Why the unpredictable ‘human factor’ can affect big deals
There is an old saying that ‘the devil is in the detail’, although the greatest opportunities often lurk there too. When it comes to successful mergers and acquisitions, the most important ‘detail’ – and especially the most overlooked aspects –often equates to the human elements, writes ASK Europe managing consultant Naysan Firoozmand.
Here are five ways to navigate your way to greater success post-merger:
- Have a people strategy: from the outset, be aware that failure is most frequently as a result of people-related issues such as the loss of key talent, culture clashes, and management conflict over strategic direction for the merged company. Successful merger and acquisition depends as much on strategic people management as it does on sound strategy and fair valuation.
- Understand the situation: take time to understand the existing context of both environments (i.e. the acquirer and the acquired). Before you elect to sustain, manage or change certain elements of pre-existing organisations, it is essential to understand what had made them function effectively as ‘systems’ in their own right.
- Decide what you want to keep: where change is required, be clear which aspects of the culture you want to retain and what you wish to change. Mergers and acquisitions bring together not only the capabilities and potential of the originating organisations, but also their existing characters and styles. While these may be harder to define, they are an integral part of their history and possibly highly influential in both past and future successes.
- Honesty and transparency: understand what you are actually asking of the people involved. In any M&A scenario, at least some employees are being implicitly asked – or even explicitly –to ‘remain’ loyal to an organisation that may now differ quite fundamentally in comparison with the one for which they had been working previously. Where changes are not just to processes, organisational structures and symbols, but also to culture and ways of working, this composite change imposes a potentially stressful level of adjustment that should not be overlooked.
- Expect unpredictability: remember that businesses are composed of people, and that human beings are complex and changeable. People are not spreadsheets or office layouts: they cannot be simply ‘re-arranged’. While they may be skilled at managing them, they also have emotions and, as a result, may sometimes respond to change initiatives in ways that those responsible for their implementation find unpredictable. To achieve lasting success after merger and acquisition, it is not enough to focus on the processes: you must also maintain a clear focus on the dynamics of people.