Posted

You’re excited, so why wouldn’t everyone else be?  After all, the synergies between the two staffing firms are obvious.  This is bringing a bigger combined footprint, access to a new customer base, and a team with competencies yours lacks.  You’ll scale faster and everyone will win as a result of this acquisition!

Shockingly, buying a staffing company is the easy part.  Integrating it into your organization is hard – very hard.  Many have failed to produce the expected results for either party.

I’ve been on both sides of the acquisition equation multiple times over the course of my career. This allowed me to both observe from the sidelines, and to be directly impacted by senior management’s mistakes. Some of these mistakes proved fatal for one or both companies with missed growth targets, poor performance in both businesses, and a negative return on investment for the acquiring company.

In this 3-part series, we’ll explore where mistakes are most often made, and what classic change management approaches increase the likelihood of success.

People Mistakes

This one is at the very top of the list for a reason.  It’s ultimately the employees in both companies who will make or break the success of the integration.

You want to win hearts and minds quickly, so here are three mistakes you don’t want to make.

1. Poor communication

Let’s start with the basics.  Assuming everyone will just get on board with the changes naturally is dangerous. Prompt and clear communication to all parties is paramount.  Not having a communication plan, or not being ready to implement it as soon as the deal closes, is another mistake. Investing too much time and energy in closed-door meetings with the senior leadership teams and mismanaging the transition to line management is another.  After all, leaving those closest to customer delivery in both organizations in the dark makes them unsettled and distracted from their core responsibilities – and can ultimately impact sales.

2. Not ripping off the bandaid

With mergers and acquisitions comes redundant jobs.   Some staffing companies wait too long to put the new organizational structure in place; in the meantime, talented executives leave for greener pastures.  Tough decisions only get harder with time, so quickly top-grade the combined talent and fill leadership roles from both organizations with the best performers who will be enthusiastic about the new vision.

Remember that until you announce the appointments, your competitors will start poaching your employees and customers when you are most vulnerable to attack. The sooner you select the new leaders, the quicker you can fill in the levels below them and complete the new org chart. Delay only leads to distracted employees on both sides wondering who will stay or go and talking to headhunters. You want all this energy focused on getting a return on your investment out of the deal

3. Underestimating egos.

Earlier in my career I learned just how much senior leadership egos could cripple sales effectiveness and operating efficiencies.

An acquiring company purchased a small company in the interactive voice response (IVR) space.  The goal was to quickly integrate what was then cutting edge recruiting technology into the entire organization to drive a competitive recruiting advantage.  I originally worked for the acquirer but took a position with the acquiree where my responsibility was to “sell” every division on the benefits of this technology, which they had to pay for.  Unfortunately, power struggles and political posturing between division heads over pricing ensued (“funny money”, from the parent company’s perspective, as one general ledger simply paid another).  This battle between anti-corporate entrepreneurs vs. Joe and Jane corporate created gridlock. Ultimately, the former owners had to leave the company two years later before the technology could be fully integrated.

The lesson?  The CEO must anticipate ego clashes and put the kibosh on power struggles quickly by clearly defining roles.

If two leaders are at an impasse, step in quickly and help them resolve it.  If necessary, put unplanned expenses impacting division budgets on the corporate budget until the dust settles.You want your new division heads focused on leveraging the combined relationship, not being adversaries.

In Part 2 we’ll cover mistakes made the area of Process.

Need help integrating an acquisition? Contact Amy Bingham.

Leave a Reply

Your email address will not be published. Required fields are marked *