Ensuring Post-M&A Integration Success

Simplify change management communication and ensure employee adoption with a single source of truth

When luxury car maker Daimler-Benz acquired Chrysler in 1998, the goal was to create a trans-Atlantic powerhouse. The globally renowned maker of Mercedes-Benz merged with the third-largest car company in the U.S. for $37 billion – the biggest acquisition in history of a US company by a foreign buyer.¹

Daimler-Benz planned for Chrysler to use Daimler parts, components, and vehicle architecture to sharply reduce the cost of production on future vehicles. But Daimler’s Mercedes-Benz luxury division was reluctant to share. Chrysler was only given some steering and suspension components, a transmission, a diesel engine, and some purchasing deals. Not enough to increase their North American footprint, as Daimler had hoped. And as such, they couldn’t keep up with the increasing competition from Asian carmakers.²

The companies couldn’t figure out how to run as one, so they continued to run as separate organizations. After nine years, Daimler-Benz sold Chrysler for $7 billion – a roughly $30-billion loss.¹

Significant cultural differences created a lack of trust that threatened integration problems for Daimler and Chrysler from the start. At the end of the union, DaimlerChrysler’s chief executive said they “obviously overestimated” the potential of synergies.²

What was initially seen as a “merger of equals” became a case of corporate clashing.¹ Two companies from different countries, with different languages and styles, came together without ever realizing any of their projected synergies. The merger was eventually described as “simply an exercise in empire-building.”²

DaimlerChrysler is an extreme example of what can go wrong when two companies come together. Daimler had a plan for how they would reach their financial goals and the targets they’d sold to Wall Street but couldn’t deliver against those commitments. A core issue that can impair the value of the merger is management’s tendency to focus on changes that will help to capture the deal’s value targets without being able to focus their team on the nuts and bolts of those changes. Those with boots on the ground are the ones who will maintain the company’s health to get there.³

In bringing two or more companies together, it’s important to get everyone on the same page as early as possible. Communicate as much as you can to your team about the new company’s vision and how your team is essential in reaching the targeted synergies. Combine operations with detailed processes, policies, and governance to support the desired changes. And drive the execution home with tools that help your employees adopt the new operating model.³ The right tools can help connect the combining workforces, provide a single source of truth, and provide seamless communication.

Communicate the Company’s Direction and How to Get There

Communication is key in change management. When combining organizations, differing procedures and overlapping staff are bound to generate errors, miscommunication, and confusion for customers. So, it’s important to communicate the direction of the new organization as early in the process as possible. Then, as soon as possible after that, it’s important to show employees the way forward.

Before cultural change even begins, the CEO and executive team should own and drive the change-management program. Leadership should clearly articulate the new company’s direction, strategic priorities, operating model, and cultural aspirations.³

By defining the desired future culture for the new organization to your employees early on, they’ll see the bigger picture and their role in it. Leaders that consistently communicate a clear and compelling case for change, and model it in their behavior, help their team develop an understanding, which leads to energy and enthusiasm for the change.

Before accepting and supporting change, people throughout the organization need to understand its rationale. Promoting a more personalized story to the individuals on your team will also help you gain their trust and buy-in.³

A single source of truth – one place everyone can access for information that is clear, consistent, and accurate – bridges what once were separate companies. Uniting your teams down to the informational level can increase their loyalty to the new company. Without that level of buy-in from Mercedes-Benz, DaimlerChrysler couldn’t execute their plan. If their employees had been more on board with the greater vision for the new, trans-Atlantic organization, their combined strengths might have had a better chance against Japanese competition.

Communication and access to information can also help reduce the risk of losing native talent. If your employees are hearing murmurs of a merger but aren’t getting the story from leadership, they’re more likely to fear their jobs aren’t secure. If employees feel confused about the integration, they’re more likely to leave their jobs and look for calmer waters.⁴

Creating a single source of truth will align everyone from the start. A single source of truth ensures employees are all receiving the same communications for company and procedural updates. They’ll have a tool that ensures client concerns are handled quickly and accurately every time. And it’s a place they can turn to when they inevitably have questions.

Establishing a single source of truth will also give you piece of mind that as your teams begin to integrate, they’ll all be working from the same playbook.

Combine Operations

Even without the extreme cultural clashes that happened at DaimlerChrysler, you will inevitably see some friction emerge during your integration.¹  

Adapting to changed operating models poses some of the most visible and difficult issues for employees. If your company can’t announce these changes early in the merger-planning effort, communicate regularly as the plan evolves. An effective plan is even more critical to ensure employees understand the process and timeline until more can be revealed. Processes should be communicated in such a way that employees understand how roles will interact and decisions will be made in the new company.

Clearly communicating operational changes is key to a successful integration, but communication only gets you so far. Before long, all efforts to communicate can blur together and you’ll have no way of knowing what’s getting through and what isn’t. Employing reinforcement mechanisms, like digital work instructions and formal policy acknowledgements, will help introduce new policies and procedures. They’ll create new behaviors and ensure they stick.

Get Your Team Where They Need to Be, Faster

Your employees are your biggest asset. Competency builds confidence and confidence, more than anything else, is the key to employee retention. Confidence and training go hand in hand to help change mindsets and behavior – and keep everyone pulling in the same direction.

When you bring two organizations together, you’ll likely have many employees who require training or development to get everyone operating at the same level of proficiency. Investing in a formal and organized training program will get your team where they need to be faster. It will also send a message that your organization cares about the professional growth of all employees, not just the team already operating as intended.⁴

Incorporate on-the-job training in the form of digital work instructions and job aids to help get teams up to speed quickly. Reinforce critical information with quizzing. And check in frequently with evaluations to ensure compliance and provide meaningful feedback.

This is also an opportunity for you to learn. As teams adopt new skills based on your policies and procedures, capture their feedback. Where are they getting stuck? What parts are confusing? Getting granular process feedback as part of workflow can help you to continuously improve as you go.

Capturing and implementing feedback, alongside providing clear direction, all support retention, ensuring you don’t lose your best team members during the transition.

Scared employees will act to protect their jobs as opposed to helping the organization realize synergies.¹ Providing them with the tools to be successful will build trust. Your investment in them will be an investment back into the organization and promote successful retention.

The best practices described above probably make sense in theory, but you may be wondering how they apply to real world scenarios. The following sections describe how our clients have deployed Acadia as their single source of truth in situations as diverse as yard management, beverage manufacturing, and banking.

Consistent Execution Across a Distributed Workforce

One of our clients is a proven leader in yard management services. What started as a small family business in Georgia has grown to a distributed workforce of over 5,000+ team members working at more than 550 locations across North America. The company has grown rapidly with 9 acquisitions and expansion into new market verticals.⁶

They use our platform as a single source of truth for training, compliance, and communication. Acadia has enabled them to maintain their strong culture and standards while integrating new team members that have come as a part of their many acquisitions. The people that have joined their company as part of the acquisitions have become some of their most valuable assets.⁶ And their ability to deliver consistent training to all employees has become a competitive differentiator.

With the turnover that comes as a natural part of their business, their CEO says without Acadia embedded in the business, there’s no way they would have been able to grow the way they have. Acadia enables them to employ a standard set of training procedures that they use for every new company they acquire. And it helps them maintain the reputation they’ve earned for operating safely on customer sites.

As their business grows, they’re finding more and more opportunities to use Acadia for training, communications, and work instructions.

Consistent Customer Service in Banking M&As

Although bank mergers have slowed in the last few years, market watchers are expecting a rebound.⁷ Retail banks in particular can expand reach and control expenses by merging with other regionally adjacent banks.

Banking is highly competitive and increasingly digital, so products can appear very similar from one business to another, leaving little room to create a competitive advantage. That means consumers often select a bank based on trust and customer service.

One of our retail banking clients recently merged with another similarly sized bank. Maintaining a high-level of customer service and trust were critical to their successful integration. A major challenge was dealing with the overlapping systems that each bank had for policy management, client relationship management, internal communications, etc. Without a single source of truth, it would have been difficult for branch and contact center employees to provide consistent, accurate information to clients and prospective clients. Acadia enabled them to present a cohesive message to customers early on, adding to client confidence in the merger.

After the merger was complete, the bank continued to standardize and simplify procedural and policy documents in Acadia. Team members log in multiple times per day to answer client questions in seconds. Team members are also more engaged.

Extending the Benefits of Integrations

When you’re the world’s leading beer producer, it’s important to maintain quality and consistency across every geography. That’s why our client has been using Acadia to build autonomous teams since 2016.

Operating across many different regions and cultures, you might think synergies would be tough to realize. But with a single source of truth, individuals can shop around for solutions. Here’s how it works:

If a plant leader is working to improve efficiency in their facility, they’ll often browse the content in Acadia from other facilities around the world. They can look for procedures in similar plants operating with better metrics than their own. Then they can borrow the policies and procedures, updating them for their own facility’s requirements. It acts as a shortcut to better outcomes.

Having access to a single source of truth allows them to capture more synergies even years after mergers have occurred. It works in the other direction as well.

Streamlined Divestiture Transitions

From time to time, the same client may divest a brand or other asset. With all operational information in Acadia, they can easily transfer critical information to the new owner.

Transition Services Agreements (TSAs) can be complex and even contentious in some transactions. But our client uses Acadia to ensure a more frictionless transfer. Instead of using traditional methods of sharing data, procedures, and other critical knowledge, both companies agreed to use Acadia. Because the employees in the acquired plants maintained a consistent source of truth, there was no interruption in operations. The transition went smoothly and quickly.

Bring Your Merged Organizations Closer Together

When organizations come together, there are innumerable opportunities for the enterprise to become more profitable. Those opportunities can diminish quickly without the proper tools in place to recognize and deploy synergies.

Navigating overlapping capabilities and systems can be daunting, but we’ve found the best way to manage it is one functional area at a time. We’ve helped a lot of our clients work through these challenges, starting even years after the acquisitions have taken place.

Reach out to us today, we can help you plan the next steps to a smoother, more integrated organization.

Sources:

1. Top 11 Mergers and Acquisitions Failures of All Time
2. How Chrysler marriage failed
3. Managing and supporting employees through cultural change in mergers
4. 8 ways to retain employees after a merger or acquisition
5. 5 Numbers that Explain The Talent Gap – And What Leaders Can Do About It
6. Lazer Logistics Inc announces the acquisition of the Yard Management Assets of Preferred Cartage Trucking Services, Inc
7. Here’s why bank M&A could thaw in 2024