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Hewitt Quarterly
Asia Pacific
is made possible through the combined skills and experience
of Hewitt consultants from across the Asia-Pacific region.
For further information please
contact:
Hewitt Associates
2601-05 Shell Tower
Times Square
Causeway Bay
Hong Kong
Tel: (852) 2877-8600
Fax: (852) 2877-2701
editor-hqap@hewitt.com
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| Winning friends and adding value when competitors become allies |
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Winning friends and adding value when competitors become allies
Failing to get the best out of your people in a merger situation is a short cut to destroying much of the value the merger was designed to create in the first place.But how do you blend together teams of people coming from what may previously have been market rivals and get the best out of them? And how do you achieve that when not all of them can have the job they might want in the new organization - even if all have been guaranteed a role of some sort?
This was the challenge facing Hewitt Associates when they were asked to act as consultants on one of the biggest ever mergers in the Asia Pacific region.
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The new alliance involved the merger of three large corporations from a country that is a prominent member of the economic and political bloc known as the Association of Southeast Asian Nations (ASEAN).
The newly formed business, with Hewitt's help, faced the challenge of making more than 100,000 employees feel good enough to remain productive, while at the same time securing shareholder value for the new business. Only by maintaining the support and confidence of all the stakeholders could the value-adding rationale for the merger be maintained, and an efficient new company built from the ground up.
The building process meant basic issues, such as business objectives and organizational structures, had to be established before talent identification and selection for key roles could begin. It created an extremely high-pressure situation because studies show the more drawn out the integration process during a merger, the greater the risk of eroding value.
"It caused a lot of intensive work, calling on the cooperation of many client contacts as well as our internal team. In effect, we had to conduct a very rapid cascade of organizational design and leadership mapping," explains Alan Parker, Hewitt's Project Director for the merger project.
To direct such a high-pressure integration process, the new business set up a merger integration office (MIO).
Through this structure, parallel teams from Hewitt and the fledgling business looked at each aspect of the business. The parallel structures had cross-reporting systems. This gave Hewitt space to do fresh thinking on each issue, but enough direct involvement in the process to cooperate with and advise the various in-house change leaders and the management teams, and to respond to their needs and experiences at ground level within the business.
"The whole project involved dealing with a lot of stakeholders who were under a lot of pressure - maintaining their current roles while, at the same time, trying to manage the integration of the three organizations. These were people who were trying to run two jobs at once and you've got to take even more of their time to talk about people aspects," says Persis Mathias, Hewitt's Project Manager for the assignment.
This is where effective stakeholder management - the personal, human aspect to a big merger - is vital. HR consultants need to show sensitivity and common sense in gaining the trust of stakeholders, listening carefully to what they say in the precious time the consultants have with them, and making it clear the consultants are acting as honest brokers on behalf of all the merger partners and all the people involved. Hewitt's ability to leave stakeholders satisfied and not frowning at the end of meetings was vital in driving forward such a complex, intense project.
Once the organizational design and leadership roles were established, the process of placing people into leadership roles - known during the assignment as Leadership Mapping - could begin.
In any merger, two of the most pressing needs are to appoint new leadership for the new business swiftly in a way that focuses on the right fit, and to ensure good and timely communication about the changes within the new organization.
"The faster you can get people focused on productivity and customers, the better chance you have of achieving the revenue and cost synergies," says Parker.
"If your people cannot fit into the new integrated culture, you'll have a tough time creating value. And the HR integration will fail if your people are not engaged with the new programs," he adds.
Without these elements, a business can lose focus, and employee morale and engagement can suffer, resulting in an increased turnover of people and a further loss of business momentum.
Yet, a recent study from Hewitt on M&A activity in the Asia Pacific region shows many businesses are still not addressing these issues during the key early stages of M&A.
The study suggested only just over 50 per cent of the companies involved actually bother measuring employee engagement before, during and after the M&A process.
Hewitt's use of formal leadership mapping methodologies was invaluable in maintaining employee engagement because the process was seen to be objective and not influenced by any pre-existing relationships within the partner companies.
Well-marshaled formal mapping was also vital given the sheer numbers of people who had to be evaluated.
"Leadership mapping was a huge task, and it had to be done at a hectic pace," says Susan Gleave, a chartered organizational psychologist and the Head of Hewitt Leadership Consulting in the ASEAN country concerned.
Candidates were asked to attend a center where a variety of leadership profiling tests, including psychometric personality profiling, were used.
Currently, few acquiring organizations are using the sort of comprehensive tools and processes for leadership mapping employed by Hewitt on this particular project. Most are relying on traditional methods, such as personal interviews with incumbents, CV reviews, and past performance reviews.
The difficulty with this is that it may result in the wrong people being appointed to senior positions. Getting the leadership issue right from the outset in an Asian M&A situation is particularly important because, in a heated mergers market experiencing a talent squeeze, it cannot be assumed that the right leadership candidates will be available via internal appointments alone.
"With this project, we not only had to identify a large number of leadership candidates. We also had to think carefully about the best mix of roles mapping, as all candidates were assured of being offered some role in the organization," says Gleave.
"The new business had made a commitment that no one would be without a job. Everybody among the 100,000-plus people was guaranteed they could continue in employment if they so wished."
Senior leaders were identified first and then announced publicly, with other leadership roles identified and disclosed on a cascading basis down through the organization.
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Organization and People Scan |
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Rewards, including Compensation & Benefits and Retention Incentives |
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Organization Structure, Leadership and Manning, including Employee Utilization |
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Transition and Implementation Planning |
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HR Strategy and its outcomes - Values, Culture and HR Organization |
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Communication and Change Management |
"It was a very unusual and demanding situation," explains Gleave.
"We all had to come out of it with people knowing that this was a rigorous process and feeling by and large that this was a good and fair result."
Another vital element in creating a feeling that this was a merger conducted with integrity was meshing the different reward and benefit systems of the three partners together so that all the stakeholders felt they were being treated fairly.
"We had to do it in a way that not only worked, but that avoided blowing the cost line out of the water. Failure to deal with this effectively and fairly would have seriously eroded value for the new venture," says Mathias.
"Our experience in reward and benefit consulting, including the efficient use of tried and tested tools and methodologies, enabled us to come up with a competitive and performance focused rewards system, including a flexible benefits program, that effectively balances and satisfies the various stakeholder needs."
Parker adds, "When dealing with a project on this scale, formal and effective tools are essential for success.
"Yes, you have to think creatively, and yes, you have to manage stakeholder concerns sensitively on a human level. But a major merger such as this requires a great deal of integrated effort, and that requires organizational excellence on the part of the consultants.
"The amount of work that has to be done in relation to people from one end of the spectrum to the other, concurrently and at a high pace, means that experience, along with excellence in formal tools and processes, is vital. If the consultants don't have that excellence, it can lead to lost opportunities that consulting talent alone can't rectify."
The authors can be reached at: alan.parker@hewitt.com, persis.mathias@hewitt.com, susan.gleave@hewitt.com
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