Human Touch
All projects are people-driven, and if the people issues associated with integrating two companies are not quickly and effectively resolved, the integration cannot begin.
Company culture, or the prevailing style used to get work done in the organization, is critical. Even companies that produce the same or similar products can have very diverse cultures that must quickly merge into a single entity.
The second major issue, fear, comes from two areas: the loss of jobs created by the duplication of positions when merging similar companies and the change or shift of power after the merger. No company performs well for long in an unsettled environment that impacts reporting structure and job security.
In addition, the nature of mergers and acquisitions often creates human resource problems in the acquired company. Some employees leave immediately after the deal is signed. Even when they stay, motivation may suffer due to newfound wealth or new subordinate roles.
HELPING HANDS
Bringing in appropriate support is the most effective way to launch an integration and help increase the overall odds of success. When determining what outside help will be most beneficial, consider:
- Dealing with unique people issues. Utilize known tools for addressing culture and fear problems instead of leaving these critical concerns to the methods of each functional manager. Securing project management support if the company is weak in tools and methodologies. Obtaining technical expertise by function. Utilize an unbiased but experienced third party to quickly sort
- Securing project management support if the company is weak in tools and methodologies.
- Obtaining technical expertise by function. Utilize an unbiased but experienced third party to quickly sort through the best practices of the two companies as well as other companies.
- Supporting the leadership gaps. Supply resources during this crunch time as well as coaching and mentoring while the company adjusts to its new size, structure and leadership requirements.
- Researching merger and acquisition best practices. Do not reinvent the wheel—utilize the knowledge of previous integrations as guidelines to your company's plan.
The increased ability to manage a larger entity can be another huge problem, especially for smaller companies. Managing a $50 million company is dramatically different than managing a newly formed $100 million company. This problem affects all levels of management. Senior managers assume new responsibilities that consume their time, creating a gap for subordinates to fill. To magnify the problem, this entire shift occurs all at once in a very dynamic and unstable environment.
Last, companies must be able to maintain critical day-to-day operations while executing the integration. This is similar to changing a tire on a bicycle while riding it. Creating focus—and understanding the resource requirements to perform both tasks simultaneously—is critical.
Find Unique Aspects
In project management, the majority of projects are repeats of earlier projects. By fleshing out the unique tasks, an integration team can proactively plan them and take action to reduce associated risks, avoiding surprise and disruption. Project management processes can quickly identify unexpected and unplanned events when they occur, immediately address these problems, assess the impact, communicate to all appropriate people and create a foundation for swift and appropriate actions.
The project team must clearly define each of the business possibilities created by a merger or acquisition in measurable business terms. Beyond the obvious stated goals, the scope should include other critical measurements relative to a successful merger or acquisition, such as retention, effect on other critical projects, morale and potential impact to the end customers. These all will become part of the management measurement dashboard throughout the project. A well-defined scope and the company's performance continuously indicates how the integration is progressing.
Build the Framework
The project should be structured in a matrix, and a senior management committee should oversee the project ensuring that all impacted areas are represented. If the full-time integration project manager is not the highest-ranking individual in the company, he or she should report to that individual to ensure the access and authority to quickly move decisions forward. The project manager should not be part of any particular functional organization, but represent the overall business outcome. In an acquisition, the project leader should come from the acquiring company. Typically, the culture of that company will be preeminent, and the project leader should know how things get done and what is important.
Subteams should be created with great care as well. Since two companies are being merged, employees are going to be watching very closely to see how they are being represented. People from both organizations must become actively involved team members, even if one organization may eventually dissolve. Because these team members have demonstrated leadership within their organizations and have successfully led other culture changes, they can effectively communicate to their respective groups.
Project Plan
All functional plans can be integrated into a master plan, clearly defining all tasks into measurable units with respect to time, resources and commitment. This process will flush resource conflicts at the individual level, allowing senior management to make decisions about priorities between the integration project and current operations.
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Since many integration projects can take more than a year, the plan must clearly define the dependencies. In addition, the project can identify the tasks that have the largest rewards and paybacks. Critical milestones can be established, creating clear, short-term objectives to allow celebration and create a positive, winning environment.
Special initiatives to deal with the unique people challenges associated with an integration project are critical. The pertinent communication plan must be sensitive to issues such as layoffs and incorporating the people development plan to support the long-term management requirements of the new entity. Even the proactive steps to deal with culture issues should be planned and tracked as part of the project plan. The plan also must create immediate wins showing a return on investment, even if small, to get the ball rolling and to create momentum for the integration.
Keeping Track
This project should be tracked and communicated like any other key business objective. It should be measured relative to the plan, cost and other key parameters described in the scope statement. Based on events that occur throughout the life of the project, management can make decisions on the appropriate corrective action when necessary and proactively can change the scope based on evolving business conditions.
Most important, the team, senior management and the entire organization will know the ongoing score. The organization does not have to wait until either the top- or bottom-line changes indicate success or failure. The goal of project management is to effectively manage the known tasks and to quickly identify and positively adjust to the unknown tasks that occur during the project.
By effectively bringing together all the resources of the company with a clear focused plan, opportunities and benefits that were never identified during the due diligence process will be created. PM
Jeffery Blanton, PMP, is president of Change Artisans, a Huntington Beach, Calif., USA-based firm that provides post-merger and acquisition integration assistance by helping to reduce risk and accelerate return on investment.