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HIGHLIGHTS
- A well-designed change management plan, curated to proactively mitigate challenges unique to mergers, acquisitions and divestitures (MA&D) such as aggressive timelines, can bolster the success rate of a deal.
- Companies need to adopt a tailored change management approach by following a playbook for Day 1 readiness that will deliver maximum value in MA&D.
- Essential elements for driving change? Leadership buy-in or sponsorship, stakeholder engagement, communications, readiness, risk mitigation, putting people first, and the right organizational culture.
In this article
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Unlock value in MA&D
Strategic change management strategies and frameworks help organizations drive innovation and unlock value from MA&D transactions.
Typically, MA&D transactions have aggressive timelines from deal inception to close. Whether it’s resistance throughout all levels within the organization, inability to meet program objectives, or low performance and productivity, these transactions can be fraught with challenges.
The focus for leaders of organizations engaging in MA&D has traditionally been on the hard side of the transaction, such as the functional business operation or IT infrastructure. Seasoned leaders with experience in MA&D can confidently assess and quantify the more tangible aspects of the program. However, they should not overlook the people and culture element of the equation. Successful outcomes are a result of both quantitative and qualitative aspects of MA&D transactions.
As leaders assume a more proactive approach to change management, they should take into account key people and culture considerations that are vital in delivering success outcomes.
Role of change management
Research shows that 70% to 90% of M&As fail to achieve their anticipated strategic and financial objectives.
What are the reasons for this failure? They often lie in HR-related factors, such as incompatible cultures, poor management styles, low motivation, loss of key talent, lack of communication, diminished trust, and uncertainty of long-term goals.
For a higher degree of success in MA&D with aggressive Day 1 Readiness timelines, organizations need a well-designed change management plan. The change management plan prepares, navigates, and manages an organization’s people, including corporate culture, through the process of change. It provides leaders with a realistic measure and helps gauge the probability of success in realizing MA&D outcomes right from the start.
Strategic programs
MA&D transactions have increased due to favorable economic conditions, and global economic markets should anticipate this surge to continue in the future.
How can this growing demand be met? Leaders must roll-out full-scale change management programs that are strategic, flexible, and agile enough to realize program objectives. Change management programs within MA&D, in the most practical sense and experience, are often only inclusive of communications plans, and managed in-house, relying on individual workstreams and business units to be executed and managed in silos.
The change management team plays an evolutionary role, although fluid, during the various phases of the MA&D. Throughout, it has one goal: to effectively assess the change management strategy, share the vision, and ensure stakeholders are aligned, supported, and managed during the MA&D life cycle to realize expected value (see figure 1).
CM's role in driving value from mergers, acquisitions, and divestitures
Adopt a playbook
As strategic partners and advisors, change management teams support leadership and project teams during MA&D with change management strategies, templates, and tools for Day-1 readiness.
A Prosci research study indicates that 85% of participants did some measure of employee engagement, but less than half did so on a regular cadence. The change management team—the ‘unseen hand’—directs, leads, and guides the organization’s change agents to engage, accurately assess, and intermittently measure employee engagement during MA&D transactions. The communications strategy and plan, for instance, should include cultural dimensions unique to individual stakeholders such as assertiveness—the degree to which an individual is expected to express their personal needs and welfare to others. Here, the change management team is the trusted strategic advisor.
Let’s look at the five fundamental components of the organization change management (OCM) Day-1 readiness playbook that change management teams can leverage for successful MA&Ds:
- Communications: Improve the success of change management through communications, one of the top three activities for stakeholder assessment and analysis, and relation and coalition building. The deliverables include communications strategy and plan, and communications message templates.
- Cultural awareness and engagement: Promote cultural awareness, considered a top priority. The deliverables include cultural adaptation strategies, and cultural assessment heat maps.
- Stakeholder management and engagement: Apply change management for a positive impact on stakeholder engagement. The deliverables include tailored stakeholder assessments, and stakeholder maturity assessments.
- Resistance management: Manage resistance at all levels within the organization from the bottom up, including frontline employees, mid and senior-level managers. The deliverables include a resistance management strategy and plan that encompasses tailored resistance mitigation strategies and techniques.
- Organizational readiness: Leverage the top three methods to assess an organization’s change—written assessments, meetings and trainings, and interviews. The deliverables include readiness and adoption assessments, and readiness heat maps.
Robust OCM
Instilling confidence in leaders during MA&D transactions
Intelligent leaders acknowledge the role a change management framework plays in successfully guiding the organization through changes in culture and people during MA&D transactions. They proactively adopt change management programs that are tailored to fit their specific MA&D transactions, improving the overall health and outcomes of their deals. This approach offers intelligent leaders a true sense of confidence, successfully realizing targeted outcomes in these transactions.
