M&As have become an essential part of organisational growth strategy. Acquisitions provide organisations with a far quicker route to revenue growth than traditional organic growth, allowing organisations to quickly grow market access and share, swift expansion of its headcount and increased geographical presence. Unsurprisingly, the M&A space has become huge business. In Q2 2008, there were 3,407 deals announced globally worth $686.6bn (£380bn), whilst Q3 saw a further 2,352 worth $735.3bn (£408bn).

M&As, however, come with considerably higher levels of risk than organic growth. A wealth of research has identified that between 70 and 90% of M&As fail to deliver the expected return on investment. The primary causes of these failures relate to:

• Strategic errors, or put simply the M&A team backed the wrong horse
• Inadequate due diligence, especially in relation to the real costs involved and the cultural fit between the two organisations
• Fail to execute during the integration, due to inadequate funding and poor engagement of employees caused by lack of clarity, a drop in confidence and absence of the tools need to deliver.

Of these 3 areas, organisations arguably have the most influence in the areas relating to execution excellence and increasing employee engagement.

Why Invest in Engaging your People?

“Managers behind the most successful mergers and acquisitions spend as much time addressing people issues such as integrating cultures, managing talent, sharing knowledge and retaining key people as they do on cost savings, merging processes, technologies and divisions.”

(Hay Group, 2007)

In addition to the need to secure ROI on the huge costs associated with M&As and research findings highlighting people issues to M&A failure, organisations need to invest more in engaging their people during M&A integrations, given that:

• Top talent and key employees will receive their first call from a headhunter within five days of a M&A announcement (Mckinsey, 2000)
• Acquired organisations lose 21% of their executives each year for at least 10 years following an acquisition, more than double normal rates (Journal of Business Strategy, August 2008)
• Engaged employees are nearly twice as productive as those with lower levels of engagement (Tower Perrin, 2007).

Despite such evidence, however, only about half of organisations conducted some type of formal measurement of employee engagement during a recent acquisition process (Hewitt Consulting, February 2007).

Why? The challenge for most M&A teams is to be able to quickly, easily and accurately identify how engaged their people are and translate this understanding into tangible actions that will assist performance and integration execution.

We fully understand that success in this complex and fast moving environment is not as simple as the deployment of a questionnaire. As engagement and retention experts, TalentDrain’s Unify offering provides clients with a range of diagnostic and consulting solutions encompassing Insight, Strategy, Execution and Sustainability.

Insight
One of the key success factors in any restructure is ensuring people are engaged, focused and confident it will be a success. However, few organisations invest the time and effort to understand what their people are thinking.

Strategy
Organisational change inevitably brings ambiguity and uncertainty that in turn can lead to a loss of performance focus and organisational confidence. Our consultancy team have considerable experience, gained as internal OD professionals and external consultants, in ensuring strategic planning embraces all aspect of organisational performance.

Execution
Restructures come with high expectations in relation to enhanced organisational performance and quick returns on investment. The juxtaposition is that change brings disruption, takes time to implement and requires people to change their behaviour. Managers need practical support to enable them to keep their people focused and deliver the short-term goals.

Sustainability
The pressure of everyday business means that organisations rarely step back, review and implement their learning into subsequent change initiatives. TalentDrain have developed a fast review process to enable organisations to improve their capability to deliver subsequent organisational change initiatives.

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