Mergers and acquisitions (M&A) are important strategies that companies use to accelerate growth, improve efficiency or penetrate new markets. In order to improve the odds of achieving the desired goals, their due diligence usually involves exhaustive analyses of financials, current and future markets, products and services, staffing levels and more. But when the analysis stops there, it’s incomplete. After all the numbers are crunched and all the projections are tested, it will be people who ultimately make these blended organizations succeed. And companies that fail to incorporate an analysis of that asset – beyond mere head counts — run the risk of not only delaying progress toward their goal, but potentially ensuring failure. In fact, the results of an industry survey recently published in the Washington Post reveal that up to 70% of mergers and acquisitions that fail are because the companies don’t pay enough attention to the challenges of integrating their people. However, there are steps you can take to reduce the chances of culture clash and increase your odds of success.
Define the Gaps—Before committing to a merger or acquisition, take a look at the people that you will be combining — from the top-down. To open the channels of communication, start by having the leaders of both organizations complete the PI. This will provide the insight into every executive’s behavioral strengths and communication styles, as well as how the senior people have influenced each corporate culture. Then drill down deeper, and look at the PIs of mid-level managers and their teams. If the differences between the two cultures are glaring, it may be so difficult to bridge the gaps that you should walk away.
If the differences between organizations are more manageable, then you will need to shape the culture of your new company. Determine what values, talents and characteristics of each business you want to retain. Begin structuring positions to reflect the culture you are building.
Who should lead?—An acquisition presents an opportunity to start with a blank slate, and re-examine all major roles—from the CEO, CFO and CIO to key marketing and sales executives. Be especially careful about who ultimately takes on the role of chief executive. Choose a leader who can harness the energy of the people who embody your “emerging” culture and values.
How you will fill these positions—and whether you will work with existing leaders or recruit from the outside—will depend on your new goals. For instance, if your company is small and private, it may have gained early traction through a “scientific professional” CEO who excelled at technical innovation. But if the goal of your acquisition is to speed market penetration, you will want a chief executive whose strength lies in motivating rainmakers. A CEO with a persuasive management/sales or authoritative management/sales pattern may be best.
Communicate—An extremely important element of any merger or acquisition is communication. Acquisitions invariably cause more work for employees during the short-term— adding to anxieties they may already have about new people and unfamiliar “rules of the road”. Shore up employees’ motivation, and ease their stress, through individualized communications. Tailor your actions and your words to individuals’ PI patterns. Your high B employees may appreciate your dropping into their offices periodically to see how they’re doing. More formal, high D employees may want written job goals and frequent check-ins to make sure they are performing on target. Put leaders and managers in place who can not only communicate individually, but help employees with differing PI profiles find common ground.
“Rehire” your employees—Map out the departments and jobs that your company will need to achieve new objectives, and determine which employees from both organizations are best suited to fill them. Use the PRO to determine the behavioral characteristics required for success in each position, and match employees’ PIs to them. The PI gives you additional insight into concerns you may want to discuss with employees before making new placement decisions.
This is also an opportunity for you to engage the hearts and minds of your current and new people by involving them in the “rehiring” process. Invite them to tell you about past work experiences that they have enjoyed, and would like to leverage in your restructured company. You may be able to tap into their hidden talents—and reenergize them toward greater productivity—by taking a renewed look at their PIs along with their backgrounds. Sitting down with employees to review their PIs in the context of the new organization may also help diffuse anxieties, and increase buy-in, if you need to reassign them.
A successful merger or acquisition does not happen by chance. It takes expert, sensitive and committed leadership—and devoted use of the PI. Build on the insights of the Predictive Index to develop the leadership team who can integrate the cultures to form a cohesive, strong, blended organization…and you’ll be part of the 30% success rate!
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To learn how Predictive Index Assessments can help with your next merger or acquisition, contact Predictive Results at PredictiveResults.com or 904-269-2299