Tuesday, May 12, 2009

How employee involvement creates successful mergers.

One of the key concepts behind high-performing teams is employee involvement. Therefore when merging with or taking over other companies, don’t move to immediately eliminate duplicate departments and positions. Instead, set up cross-company teams to decide who has the best skill-sets and which company has the best processes. It may take more time and cost more, but it results in better outcomes. In a variation of this approach, some merging companies developed a survey program to uncover industry ‘best practices’ as perceived by the combined customer base of the two companies. The survey, which was very qualitative in nature, gave respondents lots of freedom to say what they liked about each company and where they felt there were opportunities for improvement. These findings were then used by integrated implementation teams to introduce changes into both organizations.

When ATTCC management bought the company from AT&T, it couldn’t share much information with employees while the deal was being finalized. So employees were given an 800 number to call where they could review all the information that could be shared with them. This information was updated weekly and additional news was immediately advertised and broadcast in meetings, on bulletin boards and in memos. As the divestiture process took longer than expected, the 800 line featured ATTCC’s CEO talking about the change, explaining what he was personally experiencing and how he and his family were dealing with it.

Newcourt Credit Group subsequently acquired ATTCC, bringing the combined assets under management to $21 billion. Immediately, an integration office with six senior management members was established to lead and manage the work of 12 dedicated integration task forces comprised of more than 60 individuals selected from among the employees of both companies. An executive vice president with extensive previous experience in mergers, acquisitions, divestitures and reorganizations, was in charge of the integration process. The full integration of the two companies was accomplished over the following 18-months.

On a local note, the San Diego Union Tribune has just been acquired by Platinum Equity, which subsequently announced it will lay off 192 of its new employees. If you were planning to buy a troubled organization, particularly an information company, whose greatest asset was its trained and experienced workforce, would you:

1) Take possession, put some of your own people at the top, assess the situation first-hand, then meet your layoff goals? Or,

2) Leave the reduction in force to the current company management that got the paper into the very mess that allowed you to come in and buy it?

Platinum chose #2, which suggests that it's more interested in the Tribune's real estate holdings than the newspaper itself.

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