By Bill Nash & John McKeever
We are a professional service firm with aspirations of hyper-growth. To accomplish this goal, we needed a dual strategy for organic and acquisitive growth. Mergers enable us to quickly make step changes in capabilities and market access. Our thinking was that the sooner we put ourselves in a broader category of consulting firms with greater breadth of capabilities, the more competitive we would be with larger, name-brand, firms.
In theory, mergers sound easy. The business case is sound and the people at the top are often excited. In reality, very few mergers are successful, but making sure the consequences of such (including why mergers fail), was a key driver for our merger strategy design and implementation.
Merging Is Like Dating
Finding a merger partner is like setting out to intentionally find a life partner. The key was to find a partner whose business complimented ours, whose core values were aligned and whose leadership could embrace our vision for the future. This assessment cannot be made on paper or through a classic due diligence process. Such requires addressing the internal organizational functional and emotional needs.
All too often, organizations conduct mergers only at the highest levels which focus principally on the financial (or functional) requirements. Our success was founded in our initial structured conversations. Not only did we discuss the mechanics of the functional benefits of the merger, but we also engaged candidates in conversations that offered a sense of inclusion. Merger candidates participated directly and early in both our business and talent development conversations. We acted as if we’re already merged in an effort to assess the quality of the relationship.
This requires courage to share some of our challenges, but, at the end of the process, such was a necessity. This established a spirit of collaboration to nurture moving forward. Simply put, we were looking to see if we could effectively solve problems together and what new views were possible to elicit.
Emotions Are Important, Too
A prescription for success was to engage at the emotional level. We outlined not only the opportunities for individuals, but, more importantly, how will the merger would affect them at a personal level. This was a means to assess how we engage employees in each entity.
Another way to achieve desired emotional outcomes was to establish proper employee “homes.” Everyone needs to see their place within the organization. But it’s not just about setting up a new table of organization. Leadership for each area, sometimes with those whom the employees trusted previously and establishing a clear career path, is imperative. In our new environment, we also allowed employees to reposition themselves within different groups. This conveyed a sense of individual empowerment.
Assess the Market Response Early
Our clients are the best source of feedback as to the real business value created. Concurrently with our internal strategic conversations, we presented ourselves and went to market together as if we had already merged. Certainly, such takes some risk, but it would be better to know if the fit was there or not before legally consummating the merger. Did it make sense to our clients? Would it accomplish what we hoped: expanding our client base and deepening our relationships with our current clients?
As such, we crafted a storyline we would use with our respective clients and with new prospects that made us look and act as if we were a single company. The results were outstanding. Since our business is built on trust, our respective clients quickly saw the benefits and were encouraged that we exposed similar cultural and client service philosophies.
Preparing Employees for Change
The most critical element was yet to come. The leadership of both companies was aligned, the market was responding positively, but were our employees ready for the change? From the onset we were very transparent and public about what we were attempting to do and why, but the literature and history of failed mergers and layoffs still crept into the work force. And since our business is built on the professional service of our people, their engagement was to be the most critical if we were to be successful. They needed to see their lives and opportunities would improve through our merger. Here we needed to do more with actions than with words and speeches. One thing we did was to guarantee the employees from the partner firm that we would not make any dramatic changes in their roles, their compensation or their work environment for a year. This came at a cost, but was essential to alleviate any fears about the transition into the newly merged firm and to provide them with time to experience the newly combined leadership and culture. This also gave leadership time to integrate and learn more about our new combined work force and capabilities. Here we used every conceivable method we could to facilitate communication, cross business integration and a lot of “getting to know each other.”
Almost two years later, we are pleased with the results. We have seen significant expansion of our services with our core clients, been engaged on larger, more challenging assignments and have experienced a low turn over in our workforce. Our biggest lesson to pass on is to focus on the customer and the employees. If they are both engaged and enthusiastic, then you can accomplish almost anything.
C. William Nash is the President of Endeavor Management, a strategic business advisory firm that works with client companies to help them accelerate their growth.
John McKeever is now Executive Vice President of Endeavor Management, previously President of Gelb Consulting Group. Gelb Consulting has provided research-based marketing strategy for almost 50 years, with a unique focus on brand and customer experience management.
Jun 11, 2016 Comments Off on Who Runs the Corporate World?
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