Companies that go through merger and acquisitions try to optimize cost, but at what price?
In this modern era of digital transformation and disruptive innovation, companies of similar kinds are coming together to reduce competition by minimizing adoption and opportunity cost. However, it has also been found by various world-renowned research firms that a large number of the mergers and acquisitions (M & A) have not been successful due to the failure in integrating culture of the two different entities.
There are factors affecting the body and soul of the warm bodies of two different entities despite various initiatives launched by the management to brand the coming together successful. It is like marriage where if two different unknown individual don’t act and think alike, it becomes difficult to make the relation successful. Likewise, in case of an M & A the businesses suffer.
‘Synergy’ and ‘optimization’ are the keys to make any merger work. And sure enough, they get thrown around a lot in the relevant sectors, across industries. While they are important, an in-depth look into them shows that the most critical element in this equation is actually the “people,” which finally determines the fate of the cultural integration.
‘Synergy’ is the core selling element for any proposed business case of M & A based on what the ‘yes’ or ‘no’ is being decided for such initiatives. Respective management commits to their board about bringing synergy (cost, system, process, people, etc) on completion of a merger and approval is sought showing relevant facts and figures.
During the post-merger phase, we all become busy to deliver on our promises to bring ‘synergy’ that we promised. Yes, this is the right thing to do as per situation demands. However, ignoring people who would drive the initiatives for bringing synergy could be the downfall.
‘Optimization’ is again another term that gets referred to a lot after a merger or acquisition. It essentially became synonymous with focus on cost. As a general trend the first cost optimization, believe it or not, starts with reducing the quality and quantity of food in the employee canteen.
Optimization of other resources like reducing space sometime gets a strong focus. So, ultimately the critical success factor element “people” is being undervalued or ignored in bringing ‘synergy’ or ‘optimization’.
Yet, there are established principles and proven good practices that can make ‘cultural integration’ successful.
Open communication with the employees in a post-merger situation can begin the process putting them in the centre of importance, and eventually help pushing the company forward in the right direction.
No hidden agenda of the Management
Distrusting the people in the company and keeping them in the dark often equals to self-sabotaging the company, even though the management believes it is protecting the company.
Don’t ignore peoples’ feelings
This may sound like common sense, but the practice is not quite as common. Allowing your people to speak their minds would eventually help you to find out the right way towards success for the company.
Over using the term ‘optimization’ leaves erroneous impression
This could, in the mind of the employees, make the impression that their jobs are not important enough and they might feel they are expendable.
Don’t over emphasize on cost optimization
You have to optimize cost, but you have to give your employees their due importance. Brandishing cost optimization around reduces people’s confidence and leads them to think that they are being considered as mere numbers.
Launch some new initiatives engaging all the employees
This is important for a new entity that has needs to make a positive impact through employee engagement and boost morale.
Build relationship with positivity and authenticity
This approach would increase trust between the employees and management. It has proven to be the key to successful cultural integration.
Md Faisal Imtiaz Khan is Head of Human Resources at Robi Axiata Limited