The Building Blocks of a Strong People Strategy
Before any major assessment and work can begin on cultural integration during M&A, organizations need to address two additional key questions:
1. Are All Dealmaking Parties Aligned Before M&A?
Companies expecting or planning for M&A should strive to align different organizational cultures before an actual deal closes. Early planning of cultural alignment between the buyer and seller can minimize the number of challenges faced during the final stages of a deal. What’s more, addressing cultural alignment early on has been shown to increase the value of the deal. Consider that 65 percent of acquirers said cultural issues hampered the creation of value in their last deal, according to a PwC survey1. There is plenty to discuss among leaders in the early stages. For example, do both organizations have the same outlook? How will differences and similarities impact integration?
2. Is Talent Secured to Ensure Future Readiness After M&A?
In the constantly evolving business landscape, employers need skilled and agile talent more than ever. An M&A deal requires both companies to assess the strengths and future skills gaps among their workforces. Talent assessment and checking workforce readiness can help companies navigate the complexities of M&A and emerge as stronger, more competitive entities. Companies that know how much upskilling and reskilling effort will be needed post-deal will be better prepared for integration and alignment efforts. A future skills framework can help companies map key functions or areas of priority within their organizations to make accurate and detailed talent assessments. Aon uses market intelligence to provide real-time insight into the skills that matter most to employers across a wide range of industries and regions.
Initiating Change Management and Communication in M&A
At its core, change management is most successful when:
- The work focuses on helping individuals make changes.
- It starts before the deal closes and continues after close.
- It’s conducted in tandem with the workstream overseeing cultural alignment.
Before engaging in any change work, organizations should agree on their method and ensure there’s a team in place that knows how to employ it. “Look for a people-centric change approach that supports your people through the cultural transitions in tangible, enduring ways,” says Andrea Mindell, a partner in Aon’s Human Capital practice who specializes in change management. For example, Aon’s 4E change management framework helps organizations envision their future state, engage key stakeholders, enable a future-ready workforce and embed the change for long-term success.
In addition, companies that employ a change management approach at the beginning of a project — with a unified culture-change team — are best equipped to reach their desired culture as the companies combine. “At the same time leaders share their outlook for their organization’s culture, the change team can explore barriers to cultural alignment and strategize how to mitigate those risks,” says Mindell. “Those findings can then be used to develop and roll out a comprehensive communication, training and education campaign in the most effective way.
Indeed, a recent study2 found 65 percent of companies reported their change effectiveness as “excellent” or “good” when change work was embedded at a project’s initiation. That’s nearly double the number of companies that ranked their change effectiveness as excellent or good when they began change work at a later stage, like implementation. And remember — this shouldn’t be thought of as a one-time exercise. Apply the principles of change management before, during and after close to speed up the change adoption, Mindell says.