Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
com
CEO
Headaches
after aMerger or
Acquisition
Written by Aruosa Osemwegie, GPHR, SPHR
aruosa@gettingajobisajob.com
We have less than a hundred days to the close of the banking sector
consolidation programme. Someone may say, “What really is the fuss
over this particular exercise.”? Let's get it over with and talk of other
things”. I submit that next to the governance of our dear country, this
is the other thing we have to do and do right. There are real
challenges ahead and CEO's may have lost sleep. It may not be a good
prayer to wish to be a bank CEO at this time. Obviously the banks
seeking to kidnap wealthy acquirers have migraine already;
considering that the sword of Damocles is less than hundred days to
falling. Making M&A work, so that it delivers on its promise, is the
ache of the executive teams of banks that have already signed
partnership MOUs. What is the severity of this pain? And what are the
best practice ideas that we can glean from successful/unsuccessful
M&A integration around the world?
Who are these people? Determining who will be part of the core
integration team represents another present day challenge that CEOs
will have to grapple with. It is wrong for staff to consider this team an
elitist group and thereby lobby to be part of it. Of course we are firmly
on the path to failure when the executive team begins to select
persons on partisan grounds. Not everybody is well placed to be an
integration manager. An integration team should be comprised of
external consultants and carefully chosen staff from the merging
entities.
Because of the humongous work associated with M&A integration, it is
almost compulsory to use consultants. Also because of the skill-set
required and the amount of objectivity and soul-searching needed,
using a consultant is critical. Another headache for CEOs is this, “What
kinds of consultants do we need”? Over the years there has been
agreement that we need business/financial consultants. But the world
having gone full circle, through a series of M&A failures, have now
realised the critical role of specialist Human Resources consultants. Is
this requirement a nice to have or a need to have? Most of the reasons
generally adduced for M&A mismarriages are people issues. Eg.
Incompatible cultures, loss of key talent, clash of management styles,
absence of HR at planning phase, etc. Having a specialist HR
consulting firm as part of the integration team is therefore critical.
Will they go or will they stay? Retaining top talent is a major challenge
for most businesses under any circumstance. Retaining key talent
while coping with the organizational upheaval wrought by a merger or
acquisition increases that challenge exponentially. Why this is a major
headache is twofold. Your people are your business. An organisation's
ability to deliver premium results is dependent on them having 'magic
people'. Secondly since business is largely relational, when people
leave, customers and other employees go with them. The key to
resolving this lies largely in preparing for it at the planning table.
People tend to leave more from the company being acquired, so steps
must be taken to identify and retain them. You will do well to conduct
a Talent Audit. The gains of this kind of audit is phenomenal if it is
planned and executed before or during due diligence stage. In the
wake of any merger or acquisition, specific retention strategies must
be employed.
And for these strategies to succeed, they must be based on
extensive organizational research conducted well in advance of the
transaction's close. Planning focused on identifying and retaining
the critical human assets being acquired begins in the earliest
phases of the acquisition planning.
Who will look after the honeycomb? To achieve the objectives of the
merger/acquisition, a new business model is usually a requirement.
Sometimes whole new business units are carved out so as to cash in
on the gains expected. The throbbing question, “Who will man the
specific strategic business groups”? Who are the magic people that
we require at the helms of certain special business units? And don't
worry the relative importance of a business unit is dependent on
company strategy and company's understanding of the industry and
the evolving trends.
Making this choice can be arduous; tasking the ability of
executive/integration teams to distance themselves from partisan
tendencies. It is important to always remember that the effect of poor
recruiting or placement is far reaching. It stifles creativity and
innovation; it sponsors mediocrity and puts a bar on the potentials of
the team. The rule is let the best man do it even if that person is from
the acquired organisation. And remember the best man is the one who
not only has the skill-set but also possesses the leadership ability to
carry more along; he should thus be the one who has the potential of
bringing maximum gain to the merged organisation's objectives for
the merger.
What will this thing cost? There are costs to every merger/acquisition;
even the marriage of individuals gulps money. How much will our own
integration cost? What are the cost elements? How do we achieve cost
savings? What is the nature of these cost are they one-off? Possible
cash elements are severance payouts to exiting staff, share price
related payouts, cost of IT integration, consultants fees that wont be
borne by CBN, whole re-branding efforts, etc. Other non-cash payouts
are emotional loss of staff, stress of the whole process, customer
relationship strain, etc
Whither goes the Mother Hen? Customers, for a myriad of reasons,
aren't comfortable with the turbulence associated with M&As.
Customers are asking questions. What will happen to my money? What
will happen to my investments? What would be the fate of the
personalised facilities that regularly come my way? It is important that
we also have a Branding and Communication plan. Communication
with customers must be clear, consistent and regular. Added to that is
a plan for managing customers accounts and request during the
integration. The loop will be closed successfully if we also have a plan
for cashing in on the emerging markets and possibilities eg. pension
funds, unified telecoms license, power sector reforms, private public
participation, etc. All these plans will be geared towards achieving
certain business results within the first 100 days.
Certainly this list isn't exhaustive. I mean no one should assume that
there aren't surgery-level problems as merging entities pry
unhinderedly into their colleagues financial books, finding out what
we have always known that the declared assets/liabilities may not
match up to reality. Though the integration of two entities will be
arduous, it is to be expected, and the success will depend on the
willingness of the power blocs to see it through.