INTRODUCTION
Over the years, the conventional process of making staffing changes on the heels of an acquisition has taken one of two forms. Sometimes the acquired firm steps in early to make people changes, whether in just a handful of positions or with wholesale reorganization. In the other approach, the parent company attempts to maintain a hands-off stance again, except for perhaps one or two initial changes until several months have elapsed that hopefully allow enough time for everyone to calm down and become adjusted to the situation. One of the familiar steps in this second tactic involves assurances from executives in the parent company to the effect that, “We don’t plan any personnel changes.”
In both of these approaches, however, the critical element that’s missing is a systematic, incisive assessment of what the acquisition brings vis-à-vis management and technical talent. Typically, the acquiring firm will take a piecemeal approach, wherein a few people here and there are evaluated in a professional fashion. Or a number of people may be appraised in a sketchy manner but so superficially that much room remains for potential problems to develop.
Top management in the acquiring firm might argue that it is best to allow some time for them to get to know the abilities and potentials of the management team in the target organization. But that assumes that those people will hang around long enough for such a familiarization process to occur. Often they do not. Furthermore, while taking the slow route, a part of this getting-acquainted exercise may consist of seeing bad management decisions being made, mistakes that could have been prevented. Likewise, key opportunities may be lost. All in all, this can prove to be an expensive and time-consuming education process. This approach also drags out the integration of the two firms. It forestalls needed resolution and leaves questions unanswered, prolonging the anxiety and ambiguity, thus contributing to the chronic problem of post-merger drift.
This approach is not necessarily a kind and thoughtful way of dealing with staffing matters. Nor is it likely to be viewed favorably by people in the acquired organization. Rather than looking on this as a fair and equitable opportunity to prove themselves, they will more likely be anxiously waiting to see when and where the axe will fall.
The situation feels like benign neglect to people in the acquisition, as if they are being left to dangle helplessly in the wind. In their opinion, it would be better to get closure, to be appraised promptly and fairly, so that they can get on with their careers either secure in the merged firm or somewhere else.
Why Should Incumbents Be Evaluated?
It might be argued that in several merger scenarios it is best to go with the status quo—that is, move on the premise that the incumbent management team is sound and that the acquiring company should not fool around with something that’s working. This line of reasoning sounds good on the surface, especially if the acquired firm is financially healthy and has a pretty good track record. Upon careful scrutiny, however, it proves to be flawed in a number of respects.
Some Incumbents May Not Play to Stay
To begin with, the acquirer needs to ascertain who plans to remain on board. The new owner may be extremely fond of the new charges and fully confident that they can continue to operate the company in a successful fashion. But that’s no guarantee whatsoever that the feelings are reciprocal. Even if these incumbents are not grumbling, even if they appear to be reconciled to the situation, in-depth data gathering often proves otherwise. The acquirer should rapidly identify fast-track, high-talent employees so that the parent company can put forth special efforts to retain them. Often these people can be “hooked” with heavy-duty assignments and special developmental opportunities that clearly communicate the key role they can play in the organization’s future.
It is particularly important for the new owner to take pains to identify these people and tie them to the organization if the acquisition represents a move by the parent company into new terrain, for example, unfamiliar products/services and different markets. The less one understands the business that has been bought, the more crucial it is to keep those people on board who do have a firm grasp of what it takes to make the business a success. The same general idea holds true, of course, if the acquirer does not have any surplus management talent to speak of that could be sent across to manage things in the event key vacancies develop in the acquisition. And after an adversative merger battle has been fought, as in a raid or contested situation, the question of who is willing to stay is a particularly sensitive issue.
Some People Should Be Repositioned or Terminated ...
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