Organizational Change Management for Merger and Acquisition Integration

December 7, 2017

Managing Change, Creating Cultural Alignment, and Engaging and Integrating People

Merger and acquisition (M&A) integration is the process of assimilating two or more companies with different values, cultures, and resources into one cohesive unit. These integration activities drive significant change within both the buying and selling company and can create complex human capital challenges. Underestimating or oversimplifying the people-related risks can lead to inaccurate integration planning, poor collaboration, unexpected costs, and loss of important talent.

A disciplined approach to Organizational Change Management (OCM) during all phases of the M&A process will minimize disruption and accelerate time-to-results by developing a strong leadership structure, making open and honest communications a priority, aligning priorities and teamwork, and ensuring the business functions as smoothly as possible.

Foundational Elements
• Determine the leadership structure and how they will lead
• Identify, analyze, and mitigate the impacts on the organization and the individual stakeholder groups across the enterprise
• Continually deploy a comprehensive and segmented communication continuum across all phases
– Key messages on why the transaction is happening
– Clear line of sight between M&A goals and what employees can do to help
– What the new business will look like
– What will change for each stakeholder group and individual
– Quick wins to show the integration is working
• Align and prioritize team activities while clarifying performance expectations and minimizing redundancies
• Develop and deploy targeted and constant training to ensure business continuity

When it comes to managing employee transition, integrating organizations is a challenging mission. The operation can be undermined by disruptive behaviors. Resistance to change is one of the most common people-related integration challenges.

Reasons for Resistance to Change
• Lack of Communication
• Confusion and Frustration
• Force of Habit
• Lack of Confidence in Management
• Job Insecurity
• Fear of the Unknown
• Loss of Competency
• Lack of Support

Managing Resistance to Change
• OCM Integration Plan
• Clear Vision
• Employee Involvement
• Clear, Consistent, and Honest Communication
• Identification, Analysis, and Mitigation of Organizational/Cultural Impacts
• Customer Focus

M&A integration is fraught with risks and challenges, and there are no guarantees. However, a thorough and flexible approach to OCM planning and execution can help stack the deck in your favor across every phase of the M&A life cycle. A fit-for-purpose approach to managing change, creating cultural alignment, and most importantly engaging and integrating people is vitally important. It can help to prevent costly turnover and lost productivity through effective leadership, communications, and implementation of the integration plan.

OCM can provide a valuable perspective on the people-related risks which may otherwise be overlooked. By partnering OCM with the deal team early in the due diligence process, you can help identify and mitigate financial, as well as structural, talent, and cultural risks inherent in the transaction. Armed with complete information, your organization will be in a stronger position to negotiate a price which more accurately reflects the costs and synergies associated with the deal.

Effectively managing the people issues that result from M&A integration takes discipline and focus, but the rewards are lasting. People working together as one company with a common vision and shared goals is how shareholder value is created. By focusing on OCM before, during, and after the deal, the organizational will be in a better position to capture the full value of the transaction.

The framework and approach described here includes the important OCM activities for M&A integration which encourage and ultimately solidify the adoption needed to stabilize and optimize the new organization and realize the full value of the deal.

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