This page contains a Flash digital edition of a book.
MERGERS AND ACQUISITIONS Where M&As fail to deliver their

promised benefits, it is usually a result of people-related issues, not poor commercial strategy: culture clashes, management conflicts, or a loss of key talent. Tese ‘people issues’ are busi- ness issues, and organisations must recognise that purchase valuations are not the only price they potentially pay. Losing and replacing staff, especially senior staff and key talents, can cost them dearly, as the COLT© and CORT© formulae developed by the Chartered Institute of Management Accountants illustrate. For a hypothet- ical multinational organisation with 100,000 employees, losing a senior manager (assuming a vacancy of c.20 weeks) might, for example, cost around £35,000. Taking into account both op- portunity and acquisition costs, replac- ing them could cost five times as much.

Paying attention to cultural issues

While 18 per cent of KPMG’s 2016 Survey respondents identify ‘ effec- tive due diligence’ as a critical success factor, the history of M&A outcomes suggests that this ‘diligence’ may not always be appropriately focused. M&As marry not just organi-

sational capabilities, but characters, styles and values. Looking beyond

'People issues’ are business issues, and organisations must recognise that purchase valuations are not the only prices they can potentially pay

systems, structures, processes and other ‘hard’ operational concerns, successful integration requires rigorous review of current cultures to identify how each is defined, and how they align to the new organisation’s strategic objectives. Tose leading integra- tion must understand what made the constituent businesses function effectively and decide which aspects of each culture to retain or change. Strategic people management is critical. In this context, employees –

22 | june 2016 |

Working with cultural change

Organisational culture can drive either competitive advantage or strategic drift, but it is manageable. HR functions must take a strategic role, underpinning or- ganisational transformation with change management programmes and learning interventions that help managers to implement them. Beyond structures and systems modifications, changes in behaviours and attitudes require en- couragement, reason and clear ongoing communication. To earn and keep trust and engagement, this communication requires honesty and transparency.

and especially those from the acquired company – are being asked to ‘remain’ loyal to a redefined organisation they may barely recognise. With the em- phasis on forward-thinking and ‘the new’ that company transformations encourage, many may feel that history is being erased. Where corrections or modifications were required, this may be desirable, but ‘history’ is also an element of personal workplace identity and the sense of belonging that under- pins commitment and engagement. Bluntly, people are not processes.

We can merge databases and back-of- fice systems (with varying degrees of ease or difficulty) and streamline office layouts and org charts, but it is harder to merge two employees into a single fully-functioning, high- ly engaged person. Organisational values – described in abstract terms but embodied in behaviours, relationships and shared understandings of ‘how we do things here’ – are complex and nebulous. Even where new values are clearly communicated, people must also change the way they behave. As HR and L&D functions should

recognise, but the finance division may not so readily appreciate, few of us can change our behaviour without failures, false starts and relapses into old, com- fortable ways of working. Most need not only time to adapt, but ongoing en- couragement, motivation and support. Behaviour is also interpersonal.

Post-M&A, many will find themselves in new teams or working relation- ships. Even where familiar colleagues remain, everyone is now operating in new terrain. We may all be ‘in the same boat’, but an unfamiliar one: simply sharing it does not guaran- tee a happy, harmonious crew.

The skills of leading change

Change cannot impact on an or- ganisation without impacting on its people. To manage both, leaders must demonstrate self-awareness, atten- tive listening, a keen understanding of personal impact and a capacity for empathy: emotional intelligence is vital. Unless leaders can inspire others. Te Kubler-Ross Transition Curve’s

familiar roller-coaster trajectory is, leaders must remember, another sim- plification: in truth, we each travel it at our own speed, experiencing different highs and lows. Tose leading change are always further along the curve, while they experience the final upward climb, others still face its downward arc. Leaders must also remember that

resisting change is a natural human response. Clearly and continuously communicating future benefits can help those yet to experience them that the longer term holds more promise than the challenging, uncomfortable present.

Liaquat Lal is principal consult- ant at ASK Europe plc and can be contacted at hello@askeurope. com or on 01234 757575

References 1 Global and Regional M&A: 2015, MergerMarket, 2015

2 US Executives on M&A: Full Speed Ahead in 2016, KPMG, Fortune Knowledge Group, 2016

3 Perspectives on Merger Integra- tion, McKinsey & Company, 2010

4 Journal of Business Strategy, ‘Being awkward: creating conscious culture change’, Peter Buell Hirsch, 2015

5 M&A Trends Report 2014: A com- prehensive look at the M&A market, Deloitte Development LLC, 2014

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44