Beyond the fluffy stuff – Putting people at the heart of complex integration

Organisational structure and company culture remain some of the most challenging yet 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 when it comes to prioritisation of effort and perception of value, the people dimension of an integration is subordinated to process and technology harmonisation. Dismissing this critical aspect as merely the ‘fluffy stuff’ has dire consequences in realising the potential benefits from a complex integration.

From our 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 putting the people dimension at the heart of integration or separation planning.

1. Implement a clear communications strategy with consistent messages and media

The stakeholders’ view of the integration and their emotional connection to it will be shaped largely by communications emanating from leadership. So leaders must:

  • 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.
  • Use change management techniques effectively: to build wider understanding and acceptance of new companywide principles. Holding open question forums, town halls and circulating answers to questions gives confidence that management are both listening and adapting their approach.

How to communicate is as important as what is said. The different organisational entities may need the same message delivered via different forums until ways of working have been aligned.

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 way 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 and ensure these are 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 than 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. During this, 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.

Your people are your business

As with any difficult business change, the more you plan and the 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?

Gemma Sarjeant | Principal

Gemma leads our M&A offering at Gate One. Most recently she has worked with a FTSE 10 company providing advice and support on post-deal implementation.