By Susan Gallagher, President & CEO, U.S. | Last year set a record for mergers and acquisitions, with more than 50,000 deals valued at more than $3.5 trillion, according to Thomson Reuters. I wonder how many of them will succeed. According to Harvard Business Review, between 70 and 90 percent of mergers and acquisitions fail. The reasons for this failure rate are complex, and no two deals are the same.
Clearly organizations don’t execute a merger or acquisition intending it to fail. When two organizations combine, C-suite executives often focus on the financial and strategic benefits of the deal. A more thorough and different strategy around talent will drive greater success. Since we are left-brain, analytical thinkers, we tend to look at the people question as one of redundancy and position. This is a critical mistake for the future – and the culture – of the combined organization.
Any combination needs a strategy around culture and talent. That strategy should not be a numbers- or position-driven strategy alone but rather a fresh look at two things: 1) What are the key roles (maybe they don’t even exist pre-merger) that will be key to achieving the future-state success? 2) Who are the best resources in those roles? A talent strategy based on skills, attributes, and future potential, aligned with the criteria for success in the key value-driver roles, will impact combination success.
Both parties involved in a merger or acquisition should have a solid understanding of their individual cultures and the strengths (or weaknesses) they bring to the culture table. This is essential to how quickly the new entity can implement change and boost engagement among employees who will be on the team going forward. Leadership must communicate the vision of the new culture and how the two entities will blend or change to help talent step up and drive the desired results.
Of course, reductions in force are usually part of the picture. In these scenarios, it’s paramount to treat your outgoing employees with kindness and respect, and to communicate well to all involved. Take a step back and ask, “What is the business goal?” and convey that to the team. Leaders should focus on communicating with their people, rather than to them, which will enhance your employer brand among both those who are staying and those leaving.
Putting the right teams together will have lasting impact on the company’s ability to achieve its financial and strategic business goals. Instead of thinking, “I need to eliminate one of these two positions because they do the same job,” think more along the lines of, “What are my critical value-add positions in the newly combined future state?” Identify the high-potential performers and team members with the attributes to play in the “new world” that’s being created.
Evaluating the talent implications of your unique business strategies will help you build alignment and create buy-in from important stakeholders, as well as prioritize investments to those areas most critical for business results. By combining the talents and skills of different people in different roles, the merged entity can drive a very different organization into the future.
The content of this piece originally appeared on ChiefExecutive.net