M&A: Reduce the Risk and Get it Done Faster

Transcription

1 M&A: Reduce the Risk and Get it Done Faster An Executive White Paper

2 It s the promised land: Two good companies come together to become one bigger, better organization. Yet as many as two-thirds of all acquisitions and mergers fail to achieve the planned benefits. Why? In the following paragraphs we ll de-mystify the most important issues, including workforce integration, and show how they can be solved. People don t like uncertainty and may leave while the M&A is under way if they have to wait too long for answers about their future. The Need for Speed Though 18 months to two years is often considered acceptable to complete the workforce integration involved in an M&A project, that s far too long because it s far too costly. There are proven ways to cut that time in half. Imagine the value that an M&A can deliver if workforce integration is completed in nine months instead of nearly two years. Not only is it possible, it s being done now by companies using the right strategies and solutions. Challenges that Sink an M&A > An inability to vet, and then cope with, differences in corporate cultures. > Lack of speed. Completing mergers quickly is vital to achieving cost savings, economies of scale and to keeping valuable workers on board. People don t like uncertainty and may leave while the M&A is under way if they have to wait too long for answers about their future. > Failing to follow a logical process for quickly putting the best managers in the right positions. > Unclear and incomplete lines of communication, for planning and discovering as much as possible about the acquired company s workforce pre-merger. > Failing to plan for and mitigate the costs of merging. > An inability to manage what can become an overwhelming volume of data. > Converting that data to trusted and usable information. The Common Thread in M&A Failures The above factors are all about workforce information the ability to obtain it quickly enough to make a difference, share it, talk about it easily to obtain consensus, use it to objectively determine what the new workforce should look like and to put the best people in the best jobs. 2

3 What Happens in Successful Mergers/Integrations First, the manual, redundant processes that companies often rely on to share workforce information, such as Microsoft PowerPoint and s are de-emphasized or abandoned. They are far too slow and prone to error. They re replaced by an automated and collaborative solution that integrates workforce information, extracts that information and easily shares it for fast decisions and for detailed, fast planning regarding people and the budgets that support them. It is crucial that the due diligence includes not just the financial numbers but also information about people and culture, for it is the people who drive the success of the new company. Thus, companies are able to perform careful due diligence on the people in the organizations they plan to acquire or merge with, including abilities, experience, career paths, performance reviews and where the employees see themselves in the future. It is crucial the due diligence includes not just the financial numbers but also information about people and culture, for it is the people who drive the success of the new company. And, conversely, if there is potential bad news that, for example, the cultures are very different it needs to be discovered early. Some companies are used to a command and control structure where decisions always are made at a high level vs. a decentralized empowerment culture where people dealing directly with customers can and do make decisions that impact dollars. These two cultures may well prove difficult to mesh. But knowing the differences early on can inform all subsequent decisions and influence the combined organizational structure. Next, key players create a new strategic vision based on the strengths and weaknesses of the two merging organizations. At this point key managers in both companies can now be quickly identified, motivated, retained and properly placed. Now the HR information of both organizations can be integrated quickly and validated for accuracy so that global or holistic HR reporting can go to executive decision makers. As a result, the workforces are integrated deliberately and swiftly. However, this can only happen if companies tap into a proven workforce planning and management solution one that s collaborative, web-based and designed specifically to help companies plan and execute significant workforce transitions. 3

4 What a Workforce Planning and Management Solution Should Do The visualization, modeling and collaborative capabilities of a robust workforce planning tool help streamline and lend collaborative logic to restructuring decisions, dramatically reducing risk as well as time and money spent in transition. Specifically, this entails: > Visual drag-and-drop modeling for faster, better decisions > Centralized workforce information to provide one-click information access for expedited improved decisions > A collaborative online workspace that enables teams to submit proposed organizational models for specific areas of the organization > Mass updates that can be automated and passed to the various workforce systems of record > Audit and change reporting > Management of any type of hierarchical data, including person-to-person, position-toposition, organizational units and cost centers > Truly intuitive self-service that allows for decentralized validation and management of organizational data > Workflow and notification capabilities that support company policies, procedures and processes > Keeping the workforce planning solution synchronized with the various source systems in order to account for the ongoing business changes during the M&A integration lifecycle > An ability to confidently secure the data A Rational, Objective Approach Yields Better Results With the ability to work with workforce planning solutions, managers are now able to, for example, work with templates doing what-if planning by position, experience and qualification rather than by name. Thus, decisions become far more rational because managers no longer have employee names, possibly their friends, staring them in the face. This eliminates guesswork, favoritism and pressure to place managers according to politics. How Moving Quickly Helps People Mergers are unsettling; people don t like uncertainty. They wonder, Will I lose my job? If I stay on, what will I be doing? Who will I be reporting to?. The faster the decisions can be made, the more settled and more productive people are going to be. 4

5 Why Time Equals Money Example: A company with 20,000 people needs to downsize its workforce by 10% a reduction of about 2,000 knowledge workers who on average cost around $100,000 per year. Every month that the 2,000 people are still employed costs the company about $16 million. Executing the transition even one day faster saves $700,000. Cutting two months off the integration time saves $32 million. Not only can this be done, it is being done so long as organizations deploy the right workforce planning solution. Be Proactive If you can get the right workforce management tool in place before your next major merger or workforce integration event, your organization will realize at least three major benefits: First, the company will be more valuable if it ever becomes a target and, second, even if it never becomes a target, it will be ready to roll when the next merger or acquisition workforce integration needs to take place. Additionally, having a robust workforce management tool in place serves as a continuing source of strength, efficiency, productivity and cost savings for your own growth and reorganization activities. The only way to quickly accomplish these objectives is to deploy a proven workforce planning and management solution. To learn more about Aquire s M&A and workforce modeling solutions, click here. North American Office 400 East Las Colinas Blvd. Suite 500 Irving, TX USA Phone: Fax: Toll-free: Aquire United Kingdom, Ireland and Africa Enterprise House 5 Roundwood Lane Harpenden Hertfordshire AL5 3BW United Kingdom TEL: TEL (outside the UK): Aquire Europe and Middle East BCB Bachstrasse 1 CH-9606 Bütschwil, Sankt Gallen Switzerland/Schweiz/Suisse TEL: TEL (outside Switzerland): Neumarkt Galerie Richmodstraße Köln Germany TEL: TEL (outside Germany): AQU-245 / aquire.com blog.aquire.com facebook.com/aquire twitter.com/aquireinc linkedin.com (OrgPublisher Group for customers only)