23 Jan. 2013 | Comments (0) Share Follow @Conferenceboard
In this, our final installment on M&A, we will detail must-have strategies for acquisition integration, including the development of a 100-day plan. Our previous blogs on this topic discussed M&A best practices, the role of HR in the M&A process, and guidelines on organizational and operational due diligence. Incorporating these insights should allow most companies to be well-positioned to begin the integration phase.
At its core, integration is focused on managing a portfolio of projects aimed at realizing the synergies forecasted during due diligence. Success in this endeavor is dependent on robust project planning, process rigor, and the utilization of a comprehensive toolkit to help align strategy goals and implementation tactics. Key elements of this process include:
- 1. Obtain Consensus Around Quantifiable Results: This can be accomplished by translating the deal drivers created during due diligence into an overall integration scorecard. This scorecard should be cascaded down to each individual Integration Team.
- 2. Establish Project Governance: When using internal resources, it’s important to recognize that experience with and understanding of M&A projects will vary. Project sponsors should select a cross-functional team based on skills required, provide training to fill gaps, and develop a comprehensive charter so that each member understands the scope of their role in the project. Establishing a form Integration Management Office IMO that includes the development of common project management processes, as well as templates and project governance, is central to the success of these endeavors.
- 3. Integration Planning Starts During Due Diligence: If you carefully think about the decisions you need to make and the questions you need to answer than, in many instances, you will have sufficient information on the acquisition to quantify the synergies, identify where they can be realized, and how. This creates the bridge from due diligence to 100-day plan execution.
- 4. Assess Talent: Understanding the talent pool should be a top priority. Often top-level executives are assessed in the due diligence phase, but it’s important to extend the process deeper, especially for key roles. This involves identifying needed skills to capture strategic goals, establishing a fact-based method of assessment and talent categorization, and the willingness to quickly take action on both retention and consolidation activities. These actions help stabilize the organization, create a new performance standard, and support an often-changing cultural framework.
- 5. Develop a Stakeholder Analysis and Communication Plan: Building on the stakeholder analysis and segmentation completed during due diligence, one must craft a plan that articulates the content, timing, sender, recipient, and medium for all integration related messages. It should also provide for a feedback mechanism that confirms understanding and supports two-way communication. This plan should be closely aligned with your risk analysis and commitment strategies that identify the level of commitment from each party, as well as key concerns that need to be addressed.
- 6. Conduct an Organizational Assessment: While often completed during due diligence, it’s important to take a deeper look at the acquired organization’s culture, structure, and HR practices to drive synergies and prevent project derailment. Culture mapping can point out areas of divergence and provide clues for bridging the gap without costly compromise. Structural assessment tools can harmonize management levels, spans of control, and reporting relationships. Also, a review of HR policies can affect everything from benefits rationalization and performance standards to onboarding and staff redeployment practices.
- 7. Identify and Manage Risk – Risk management is not a static activity. While initial challenges may have been uncovered in a prior phase of the transaction, it’s important to continue to reevaluate and reprioritize risks as the project unfolds. People, process, and system risks can supplement more traditional categories, such legal, financial, competitive, and regulatory to ensure you have a complete picture of the evolving risk management portfolio.
The 100-Day Plan
With the initial analysis complete and the project team operational, it’s time to capitalize on some quick wins. Focusing on tangible, near-term deliverables not only builds employee support for the endeavor, it helps the organization achieve synergy targets.
Key elements include:
- 1. Kick-start Communications: Despite the best efforts of the core deal team, rumors often circulate prior to formal integration. Therefore, it’s critical to develop, target, and spread accurate messages that address the concerns of each stakeholder group during the first 100 days. It’s also important to continuously revise the channels used in response to employee feedback. This information can inform your risk management plan, allowing you to quickly deal with potential issues before they materialize.
- 2. Secure Early Wins – Solidifying the leadership team and retaining key talent should be top priority, as these employees will drive success of the overall initiative. Once complete, the project team should review items covered in the organizational assessment to identify low cost /time, high impact projects to action.
- 3. Monitor Progress – Leaders, employees and external stakeholders will all be watching for signs of success and failure. The project team should embrace this and consistently review progress on performance indicators noting places of synergy capture and ROI realization. It’s also important to highlight areas of divergence and quickly determine the root cause so a course correction can be undertaken.
- Demand Leadership Integrity
Even the greatest project team will stumble if lackluster leaders fail to demonstrate the courage of conviction required to shepherd in a change of this magnitude. If not intrinsically present, project leads should coach their sponsor to adopt the following practices:
- 1. Be Fair – Employees have an implied agreement with their employers – the way things get done, how they are rewarded, etc. This changes during an acquisition. Leaders should work to understand real or perceived losses and where possible, endeavor to make employees whole.
- 2. Keep Promises – Better yet, don’t make them. The only guarantee leader should make is that change will happen.
- 3. Explain the Fluidity of Truth – Even well designed communication plans will have gaps and “this just in” moments that catch even senior managers by surprise. Facts may change as the dynamics of the deal develops, but leadership’s commitment to honest, two-way communication should not. Explaining the nature of these transactions up front can help establish trust.
- 4. Be Bold – This refers to admitting mistakes, taking risks, and delivering bad news without blinking. Every change has winners and losers. The facts may not be popular, but the manner in which they are communicated can make the transition easier for all. Leaders should be mindful of the shadow they cast on the organization and use it wisely.
In our next blog, we will begin a new multi-part theme on the topic of strategic planning.
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