The Importance of Organizational Focus in a Merger or Acquisition
The one thing that all organizations have in common is the presence of people. The one common source of all organizational problems, is again… people. If it weren’t for all of us imperfect human beings, our organizations would run far more smoothly and effectively.
The impact of people issues is felt no more strongly than in the case of a major change such as a merger or acquisition. Even in stable organizational settings, people issues can wreak havoc on strategy formation and execution. Mix in some merger activity, and people issues become inflamed and can significantly impact results.
Most of us have grown weary of seeing the statistics of merger failure. It’s a given that realizing the full potential of a merger or acquisition is tough. Fine. We get that. The numbers rarely seem to add up in the end. Along the way, something short-circuits the results that the experts calculated on paper. When leaders are polled as to the reasons for missed merger expectations, the causes are plentiful. However, people and organizational issues are often grouped near the top. The issues that the accountants and strategists don’t anticipate, and can’t control, can make the difference between success and failure.
I believe it is time for shift in M&A thinking. I’m convinced that an intentional focus on individual and organizational factors must be incorporated into every phase of the M&A process. From the earliest stages of exploration, through due diligence, negotiation, consummation, and integration the buy side organization or its M&A firm should include a human capital/organizational expert in its efforts.
Cultural and organizational fit and integration is every bit as important as the synergies and fit between product lines, operations, customer bases, facilities, branding, and market position. Before the finance and strategy folks dismiss me with a roll of the eyes, let me say that I’m not so naïve as to suggest that a merger be called off for cultural or people issues. I know better than that. However, I am suggesting that derailing issues can be uncovered, and risk can be mitigated, with an intentional focus on people issues, communication, and cultural/organizational integration.
Remember, in the end the NewCo is still a group of individuals working together to meet a common goal. Why not ensure that the individual and organizational elements are addressed with the same vigor and due diligence afforded to the financials and market strategy? In the end, I guarantee that the bean counters will be happier with the results.
Jeffrey J. De Wolf is the Managing Principal of WOLF HR Solutions™, a Kansas City based organization effectiveness and HR solutions firm. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 913-219-5353.