According to a recent Harvard Business Review report, the failure rate for mergers and acquisitions (M&A) falls between 70 percent and 90 percent. That’s a staggering enough number to make any CEO hesitate to enter into such a transaction. However, the primary culprit to failures of these deals is generally related to post-merger people issues and integration – challenges that are solvable with the right strategy and approach.
Post-merger talent mismanagement and misalignment is so damaging to merger synergies is because it can lead to employee disengagement, incompatible management styles, poor motivation, loss of key talent, lack of communication, diminished trust and uncertainty of long-term goals. Remember, not only are you attempting to integrate two companies under one mission, but you are bringing together large cohorts of people with their own personalities, motivations, behavioral traits and work styles.
Building Your Future High-Performing Leadership Team.
Companies must assess its human capital with the same rigor that applies to the assessment of inventories, financial statements, and other important assets. In most cases, the acquiring company knows little about the leadership talent coming aboard, or lacks a data-driven process to inform effective decision-making about future roles.
Designing the blueprint for the future must take into account which leadership talent will be given the role to shape and execute that blueprint. To gain this critical insight, organizations must use a data-driven approach that is proven to better identify the right leadership for the right positions.
Companies who have successfully integrated talent post-merger or acquisition take a more strategic, objective, data-based approach to their integration and alignment process, which includes:
- Clarifying business objectives. First, identify the objectives of the new organization so that leadership talent can be measured against their abilities to meet those expectations.
- Define success criteria. Define the success criteria required by the business objectives, such as critical thinking skills, culture/values, and leadership ability.
- Assess your talent pool. Benchmark and identify the critical thinking skills, culture/values of successful leaders through science-backed talent assessments.
- Review and make decisions. Armed with the data on key talent, decision-makers will have the information needed to select the best person for each position.
Talent Integration and Alignment Doesn’t End There
While many executives mistakenly believe the integration process is over once talent decisions are made, this is a dangerous misperception. When combining employees from two organizations, you are essentially asking them to now operate and perform as a team. But, it’s human nature to fear and resist change, at least at the outset. And, there are few experiences that produce more stress or uncertainty than a merger or acquisition. Misinformation, rumors and fear of the unknown can slowly threaten even your most highly-engaged and top performers.
It’s critical to develop and implement an effective program that fosters and encourages retention of talent, rapid engagement, accelerated productivity and cultural alignment.