Beyond the ‘fluffy stuff’: managing the people dimension of a complex integration
Organisational structure and company culture remain some of the most challenging – and most neglected – areas to get right in an integration, merger or separation. This can cause significant organisational strain, not to mention the erosion of the synergy case promised to business leaders and investors.
Yet all too often the people dimension of an integration is subordinated to process and technology harmonisation when it comes to prioritisation of effort and perception of value. In our experience, dismissing this critical aspect as merely the ‘fluffy stuff’ has dire consequences in realising the potential benefits from a complex integration.
Handling the people dimension in any M&A scenario is always fraught with foreseen and unforeseen challenges. Every integration brings its own unique complexities, so there is no out-of-the-box solution that can be applied. But what are the key ingredients to a successful – or at least harmonious – cultural integration?
The question here is not what the (theoretically) perfect post-integration culture should look like, but rather how to put the people dimension at the heart of integration or separation planning. This compels the architects of any transaction programme to make the ‘journey’ as transparent as possible from start to finish. All of the critical success factors of any given business change undertaking will hold true in this scenario, but there are some important additional factors to consider in the context of integration.
From our recent experience of supporting a host of complex integration programmes – from divestments of small-to-medium sized business units through to the merger of giant multinationals – there are three fundamental commonalities to managing the people dimension:
1. Implement a clear communications strategy with consistent messages and media
The view that most stakeholders will form of the integration – and their emotional connection to it – will be shaped largely by communications emanating from leadership.
- Prioritise development of a communications strategy: to drive consistent messaging and alignment among teams, partners, suppliers and customers from the onset.
- Have something to say: too often comms are avoided because there aren’t big messages to share but letting the workforce know that detailed issues are taking time to work through gives reassurance of progress.
- How to communicate is as important as what’s said. The different organisational entities may need the same message delivered via different forums until ways of working have been aligned.
- Use change management techniques effectively: to build wider understanding and acceptance of new companywide principles. Holding open question forums, town halls and circulating answer to questions gives confidence that management are both listening and adapting their approach.
2. Demonstrate an appreciation of the other partner’s values, ways of working and priorities
Even in cases where the integration more closely resembles a takeover than a merger of equals, the different cultural entities need to be carefully managed along the journey.
- From the onset, align on common terminology, governance and simple ways of working. This need not be the ‘lowest common denominator’ approach, but rather the most pragmatic and effective to achieve the aims of the integration.
- Define the culture you want to see emerge between the two organisations; do you want to create a blend of cultures or do you want the acquired company to assimilate the culture of the buyer? Use the integration as an opportunity to define something new and better, rather than hanging on to long-established norms.
- Think about what behavioural norms you want to exhibit which should be driven from senior leaders; structure, accountabilities, inclusiveness and ways of working should be clearly communicated to ensure everyone is aligned.
- To avoid misalignment between partners, active senior stakeholder management is key to building relationships and maintaining engagement. Leaders need to be ‘living and breathing’ the communications, ensuring the key messages filter throughout the business
3. Manage the inevitably difficult exit conversations with skill and empathy
The benefits case for most integrations will centre on realising operating efficiencies. More often than not, this means a streamlining of the combined workforce.
- Plan effectively for these: nothing disengages quicker that a leaked message or some office gossip that isn’t followed up by a formal communique setting out the facts and a clear plan of action.
- Managing exit conversations will require preparation, planning and a personal touch. They should be executed with candour, empathy and integrity – typically by the most skilled HR professionals from either organisation.
- It is key to emphasise that it is the role that is no longer required, rather than the individual, and to support them through the anticipated stages of denial, anger/frustration, acceptance and commitment to moving forward.
- Identify which individuals will be required to stay for a period of time to conduct handovers and work on integration related activities, and offer retention bonuses where applicable.
- Support the remaining teams – getting to a new ‘steady state’ will take time. It is appropriate to ‘mourn’ for a temporary period, after which management focus should fully shift to the remaining (joint) teams that will prosecute the many difficult business changes well beyond ‘Day 1’ of the integration.
As with any difficult business change, the more you plan and more you invest, the more you are likely to gain. This is especially true when managing the unpredictable people dynamics of a complex merger or integration.
It’s no bad thing to plan for the achievement of process and technology benefits from the planned integration. But given that your people genuinely are your business, isn’t it about time to prioritise ‘the fluffy stuff’ too?