words, before the deal has taken place. Here, the two sets of data would be compared and looked at really seriously to determine whether or not there are deal-breakers, or at least what might be in store that could help or hinder a successful integration. However, even if the deal is agreed before these things are looked at, all is not lost. Preceding integration activity with this kind of work paints a vivid picture of the task in hand and the potential pitfalls facing the new combined organisation. You may be faced with all manner of issues and obstacles standing in the way of making the new business work effectively, but if your people a) are committed to it and b) can find common ground and language, the likelihood of success is much stronger.
16/12/2010
It pays to pay it forward: redundancy, employee experience and the social media effect - posted by Hatty
At risk of stating the obvious, these are tough times. As of yesterday’s BBC news, unemployment is up again – due almost exclusively to public sector job losses – and the expected upturn in private sector jobs, hoped to be the ‘engine room’ of the UK’s recovery, hasn’t yet happened.
When larger-scale redundancies happen, the driver is nearly always an urgent or imminent need to cut costs, and this compulsion often extends to the cost of the redundancy process itself – in other words, keep it simple, quick and cheap. However, in such situations, abstemiousness is not always the best policy. Why? I’ll explain, or, at least, attempt to articulate our views.
I’ve been personally involved in redundancy processes a number of times; once as a recipient of it following the merger of my organisation with another (incidentally I was also one of the architects of the process, so a slightly strange situation), and a number of times as an external consultant engaged as part of transition and outplacement support for those affected. The situations I describe involved significant investment on the part of the organisations making the redundancies, but the benefits were far-reaching and manifold.
In one notable example, the company concerned was making around 50 redundancies, but had a very essential business need to ensure that the work of those leaving was smoothly and effectively handed over to those remaining in their jobs. Business continuity and customer experience absolutely depended on the success of the transition. For this to happen, the people leaving the organisation needed to maintain their goodwill – both towards the company making them redundant and the individual people taking over their responsibilities – by remaining in their roles and continuing to perform right up until their last day of employment. They needed to feel that there would be some kind of benefit – in all likelihood an emotional one – in doing so. With all this in mind, this is what happened:
· Communication was excellent; open, honest and frequent. Other than those designing the process, no-one was in the know before anyone else. Discussion and questions were encouraged.
· Financial packages were generous (though not excessive). They included the statutory amount, pay in lieu of notice, bonuses paid in full and in one or two cases a retainer bonus paid when handover would take longer
· Skills training was provided; CV writing, interview skills, communication skills
· Change management workshops were held; helping people to make sense of their situations, normalise emotions and take control of the future
· 121 transition coaching was offered to all those who wanted personalised support
· Local employers were contacted with CV details of those affected and open days/interview slots set up.
Sounds expensive? The detail might surprise you. Training and coaching was sourced largely from the internal skill set, and in many cases this involved people who themselves were impacted but who, through being proactively involved with helping others, were themselves more positive and motivated as a result. Communication and encouraging a positive environment cost nothing, but created a fantastic camaraderie amongst the people impacted. Yes, it required courage and conviction from senior management but for them it was time to stand up and be counted. They didn’t regret it. Liaising with local employers cost nothing but a few phone-calls and this alone generated huge good will.
The net effect of this support package was exactly as intended; to a man, everyone stayed motivated, positive and began giving of themselves to help others – be they people in the same situation or those staying on and taking over the roles.
So what of social media? No employer should underestimate the power of the written word, be it a wall post, a tweet or a blog. The organisation that condones the approach of frogmarching the innocent and uninformed employee off the premises with their worldly belongings in a cardboard box will surely live to regret it. The word will spread like wildfire and cause long-term damage in the form of poor perception from customers, employees, suppliers and just about everyone else. Also, in today’s highly mobile market, you just never know where those who’ve been treated poorly may reappear.
Yes, there is a moral message here that we would always support in that it’s absolutely the ‘right’ thing to look after your people, but there is also a question of practicality, which is whether in today’s world an organisation can afford – in any sense – to do anything else?