Written by: Dr. Tobias Umbeck & Mr. Adrien Bron
View full article from Transaction Advisors, here.
While business leaders often point to people, culture, change management, and communication as reasons for integration failure, few companies completely understand how to tackle those issues head-on.
Fortunately, a systematic approach does exist that can help guide companies in managing change and people. This plan follows three general principles: embedding change management into the integration; co-creating the foundation with the top team; and systematically cascading the change throughout the organization.
The approach to managing change during an integration should be tailored to the synergies, time available, cultures, and the integration’s magnitude of impact on different employee groups.
As opposed to creating an independent work stream for change management, change management should be embedded in the design and execution of a merger integration.
Experienced dealmakers begin to identify key change risks during the due diligence phase, based on interactions with the target’s team.
Change management starts at the top—each member of the executive team should be personally involved in defining the main aspects of the new company.
While staying conscious of applicable antitrust law prior to closing, the executive team and the newly appointed management should co-create the foundation of the new company.
What people hate and fear most about change is the potential loss of control. As most merger integrations involve a significant amount of change, it is invaluable to give control back to people whenever possible.
Once an aligned top team jointly builds the company’s foundation, the broader organization should be engaged. Post-closing, one potential path for engagement is to bring together top leadership across divisions from both companies for a workshop focused on understanding, alignment, and action.
It’s critical to keep up the momentum throughout the process and track results. A chief integration officer can be used to orchestrate and execute an integration as well as oversee the integration management office.
An integration management office is a team charged with planning the cascading and enrollment, providing objectives and targets, and supporting progress.
The cascading process must be monitored closely. One battle-tested method: conducting a monthly risk assessment where a handpicked group of change agents routinely interviews people who are close to the front line and critical functions.
The risk assessors bring key risks to the surface before they become major issues and help to focus executive attention and support when they encounter critical roadblocks.