SEVEN STEPS TO MERGER EXCELLENCE
by Roberta Hill and Sandy Weiner
The Organization |
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The dustbin of business history is loaded with the victims of ill conceived mergers and acquisitions. But while there are no magical solutions or silver bullets that ensure success, a process that is co-designed from the beginning will make an M&A appear seamless and fluid, with a high degree of positive, engaged energy throughout the organization. Merger Excellence will be achieved.

Mergers and acquisitions often create winners and losers at both the corporate and individual staff levels. One culture unseats another. One employee outweighs another. Power struggles prevail. And while policy and organizational decisions are made from above, the organization sits in limbo, slowly becoming disengaged from its focus. It is a hardly satisfactory state, since engaging across corporate cultures should be a near-fluid process in which a meaningful, value-driven focus and corporate loyalty are created from the onset.

M&As play a significant role in the survival and vitalization of corporations today. They continue to be a major strategy for improving innovation, profitability, market share and stock prices. Often, companies view the merger itself as the strategic end-game, rather than the main event. According to the consulting firm, Booz-Allen, which looked at what they classified as, “The Best Deals” since 1999, only one sixth of the M & As they studied increased shareholder value by 44 percent over industry peers. One sixth lost shareholder value by 44 percent relative to industry peers, and 51.3 percent underperformed industry peers. Today, years later, not much has changed. Even worse, little has been written on how to make the process work. (Viscio, Albert J., John R. Habison, Amy Asin, and Richard P. Vitaro, “Post-Merger Integration, What Makes Mergers Work?” Strategy + Business, 4th Quarter, 1999. Reprint No. 99404.)

Our experience and nearly all industry research confirm that when mergers and acquisitions do work, the integration process seems to be holistic, fluid and well executed. In this article, we will highlight the five critical issues (Figure 1) that hinder M & A success and outline our 1-Focus 7-Step Model (Figure 4) to manage these issues. How the corporate leadership focuses its energy, as well as the timing and vision that drive employee engagement, impacts post-merger effectiveness. The single most important factor for post-merger success and long-term sustainability is the involvement and integration of employees from the start to create a common New Identity around a Shared Vision.

Look at any successful change intervention and you will always find a discussion around creating identities and a common vision for the organization. However, these pieces of the process are often not handled as clearly and collaboratively as is needed for merger excellence to occur. In this article, we have highlighted the terms Culture of Engagement, New Identity and Shared Vision to stress that these are the components of the integration plan that require diligence and focus. While in theory the process should be led by the “C”-Level executive team, it is usually assigned to the next level down – which we refer to as the project implementation team. However, it is important to emphasize the requirement for the on-going and continued involvement of the “C”-Level executive role throughout the integration process.

Our 1-Focus 7-Step process has been adapted to address the specific and unique concerns of mergers and acquisitions. Training on specialized activities and various large scale interventions is offered across all levels and functions at various stages. We noticed a competency gap and designed unique identity simulations and team workshops to develop integration process skills at the front end of the process. Beginning at the pre-merger stage, the 1-Focus 7-Step process drives the integration from a Top Down – Bottom Up approach in an organic, collaborative process. A New Identity out of a Shared Vision is created. (Table 1)

Table 1: The Seven Steps of Merger Excellence

Pre Merger Cultural DNA Due Diligence: Collaborating on an integration strategy Culture of Engagement framework
Step I Involvement and Engagement: Dreaming the dream of the future New Identity formulation
Step II Shared Vision: Expanding the vision from mine to ours and giving it life
Step III Analysis: Evaluation of current reality in line with strategy
Step IV Action: Cascading the process by creating ownership in the process
Step V Implementation: Building and creating momentum
Step VI Maintenance: Focusing direction and energy of corporate New Identity
Step VII Renewal: Re-evaluation and re-creation
REPEAT Step I Integrated Organization: Dreaming the dream of the new future together

Lessons learned: Communications

The greatest loss that most M & A’s suffer is not due to a poor match, but rather to poor post-merger implementation. This results in staff disengagement, and possibly, even disintegration of the company.

Most mergers focus on financial and business systems integration, which is operationally essential and key to creating a basis for success. At the outset, little attention is paid to the human factors, and communication is limited to “a need to know basis.” By the time the “soft” factors are addressed and people are involved on a broader scale, many employees have either left the organization or become emotionally disengaged.

Employee disengagement is a key sign of post-merger dysfunction. The symptoms of disengagement – alienation or loss of identity with a company/organization/group/team — result in the following outcomes:

  • Day-to-day decision-making grinds to a halt as overall decisions from the top are awaited.
  • People don’t know where they are going to end up or how they will contribute.
  • Employees feel that their security and future are threatened.
  • They no longer feel a vital part of the company.
  • Worker morale plummets.
  • Battle lines are drawn. An “us vs. them” stance emerges where cultural, corporate, country and continental differences are magnified and feared.
  • Personal value is lost or at least undermined. The dominant question in most peoples’ minds is: Where do I fit?

An on-going, cascading communications strategy developed in the pre-merger phase must be rolled out from day one. The more time that passes between the announcement of the integration strategy and the creation of a Culture of Engagement, the more challenging the task of regaining footing becomes.

The emotional rollercoaster:Timing

This initial crisis, disengagement, soon leads to an even deeper crisis, which psychologists refer to as the survival syndrome. In the resulting uncertainty, top performers are the first out the door. When employees become disengaged, it does not take long for customers and distributors to lose brand loyalty and begin to look elsewhere to buy products. In this environment, focus and energy are spent fire-fighting, rather than building a forward momentum.

Establishing engagement becomes more and more difficult as time passes. Creating a new Culture of Engagement is essential within the first thirty days of announcing the merger. Starting this process at the pre-merger stage and staying with it through to integration does more than recreate a New Identity. It increases employees’ sense of belonging, motivation and engagement. These are the main drivers and are essential to maintaining the energy and drive to successfully move through the stress and pressures of the duality stage. (See Figure 2)

Figure 2: The Emotional Change Experience

After around six to nine months, energy and emotions are high, as a new focus begins to emerge. However, even with clear direction, there remains an internal emotional conflict as previous processes and the old identity give way to new systems. Exhaustion and frustration begin to set in regardless of how well the integration implementation process is executed. A drop in productivity and engagement will be experienced. It is important to remember that this is normal and short lived. Unfortunately, too many C–Level executive teams begin to “give up” and look for other “quick solutions” instead of staying the course.

From a culture of engagement to a new identity

Historically, little time is spent at the pre-merger stage to define the right strategy for integrating the existing cultures. Will a policy of separation, assimilation, blending or the creation of a new culture be incorporated? (Figure 3) In most situations, employees resist assimilation and the “acquiring” organization finds itself imposing its values and practices. Another strategy that may be adopted is to “take the best of both cultures and create a new one,” without sorting out what is really aligned with the company objectives. The strongest and most engrained elements of each culture, whether good or not, fight to survive. A disintegrated culture emerges that is not aligned with the strategy, synergies are not achieved, and morale continues to fall.

Figure 3

The co-creation and collaborative development of the New Identity through employee involvement creates loyalty and commitment that enable the realization of a shared future. Instead of focusing on a sense of loss caused by the changes, a sense of belonging and community is developed. At the same time, cross-organizational networks and project teams are quickly established. From this emerges a new, vibrant corporate culture, absorbing what is consistent and enabling the new direction and organization to emerge.

M & A uniqueness

M & A’s differ from “normal” change processes in that their very nature requires that a new corporate identity and a methodology for cultural integration be established for the two organizations. The process begins with a state of duality at the beginning. Timing, clarity from the top and connection to the entire organization are essential for a fluid, successful integration process. While these issues can be factors in any organizational change initiative, they are key integration success factors and co-dependent in M&As. Consequently, any methodology or process must address these factors simultaneously from the start of the change process.

The Shared Vision is co-created by the C-Level executive team and incorporates individual perspectives to create a holistic vision. It is then further developed by the implementation team, establishing a truly SHARED Vision. From here, the new organization continues to develop around its core passion and shared perception of the future. In order to rapidly involve the energy and focus of the whole system, a bottom up process involving storytelling around “Organizational Excellence” and the New Identity takes place.

How to pave the road to merger excellence (while avoiding the potholes)

Merged companies face dynamic cultural challenges. They need to listen to customers and reconnect with their employees through a Culture of Engagement. The good news is that when done correctly, the process appears fluid and seamless with minimal stress.

At each stage of the merger or acquisition, clear guidelines and process are required:

  1. A pre-merger process that targets companies that are a good cultural match, have compatible values and are in line with achieving corporate strategy. This begins the integration through rigorous, yet flexible collaborative planning and trust-building. It enables the two companies to move towards a Culture of Engagement, involving stakeholders from both companies at the start of the merger.

  2. A merger process for creating a Shared Vision that can be owned at each level of the organization and readily expanded into an integrated strategy. It is formulated to support and define where the new company is going and communicate how the formation of this new company fits the overall vision. This sets the groundwork for a NEW IDENTITY and a clear corporate brand.

  3. A post-merger process in which time and people are the essence of the collaborative process. Communication is open and transparent. Integration teams are comprised of members from both organizations across stakeholder groups. The process will reinforce core competencies, build a forward momentum and implement a flexible, collaborative, methodology for consolidation. Identification with the New Identity becomes realty.

A process for top down, bottom-up involvement

Our work with M & A’s has shown that the pre-merger integration activities (timing, communications and shared vision) are most critical, but often ignored. In general, companies focus purely on the financial side of the transaction. We feel that it is precisely because of this approach (merger by the numbers and delayed people involvement) that 60 to 80 percent of mergers fail.

The 1-Focus Seven Step Model (Figure 4) moves the organization from the top of the C-Level executive team and the project integration team down and outwards through the organization. Concurrently, it engages all employees (from the bottom up) in the sharing of stories, developing common ground and commitment to organizational excellence. Roles and responsibilities are clear at the top and throughout the organization.

This results in an alignment with and a focus on the Shared Vision, corporate mission and values. It brings the diverse group of stakeholders responsible for the integration, as well as internal and external stakeholders and key players (across the breadth and depth of both organizations), together in large-scale integration and learning meetings in a timely manner.

Figure 4: The 7 x 7 dynamic Model to Create Organizational Change

Together, implementation strategies are developed with a commitment to carrying them out. The commitment leverages cross-organizational knowledge, the most effective community-building techniques and the reforming of functional internal networks around a shared purpose.

In M & As, the initial push must come from the top and be continually reinforced by the C-Level executive team and then the project integration team. To enable momentum, all members must be on the same page. At the onset of the process (pre-merger or very early in Step 1), a clear and serious look at where each member of the C-Level executive team wants to be (individual visions) must be brought to the table. Only from this process can an aggregate Shared Vision be truly developed.

During all change processes, we recommend and encourage various collaborative large-scale interventions that get “the whole system into the room.” This step is critical early on for M & As. It must follow the announcement as soon as possible in order to focus the organization’s energy toward a shared purpose, rather than drifting apart. Cross-stakeholder meetings with a minimum of three across and three down are essential. The core or inner planning group (usually the project implementation team) is most effective when formed and meets regularly as a whole group at the pre-merger stage and is involved in the implementation of the merger.

It is the members of this new community that drive the process outward into the organization in a positive way. At the same time, they create a knowledge center and a healthy, communicative, competitive environment with a purpose (achieving the shared vision). They also enable a positive customer interface and brand loyalty to ensure shareholder value.

The use of large-scale collaborative change methods, if applied effectively, can speed up and raise the effectiveness of the merger process. These methods produce an environment where new connections and strong emotional bonds between participants are formed within the first few hours of these face-to-face meetings. It enables healthy relationships, communications and community-building between participants that take years to develop under more traditional methods of meeting. Actions are also aligned with the strategy. The members of this new community are better able to drive the process outward into the organization in a positive, collaborative way.

A collaborative approach quickly establishes a corporate New Identity that supports the formation of an integrated corporate culture and core strategy. It engages internal and external stakeholders in a larger and wider process of re-engagement by re-creating corporate identity and roles. A “tipping point” of commitment rapidly unites the organization before disengagement and battle lines can be drawn. Those “hate to lose” employees are engaged in the creation and implementation of the change process. The whole of the organization is focused and integrating a Shared Vision and corporate sustainability.

A collaborative process is continuously co-designed with the corporate leadership and appropriate stakeholders to align to the needs and timing of the organization. Each organization has its own rhythm and must develop its own Shared Vision, mission, values, supporting strategy and processes – Its own Corporate Identity. It is the role of the consultants and coaches to follow this rhythm and hold the space for the organization’s process to emerge through appropriate change management, process design and facilitation, questions and coaching. There are no magical solutions or silver bullets. If the process is continuously co-designed, it will appear seamless and fluid with a high degree of positive, engaged energy throughout the organization. Merger Excellence will be achieved.

The Authors:

Roberta Hill

Roberta Hill is a partner and heads up the Inner Spirit Leadership Program at 1-Focus International. She works as a professional leadership consultant and coach to both the public and private sectors on issues surrounding change and transition.



Sandy Weiner

Sandy Weiner is co-founder of 1-Focus International, an international management and organizational consultancy. She has extensive experience in facilitation, coaching, and management, and has held senior positions in human resources and sales & marketing.



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