When a merger or acquisition is precipitated by financial difficulties is it all too easy to lose sight of the critical issues of culture and transformational change in the rush to rescue a failing business. Leaders must recognise that bringing people with you on the journey is a pre-requisite for success.
One consequence of the current recession is an increase in mergers and acquisitions as struggling businesses are swallowed up by their more successful competitors, not least in the ailing financial services sector. For many strong organisations, this is a period of opportunity when they can capture large swathes of market share. However, businesses can easily be seduced by bargain basement prices and should remain wary about what they are getting themselves into. Even at such attractive prices M&A remains a tricky affair often ending unhappily. It takes a concerted effort of leadership to ensure that imagined business benefits are turned into reality.
In calm economic times, it is not often the case that a merger or acquisition fails due to lack of due diligence. Usually, the acquiring company carries out a forensic examination of finances, operational capabilities and order books. Generally, there is also a careful evaluation of the executives and senior managers to assess the capacity of the leadership team run the ship and to identify key players to be kept on board post merger. In the current economic climate, even due diligence may be set aside. You only need look at the disastrous takeover of HBOS by Lloyds TSB to see what can happen as a result.
One of the hardest tasks in M&A, and one that is therefore is more likely to be neglected in the headlong rush to merge organisational structures and operations, is the bringing together of two groups of people with two cultures into a single unified organisation with a single clear purpose and set of values. Ignore it, and a merger will be slow and painful. At best, there will be long periods of dysfunctional behaviour leading to poor business performance and at worst a break-up of the organisation.
When it comes to getting people all pulling in the same direction, organisations embarking on a merger or acquisition need to be guided by some of the central lessons of effective leadership.
Great leaders have a strong sense of what they stand for and a clear vision of the future. Think of Winston Churchill, Martin Luther King and Nelson Mandela. Without an unshakable set of beliefs and strong sense of destiny they could not begin to lead others in turbulent and uncertain times. Not only that, and perhaps just as important, they had the capacity to communicate this in a way that inspired others to follow.
In a the same way, an organisation buying or merging with another organisation needs to have a strong sense of its own vision and values and to communicate them in a compelling way if they are going bring people with them. Take the example of a Dutch bank that acquired a UK financial services company. Whilst their culture was strong it was only really understood by those who had worked in the bank for many years. As a result, the vision and values of the organisation were not communicated to the employees of the acquired company who were left to their own devices to guess what was required under the new regime. As is typically the case in a takeover, people were highly sceptical about the intentions of their new bosses and so every attempt to change structures, operations and IT systems was seem as an attempt to do away with their culture or to threaten their jobs. Despite the fact that the takeover meant greater career opportunities for employees and a similar culture based on integrity, expertise and personalised customer relationships the Dutch leadership team faced a pitched battle with managers and staff to introduce the systems required to integrate the new acquisition into their organisation. Years later, some people have still to make the mental transition to their new company. So leaders must relentless communicate a clear vision and set of values for the new combined company before they can being to get everyone working together to move the organisation forward.....see June 2009 issue of HR Director Magazine for the rest of this article or email me via this website
One consequence of the current recession is an increase in mergers and acquisitions as struggling businesses are swallowed up by their more successful competitors, not least in the ailing financial services sector. For many strong organisations, this is a period of opportunity when they can capture large swathes of market share. However, businesses can easily be seduced by bargain basement prices and should remain wary about what they are getting themselves into. Even at such attractive prices M&A remains a tricky affair often ending unhappily. It takes a concerted effort of leadership to ensure that imagined business benefits are turned into reality.
In calm economic times, it is not often the case that a merger or acquisition fails due to lack of due diligence. Usually, the acquiring company carries out a forensic examination of finances, operational capabilities and order books. Generally, there is also a careful evaluation of the executives and senior managers to assess the capacity of the leadership team run the ship and to identify key players to be kept on board post merger. In the current economic climate, even due diligence may be set aside. You only need look at the disastrous takeover of HBOS by Lloyds TSB to see what can happen as a result.
One of the hardest tasks in M&A, and one that is therefore is more likely to be neglected in the headlong rush to merge organisational structures and operations, is the bringing together of two groups of people with two cultures into a single unified organisation with a single clear purpose and set of values. Ignore it, and a merger will be slow and painful. At best, there will be long periods of dysfunctional behaviour leading to poor business performance and at worst a break-up of the organisation.
When it comes to getting people all pulling in the same direction, organisations embarking on a merger or acquisition need to be guided by some of the central lessons of effective leadership.
Great leaders have a strong sense of what they stand for and a clear vision of the future. Think of Winston Churchill, Martin Luther King and Nelson Mandela. Without an unshakable set of beliefs and strong sense of destiny they could not begin to lead others in turbulent and uncertain times. Not only that, and perhaps just as important, they had the capacity to communicate this in a way that inspired others to follow.
In a the same way, an organisation buying or merging with another organisation needs to have a strong sense of its own vision and values and to communicate them in a compelling way if they are going bring people with them. Take the example of a Dutch bank that acquired a UK financial services company. Whilst their culture was strong it was only really understood by those who had worked in the bank for many years. As a result, the vision and values of the organisation were not communicated to the employees of the acquired company who were left to their own devices to guess what was required under the new regime. As is typically the case in a takeover, people were highly sceptical about the intentions of their new bosses and so every attempt to change structures, operations and IT systems was seem as an attempt to do away with their culture or to threaten their jobs. Despite the fact that the takeover meant greater career opportunities for employees and a similar culture based on integrity, expertise and personalised customer relationships the Dutch leadership team faced a pitched battle with managers and staff to introduce the systems required to integrate the new acquisition into their organisation. Years later, some people have still to make the mental transition to their new company. So leaders must relentless communicate a clear vision and set of values for the new combined company before they can being to get everyone working together to move the organisation forward.....see June 2009 issue of HR Director Magazine for the rest of this article or email me via this website
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