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Managing Talent in a Merger

July 2014

Excerpted from Getting a Merger Right.

Mergers can fail to deliver their anticipated value when leaders don’t or can’t make smart, efficient talent decisions in order to place the strongest executives in the most important roles. Important decisions often are made with limited information, and politics and poor communication can further disrupt the integration process. We offer four recommendations for developing a thorough and expedited talent management process, which can be the foundation of a successful merger.

1) Quickly identify the people the organization should retain and engage them in integration planning.

The highest-performing executives will generate the most value for the business; they have the skills and personal characteristics to drive the success of the merger. This group of high achievers is highly motivated, exceptionally smart and highly experienced, with the courage, confidence and emotional intelligence to handle complex and thorny issues. By retaining the highest performers and placing them in critical areas of the business, the merged company is more likely to achieve the anticipated value of the deal. Conversely, act swiftly to decide who will not fit in the new organization; these decisions can have as big an impact on defining the new culture as who is asked to stay.

2) Communicate merger milestones and provide some measure of transparency about the decision-making process.

Executives often feel uncomfortable communicating with employees after a merger announcement because so many questions cannot yet be answered; but not meeting with key employees can be fatal. Productivity in day-to-day operations often decreases as people wait for announcements or are preoccupied thinking about their future. Anxiety increases in the absence of information, and the assumptions people make are always negative. Ease this anxiety by communicating intent, appointments, strategy and merger status. Interestingly, admitting when there is no certainty actually increases people’s personal sense of clarity.

3) Define the scope and responsibilities of key roles in the combined company.

It is rare when two companies merge that their businesses and operational models match perfectly; one may be organized by function, another by region, for example. The responsibilities of many roles in the new organization, then, may be significantly different than before the companies merged. When companies don’t acknowledge how roles will evolve in their planning, they can place people in important positions who are ill-equipped for their new responsibilities and expectations. In addition, certain soft skills that may not have been valued previously become important in a merger, both in planning for the integration and the execution.

4) Rely on fact-based, objective assessments that provide real insight into candidates for top roles.

The selection of leaders for key roles in a merged company is typically constrained by a lack of data. Not only do companies overestimate the value of their own assessment tools for understanding the capabilities of their people, they lack shared objective standards to compare executives from different organizations. An independent management assessment can evaluate individuals’ strengths in critical areas, provide a consistent view of executives across companies, minimize fears of favoritism by applying objective standards, speed up decision-making and serve as a conduit for feedback from management to the very top of the organization. Such assessments also can identify gaps that may need to be filled by external hiring and potential assignments for internal candidates who did not get the roles they expected.

Learn the necessary steps to avoid the talent traps while implementing a successful merger.