Tales from the C-Suite: Merger Challenges & Solutions
“How’s the merger going?” I asked my dinner companion. “Great!” she replied. 5 seconds later, she said, “It’s terrible.”
Six months before, the mid-sized engineering firm she worked for had acquired an attractive, smaller firm in a nearby location. Expectations were high, as they were certain this venture would lead to increased business beyond what the two companies could do separately.
Now, because of unclear roles among the executives, one of the divisions was floundering badly, and it was apparent to everyone that one of the executives needed to leave. Apparent, that is, to everyone except the executive himself. His manager, the COO, had been making overtures about finding a new place for him, either in a different division or outside the company. Unfortunately, the executive politely declined, asserting his success in his current role.
Meanwhile, his team, leaders themselves in the company, were spending hours discussing the problem and strategizing ways to work around the competing agendas and confusion of roles. “We spent two hours this morning just trying to figure out what things we can control and what we can’t. It’s so annoying. I have so much real work I need to do,” my companion declared with frustration.
Additional interviews revealed that the COO was reluctant to confront the situation, concerned about morale if the executive left and that he would take two associates with him. The COO focused her feedback on poor sales results, but the executive defended his performance, arguing that he needed more time following the merger.
What is wrong with this picture and how can you avoid this situation?
Plan – Such an obviosity! Who admits to not planning? Yet integration is often the least focused aspect of mergers and acquisitions, almost an afterthought. Clearly this organization had not adequately defined the roles, responsibilities and authority the new leaders would assume following the merger.
Communicate in both directions and ongoing – Everyone in the organization needs to be informed of the changes that will occur. Sometimes that means having difficult conversations, but that’s unavoidable. Avoiding direct communication only leads to confusion and unnecessary conflict. In addition, despite careful planning, there will always be unanticipated consequences. It is imperative that feedback is solicited from all levels of the organization as the integration unfolds.
Take action – Once a problem is identified, take action quickly. In this case, the COO needs to immediately redefine the executive’s role inside the organization or let him go. Delaying does not prevent consequences; it only exacerbates them. If associates leave with the executive, so be it. They will likely leave regardless. End it quickly before the organization wastes further resources investing in un-committed employees. In other circumstances, unexpected opportunities are not exploited when action is delayed. Morale is diminished, the organization is drained of energy and the value of the merger is not fully realized.
According to research, the failure rate for mergers and acquisitions (M&A) sits between 70 percent and 90 percent. (Harvard Business Review – Mar 15, 2017.) Yet the unbridled enthusiasm, one might say hubris, for these undertakings continues. Growing one’s company through acquisition can be a robust strategy. But don’t succumb to irrational exuberance that undermines careful planning an
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About the Author: Dr. Joanne Irving, Executive Advisor
I help executives like you become the best leaders they can be – to lead with vision, inspire your team, and increase the profitability of your organization. The challenges you face require heightened self-awareness, decisive critical thinking and the ability to be in tune with the needs of your company, your employees and your stakeholders. These are the skills that successful executives understand are crucial to their ability to lead effectively, but often have difficulty executing at the most crucial times. That’s where I can help you.
As a leadership expert and a psychologist with deep understanding of human behavior, I will help you strategize, navigate organizational challenges and lead your company with confidence in yourself, your people and your purpose. Learn more at www.i2aa.com.