Ask any married couple about first moving in together and you’re certain to hear everything from, “He kept a hideous couch from his bachelor pad!” to “She commandeered the bathroom!” The funny highlights are a welcome respite from tough, emotional decisions: Whose furniture goes to Goodwill? Who parks in the garage? Toilet paper roll up or down? Couples have to make countless adjustments.
Organizations often struggle to effectively integrate newly acquired companies. The rude awakenings encountered by newlyweds are amplified in a corporate union involving multiple stakeholders and millions of dollars. The most successful organizations follow these integration rules:
Don’t Dismiss the Ratty Couch
Employees will be uncomfortable in the early stages of integration and are susceptible to other opportunities. It’s important to identify the departments and employees critical to the new organization during integration planning. Pick the best from each company, taking advantage of integration activities to eliminate ineffective departments or employees. Evaluate enterprise projects in the same way—determine which should continue and which should be eliminated. Use a combination of retention bonuses, clearly communicated long-term HR succession plans, and employee involvement to reduce the chance of losing critical resources.
Forget Who Used to Park in the Garage
The new organization must operate under a single set of business processes across similar functions to maximize shareholder value. Don’t assume the processes from one organization will always be better than the other. Both sides will have to compromise and adapt. Decide which business processes to use going forward and make the way clear. Create a realistic plan for rolling out and communicating standardized processes after the new organizational structure is established. Provide training and resources for employees whose roles are changing. It is likely that one group may need to pause to allow the rest of the organization to catch up. Not everything has to change at once.
Postpone Account Consolidation Until Ready
Every newlywed couple must decide whether to consolidate bank accounts. Consolidation involves more pain up front while separate accounts and accounting software require more long-term maintenance. Similarly, organizations must decide when to combine systems and information by using a consolidation tool or by migrating to a single environment. A consolidation tool can work well for a period, but a new system can be used as a catalyst for change and drive process consistency. A consolidation tool should be considered as an attractive short-term solution during reorganization. Once reorganized, the new company can take on a significant systems integration effort.
Surprise! I Like Toilet Paper to Roll from the Top
Even the most effective integrations will produce surprises six months to a year after completion. Nuisances are more obvious after the honeymoon phase ends. The merger and integration team must plan and budget for surprises. Typically, customers don’t do business as expected, financial incentives don’t keep the best and brightest from leaving, systems and data cannot be easily aligned, and organizational roles for similar functions are different than expected. Keep the integration team together to address these issues as they arise.
Well-planned acquisition integrations include a thorough examination of organization, processes, and tools. Identify critical resources, standardize business processes, select a common ERP system, and plan for surprises.
Acquisitions will require a large amount of effort from HR and Finance. Read on to find out how these departments can collaborate for maximum effectiveness.
Further reading: Stop Playing the Glad Game: Facing the Reality of Integration