A critical element of success in post-acquisition integration is identifying the right jobs to drive performance and then selecting the right people for those jobs. Selecting people for key positions in the new organization is among the most critical steps in the integration process. These choices are key to determining if the acquisition is accretive in value. It also provides the foundation for future success of the business and adopting a powerful organizational culture. At KingChapman, we think about how leaders can succeed in dealing with the Conundrum of People in M&A. In over thirty years of consulting in acquisitions, we find that getting the right person in the right job is critical to future success. It provides an excellent opportunity for leadership in bringing two or more organizations together. Placing the right people in the right jobs is also crucial communication to people in all organizations regarding their leader’s commitments and values.
In tandem with our clients, we have developed a “Right Person, Right Job” process for leaders to use in populating new organizations. How a selection process is conducted is a vivid illustration of the executives/managers commitments regarding the future of the organization. If the organizational design reflects no new thinking and people selected are the usual suspects, it is a clear demonstration that nothing will change. If, on the other hand, the organizational design reflects the new future created via the acquisition, then it demonstrates their commitment to a robust future for the organization that is exciting for people in the organization. Further, if finding the right people for the jobs is deliberate, with open conversations of personal values, then people will see that the selection process is consistent with the commitment to future success. As with all our work, the focus is on creating a powerful future, developing strategies for that future and delivering exceptional business results. This provides the context for this leadership process.
Getting the right people in the right job requires leadership commitment to creating a powerful, Invented Future for the business. This Invented Future provides the context for thinking about organizational design, organizational structure, and selecting the “right” people to go into those positions. If that commitment is not explicit, then that is the place to start. A robust, Invented Future needs to be created prior to taking any other actions. Without an Invented Future, the design of the new organization will invariably be based on the past. That is, the past of the organization which is making the acquisition. The flaw in relying on past-based designs is that future success of the combined organizations depends on creating a new future which is more powerful than was possible prior to the acquisition. There is a strong tendency to assume that an Invented Future is not needed since the organization making the acquisition had sufficiently strong organizational design, people and resources to execute the growth strategies. This mindset assumes the existing future is sufficient is a mistake which will hamper success in integrating the acquisition and creating growth.
Thinking from this invented future provides a platform for developing an organizational design consistent with that future, rather than the past. Organizational design begins with the identification of the design elements and principles which are important given the Invented Future. Teasing out these elements is best done in a conversation with others about the Invented Future and strategies for achieving that Invented Future. In these conversations, keep asking what are the elements or principles of design we need for our organization?
As an example, continued innovation is often a key element in an organization’s strategy. If approached from a design standpoint, the useful question is “How can we build amazing innovation into our organization?” By delving into that question, endless opportunities will emerge. In contrast, if innovation is considered from perspective of organizational structure, the predictable response is we need an executive in charge of innovation and an innovation department. While this structural approach may seem logical, the probability of success is low.
A common misconception is that organizational design and organizational structure are the same. Both are important, yet are not the same. Organizational structure is the formal structure of accountability and usually is represented by a formal organization chart. This arrangement of boxes and lines is often where managers begin in thinking about an organization. While organizational structure is important, it is usually the last step to be taken rather than the first place to start.
Assess the Position
Begin with a clear definition of the position.
- What is the role?
- What are the key outcomes to be produced by this position?
- Are there other key deliverables that should be produced by this position?
If this is a non-managerial or technical position, describe the type and importance of the technical skills required. Does this person need to be a “best-in-class” performer, or more of a journeyman?
If this is a management position, describe the expectations for the person in this position to have further advancement, i.e., is this the top or terminal position for a person in this role? If not, discuss the expectations for where the person in this role should go next, and the skills that will be required for that role. Time frame for promotion should also be discussed.
Assessing the Candidates
The people who are in consideration for the position should be discussed based on the specific requirements for the position. The background commitment is to support the managers in evaluating candidates for positions in an objective manner. The essence is that each person was given a fair hearing and discussion of his or her suitability for their fit in the revised organization. The focus is to discuss the person’s track record of producing business results and fit with the company values. Watch for the conversation drifting off to talk about what a good person they are, how important they have been in the past to the company, what role they play in the community, etc. The focus is on getting the best person for the job based on results and values.
Once the decision is made, then there can be a discussion on the extenuating circumstances, e.g., the best candidate wants to retire in the next year. Be slow to reverse selecting the best person. If none of the candidates appear to be of the caliber needed, leave the position vacant and conduct a search to find such a person.
A critical element of success in post-acquisition integration is identifying the right jobs to drive performance and then selecting the right people for those jobs. Selecting people for key positions in the new organization is among the most critical steps in the integration process. The conversations used to design, structure and populate the new organization is a vivid demonstration of leadership’s commitment to success of the post-acquisition integration as well as business success of the organization.
Half of M&A transactions fail to create value. Ever wonder why? Download our whitepaper ‘The Conundrum of People in M&A’, and understand the critical elements that impact mergers and acquisitions success or failure.
In it, you will learn:
- Eight common flaws in decision-making often made by executives in M&A transactions
- Why the integration process is so critical
- Tactics in organizing, planning, and communicating that lead to successful integrations