Successful Mergers: 3 Focus Areas For Leaders Who Succeed
Leading mergers can be rewarding and challenging with lots of moving parts to coordinate, manage and leverage. Much has been researched about the relative success of most mergers, and their more competitive cousin, acquisitions.
In the private sector mergers involve joining two or more organisations to leverage either market share, capability or combining service offerings to deliver an end to end solution for customers. In the public sector they are usually borne out of a need to make savings from different functions or agencies merging together or realising opportunities to streamline public services.
Regardless of the type of merger, they all share common challenges – the success is dependent primarily on three things: people, processes and structure. As a leader of a merger these three things create a list of challenges for leaders:
Added together these challenges are some, but not all, of the underlying reasons that mergers often fail to reach their objectives.
1.Clarity of Purpose – Reframe time taken to time invested
Start with the end in mind. In the due diligence phase, you’ll have outlined a clear goal for the merger. Starting with a clear purpose means you can assess the value of the time you spend working on the merger. By reframing your thinking from ‘time taken’ to ‘time invested’ you can focus instead on monitoring success and course correcting if things are going awry. If your success measures aren’t crystal clear – in specific and measurable terms – it will be hard to assess if time spent on the merger is wasted or invested. The ultimate reason for merging is to deliver value – for customers and the business. Leading transitions is therefore a valuable way to spend your time and will be additive to the other tasks within your leadership role.
A fully functioning merged organisation will take concerted effort and time. And that will be rewarded by the results the merger delivers.
Approach merging the organisations in a different way. Not everything has to change. Focus on what needs to change now and don’t reinvent the wheel. What’s working well? What’s the evidence? What’s not working well? What’s the evidence?
Due diligence pays off too. You will no doubt have clear parameters about what each party brings to the merger – the strengths and weaknesses. Reorganise those areas that aren’t working so well AND be mindful of how those areas integrate and affect other parts of both organisations. For example, do you need one sales process for the merged organisations or is it better to have different sales process for different services and products. What are the implications of aligning processes into one? What will you lose? What will you gain?
Assessing the impacts of how changes will likely affect the other processes and people means you can choose which parts of the organisation will change and which will stay the same. This requires a forensic approach to evidence collection including involving those people in direct contact with the customer. And if you can, involve external stakeholders and customers in the design of the organisation and processes. If suppliers are a critical success factor to deliver some of your services, it makes sense to understand how changes in your organisation structure and processes will affect their ability to deliver what you need from them.
Make the reorganisation and integration process as short as possible. Stay focused on the reason you merged and reorganised: to deliver value. The likelihood of change fatigue will be reduced by taking a focused and time-bound approach to the reorganisation.
3.Business Performance: Be realistic about what’s possible
Statistically around 50% of all mergers experience some drop in performance. At its worst 10% reduction is likely based on research of previously merged organisations (although this should be taken as an indicator as no two mergers are the same).
Keeping the reorganisation of the merger as short and focused as possible increases the likelihood of steady performance during the transition. The longer it takes the more likely people will start to demonstrate signs of demotivation. And likely job satisfaction dips too. Both of which are indicators that organisation performance is likely to suffer.
If you’ve identified which areas of the organisations need to change it is much easier to put contingencies in place to counter any dips in performance. For example, if customer satisfaction is a key metric for merger success, you would look at any customer processes that might be impacted during the transition – either directly or indirectly – and take proactive steps to alleviate any likely problem areas. A pre-mortem activity is a great way to identify the worst- and best-case scenarios and create possible solutions. This activity is enhanced by including people from all affected processes – either in full or taking a cross section.
Successful Mergers Start with Why
It sounds trite but knowing the purpose behind the merger is the starting point for success. The reason why drives how you’ll measure progress, results and success. It’s the key to sorting what really matters from the noise.
Starting with people, processes and systems is one thing, how you lead the merger is the magic dust that makes the difference.
Change Strategist and Coach
With almost 30 years experience in Organisational Change, Continuous Improvement, and Coaching, Ro has dedicated her career to helping organisations become agile and change ready. To read more about Ro and the workshops she delivers, please click on this link.