Ensuring Success when Merging Organisations
Dr Amanda Potter was invited to speak on the subject of Executive Coaching at the BioIndustry Association (BIA) and RSA’s Talent Management Seminar. Her presentation focussed on the benefits of coaching, case studies of success and some of the pitfalls clients should be aware of before engaging with a coach. Feedback was really positive with some delegates confirming that they would like to seek out a coaching provision in their organisation. This blog however focuses on some of the key points we have taken from some of the other speakers from the conference, in particular in relation to ensuring a successfully merged organisation.
Creating a Successful Merged Organisation
Co speakers at the conference including Keith Posner (Partner, Positive Perspective) and Geoff Tompsett (Director Human Resources and IT, Biocompatibles International) focussed on how to avoid a conflict and culture clash during organisational change or merger. Some of the key messages that we have taken away from this Seminar include:
What are the critical success factors when merging two companies?
The key success factors identified for mergers include:
• When fusing a company, ensure that positive feelings amongst customers and employees are preserved.
• Having a branding strategy that explicitly transfers the equity from both to merged companies and recognises the importance of the company name.
• Developing a new company culture. “Culture is the commonly held beliefs, attitudes and values that exist in an organisation. Put more simply, culture is “the way we do things around here‟ Furnham and Gunter (1993).
Why is a new culture important?
Three Types of mergers have been identified:
• Assimilation (we win, you lose)
• Business as Usual (we both stay the same)
• Fusion (best of the best).
Research shows that “Fusion” or bringing together the best of the best, with a new culture is the most successful in a merger situation.
What is the key message?
“83% of mergers were unsuccessful in producing any business benefit as regards shareholder value” (KPMG Mergers and Acquisitions: Global Research Report 1999). Most mergers and acquisitions fail to deliver their objectives and in fact destroy value, for example, HP and Compaq, AOL and Time Warner. Many of these mergers were unsuccessful because they did not “fuse” or create a “new culture of success” rather spending more time on the “hygiene factors” of where will I located, be sitting and who will I be sitting next to?
So how can a merged organisation avoid a culture clash and ensure a new fused Successful culture?
Colleagues proposed some positive questions that could be asked of the merging organisation in order to bridge the gap and aid change management:
1. Why do you need to change?
2. What is your current situation?
3. What is the vision of the future?
4. How will change affect the client, management and the team?
5. Who will drive the change?
6. Who will be your resistors?
7. How will your change be communicated?
8. What are the implications for all your people – including you?
9. What are the implications for your organisation?
10. How will you measure the change?
Keith spoke to the delegates explaining that conflicts will always happen and they are hard to prevent. However we can work with and manage conflict, most importantly there is a need to measure performance and follow up. Keith referred to Tom Peters book, In Search of Excellence “What gets measured, gets done!” It is important to review, monitor and check the progress of a change process to check how well the change has been implemented and the benefit that it might have to the company or client. This enables us to build on our successes and to rethink areas that might need developing.
So what do we need to do?
• Set the strategy, establishing the fundamental focus for action that the organisation must take in order to provide significant added value to customers.
• Focus the strategy on the integration and future direction of the combined company; align the acquisition strategies to improve the target companies’ performance.
• Consolidate to remove excess capacity, accelerate market access for the targets (or buyers) products.
• Acquire skills or technologies faster or at lower cost than they can be built.
• Pick winners early in order to help them develop their businesses.
• Create clear leadership roles in order to create a vision and direction for the organisation is essential and mobilising people to accomplish them.
• Displaying role model behaviours “under the microscope”.
• Get right top team and integration team “the Casablanca effect”.
• Ensure a joined-up HR, coherence and consistency.
• Have in place people policies, recruitment, promotion and bonus plans.
• Develop a clear and open communication plan.
Within your strategy ensure you define and build the culture of the business. Make the choice between a single culture, cultural alignment or whether to do nothing. This may depend on the merger vs. acquisition, the relative scale of companies and the acquisition strategy.
A single culture is about keeping one culture and having a “This is the way we do it” environment, which is seen as faster, clearer, and repeatable, which can be seen as a template for success.
The new culture is about co-inventing the future and developing core values together for the new organisation.
Cultural alignment, which is relevant where full integration is not planned. This is to buy-in to overall organisational goals and to reach an agreement on how to do business and work together. By carrying out a cultural alignment it can preserve the intrinsic value of original organisations.
Written by Ruth Sweetman and Dr Amanda Potter.