A new era for change management during mergers & acquisitions

For years, companies have tried to bundle change management into an existing human resources work stream during mergers and acquisitions. Companies didn’t want yet another team to manage or another cost center putting them at risk of missing synergy targets.

With mergers and acquisitions on the rise, and many of them not achieving the success they desired, companies are rethinking the best approach to managing change, creating cultural alignment and, most importantly, engaging and integrating people. As you approach your next transaction, keep in mind these best practices:

Human resources and culture are NOT one and the same.

Your human resources team is focused on critical Day 1 initiatives – making sure employees get paid and are enrolled in benefit plans. Distracting your HR team from these fundamentals could wreak havoc on your organization. Instead, establish a separate team to manage cultural integration and change management related efforts. This team can focus on identifying potential areas of conflict, assessing leadership strengths and weaknesses, and developing a comprehensive communications plan that engages all levels of the organization. Most importantly, this team is responsible for identifying and qualifying the “WIIFM” (what’s in it for me) for employees and stakeholders. Articulating the “WIIFM” is a powerful way to increase organizational readiness for change and adoption, reduce the depth and duration of business disruption, and accelerate ROI and realization of expected benefits.

Change doesn’t end when you announce the deal. The announcement is just the beginning.

Few companies have a long-term change management plan articulated during the pre-close transaction phase. Even fewer conduct a detailed cultural diligence to identify possible conflicts between two distinct organizations.

In most cases, leadership teams are working together for the first time. Politics are heated, opinions on how to move forward vary, and decisions on “who and how many” are extremely complex. Spend your first 90 days focused on establishing the right leadership team. Consider the strengths of your internal teams and also explore external candidates with the right skillset. Use formal assessment tools or hire a third party to provide an unbiased opinion.

Once you have the right leadership team in place, train them on how to embody the desired culture on a day-to-day basis. Also, pay special attention to how you onboard your new leaders so that they can live the brand and the culture as of day one. To do so, make sure that all of your leaders are aware of the non-negotiable critical success factors that must be in place to serve as an effective and cohesive leadership team. 

Next, develop a comprehensive communications plan – not just for Day 1, but holistically and consistently across all work streams. Establish a cadence around communications (who, how often, what media) and stick to it. Employees are quick to identify cultural initiatives aimed at improving morale that have no weight or intent behind them.

Spend now, save later

Companies that spend the time and money on cultural integration and change management during diligence and integration reap the benefits. A well-integrated, engaged workforce is more efficient and productive. Costly turnover can be diminished. Where once change management and culture were deemed “nice to have” parts of an integration budget, they are now, in many cases, separate groups with multi-million dollar budgets. On average, companies should expect to spend 15-20% of their integration time on culture and change management initiatives.

If expert predictions hold true, 2015 will be a record year for mergers and acquisitions (and a highly competitive one). If you’re fortunate enough to find the right target and win a possible bidding war, make sure you’re prepared to successfully integrate your people, process and technology.

For more information on how to manage change and cultural integration during a transaction, please contact us.