SAVE | EMAIL | PRINT | MOST POPULAR |  RSS | | REPRINT
|
Training How-to: Address the Human Side of M&As
April 07, 2009
Due diligence in a merger often does not effectively analyze the more dynamic, and equally important, concepts of people and organizational design that enable a business to properly function.
By Sharon Birkman Fink
Mergers and acquisitions can produce growth, cost savings, and competitive advantage—when they succeed. But research shows that up to three-quarters of deals do not deliver the expected financial results and operating synergies. One reason is that conventional merger and acquisition due diligence is often too narrow, looking primarily at legal, financial, and tax considerations. Such risk analysis does not sufficiently address the more dynamic, and equally important, concepts of people and organizational design that enable a business to properly function. Without addressing the human side of the M&A equation, there will be unforeseen expenses; higher operating costs; key staff losses; deterioration of service; loss of market share; and, in the worst cases, failure.
For an acquisition to work, management of the new company must retain the people who made the acquired entity attractive to begin with, keep them performing at peak levels, and ensure they are not at cross purposes with the dominant culture of the combined entity. Here are five tips for accomplishing this vital task.
1. Define parameters: Before the acquisition closes, make sure all aspects of "performance" are defined and measurable by metrics that can be easily tracked, reported upon, and rewarded. If the performance can be measured, then a company can avoid crippling corporate politics if people from either of the combined companies think the other side is being favored. The playing field needs to be level, with the yard lines clearly visible for all to see.
2. Make an initial assessment: Within the first 30 days of closing the acquisition, assess the combined personnel. Does the new company have the right people, doing the right things, in the right places? If not, it should make the cuts early (within the first 90 days) and not dribble them out over an extended period of time. There is nothing more debilitating than death by a thousand cuts to an acquired workforce. A prompt reduction in force prevents people in redundant positions from creating unnecessary bureaucratic processes and engaging in counterproductive politics to preserve their positions, thus slowing any performance improvement the combined companies otherwise could achieve.
3. Establish communication: Effective use of personality assessment testing can help the company understand the way its people prefer to communicate and interact, especially in team dynamics. This will facilitate teambuilding exercises based on these assessments. Such a cost-effective, low-impact process will improve the internal trust and communication necessary to high performance.
4. Set reasonable goals: It is important to have some early successes in order to give the new organization the sense it can operate in an achievement culture. Company-wide personality assessments can show management how their important team members react to these initial goals, thus accurately predicting future response to greater challenges.
5. Be flexible: A company must be open to new ideas an acquired entity may bring to the table, and show a willingness to listen. That often means integrating the best of both cultures and promoting those people who are not afraid of change. A reliable and valid personality assessment can identify the best candidates for retention and promotion. With the right insights and information from testing, the newly formed company will be in the best position to retain—and gain.
For more on personality assessments, read "Personalities & Performance" at www.trainingmag.com/personalities.
Sharon Birkman Fink is president and CEO of Birkman International, Inc., which provides an assessment tool that accurately measures internal needs, behaviors, occupational preferences, and organizational strengths. She can be reached at 713.623.2760 or sfink@birkman.com. For information on the Birkman Method, visit www.birkman.com or call 800.215.2760.
|
SAVE | EMAIL | PRINT | MOST POPULAR | RSS |
|
|
| Back to Training Index |
|
|
