Tracking M&A Progress and Impact - Part 2

How to Measure and Track M&A Progress and Impact
by Mitchell Lee Marks, PhD
San Francisco State University
JoiningForces.org

In the previous issue of the M&A Monthly, I discussed the benefits of tracking a merger or acquisition’s progress and impact on employees, work teams and the overall organization.  I also wrote frankly about why most managers resist efforts to measure M&A results.  This month, I show how to measure and track a merger or acquisition’s impact and tell you specifically what to look for when conducting an assessment.

How To Track a Combination’s Progress and Impact

A variety of methods can be used to collect data about a combination’s process and progress. Certainly there are distinct advantages to, say, interviews versus employee surveys (depth versus breadth of opinion) and focus groups versus informal conversations (more structure versus spontaneity). Good tracking programs rely on multiple methods of data gathering:

• Employee Surveys:  An entire workforce can be surveyed or a cross-section of the organization.  Alternatively, particular groups most affected by a combination can be targeted. Employee participation should be voluntary and individual results kept anonymous.
   
• Interviews:  Confidential interviews allow employees to expand on their views, offer detailed explanations, and provide examples. Interviews should be relatively unstructured when general information is desired or guided by a set of questions when specific data are needed. When collecting companywide data, it is useful to sample a mix of employees who are both supporters and critics of the combination; who come from multiple levels; and who represent various departments, divisions, and demographics. 
   
• Focus Groups:  These are interviews conducted with groups of employees. They let participants build upon one another’s responses but, in a climate of low trust, people may clam up. A skilled facilitator can elicit true feelings, and also prevent focus groups from degenerating into bitch sessions.
   
• Exit Interviews:  Interviews conducted with people leaving (during or soon after a combination) can be used to find out what, if any, aspects of the transition influenced decisions to seek employment elsewhere. If a repetitive pattern is found, action can be taken to address the causes of voluntary turnover.
   
• Performance Records:  Many corporate reports contain combination-relevant data. Records of turnover, absenteeism, grievances, and the like are good metrics of morale in the combination. Tracking customer orders, productivity levels, quality control, waste, accidents and the like before, during, and after a combination can be useful in evaluating progress and spotting problems. 
   
• Websites and Media:  Smart companies also monitor website traffic, social networks, and blogs to see who is looking into their combination and what is being said.  Of course, they also check customer comments and press coverage. 
   
• Industry Benchmarks:  Sometimes a good measure of a combination’s progress comes from comparing it to others in the same industry.
   
• Observation and Informal Conversation:  Managers can also assess the state of their combination by observing and informally chatting with supervisors and employees. Management-by-walking-around, conversations in hallways and after-work bull sessions all provide occasions for gathering data about a combination.

What to Monitor and How to Do It

Naturally, a formal tracking system assesses the progress of the combination with respect to schedules, budgets, and targets.  It can and should also address the human side of M&A.  The best tracking efforts focus on the specific dynamics at each phase of a combination:

Pre-Combination Phase

Early in the combination process, tracking tests for the extent to which people understand the purpose and promise of the combination and how they are affected by it:

• Is the rationale underlying the deal understood?
• Is the end-vision clear? Credible? Energizing?
• Do the CSFs make sense to people?
• What business benefits do people anticipate in the combination?
• What personal benefits are anticipated?
• What signs of the Merger Syndrome are people experiencing?
• How are morale and productivity being affected?
• What messages is leadership sending?
• Do management’s actions align with their words?
• Do people feel well informed about the combination plans and process?
• Does the full management team seem in sync regarding the combination?
• Are managers at all levels taking steps to minimize negative reactions and build positive feelings?
• What early impressions are being formed of the partners’ ways of doing things?
• Are cultures clashing?

Combination Phase

Next, in the combination phase, tracking focuses on the quality of planning and decision- making:

• Are the CSFs being adhered to?
• Are operating principles being followed?
• Are participants being pushed for the best possible solutions?
• Are new and better ways of doing things being considered, or are the old ways being carried forward?
• Are task force members getting the information and other resources they need?
• Are politics and favoritism influencing the decision-making process?
• Are task forces coordinating well with one another?
• Do people outside the process feel well informed?
• Do managers have sufficient information to give their people a clear picture of where, when, why, and how changes will be occurring?
• Are staffing decisions based on valid criteria?
• Is a truly better organization emerging?

Post-Combination Phase

Finally, as implementation proceeds in the post-combination phase, tracking assesses the extent to which people are prepared to make their contribution to the post-combination organization:

• Do people understand their new roles and responsibilities?
• Are reporting relationships clear?
• Do people have the information they need or know where to go to get it?
• Do people understand new policies and procedures?
• To what extent are new systems running efficiently and effectively?
• Do people have the equipment and resources they need?
• What is valued and rewarded in the new organization?
• Have the CSFs truly been followed in implementation?
• Are schedules on target, and are changes being effectively implemented?
• What are the business benefits of the post-combination organization?
• What are the personal benefits of the post-combination organization?
• Are managers being given the resources and support needed to reorganize their departments and rebuild capability?
• Is a one-company mindset being developed, or are cultures clashing?
• Is teamwork being developed in work groups?
• Is teamwork emerging across work groups?
• Has a new and better organization been built, or are the pre-combination ways being carried forward?
• What new or unanticipated issues are emerging?

The Tracking Process—Gathering Action-Oriented Data

For information to be helpful in managing a combination, it has to be valid, timely, and focused on the critical issues that relate to eventual success.  Leaders have to honestly assess the extent to which they can collect valid data from managers and employees. Information gathering that generates fallacious data is a waste of time which can misdirect focus from critical areas requiring attention.

            The extent to which people are candid in completing questionnaires or answering interview questions very much depends on prevailing levels of trust within and between the combining organizations.  Therefore, many executives rely on outside professionals to conduct surveys or interviews, particularly in the early months of a merger. Once employees see that there are no personal repercussions for speaking up and that the input is listened to by those managing the combination, then responsibility for conducting the tracking can be turned over to internal staff.     

Guidelines for Tracking the Impact and Progress of a Combination

Some special conditions of mergers and acquisitions should be considered when designing a tracking process:

• Understand the history of employee research efforts in the partner organizations.  While the tracking effort should signal an interest in the “human side” of a transition, there are instances when people in either firm might have suspicions about the intent because of bad experiences with prior employee surveys and studies.  Explain up-front what tracking is all about and why—and how—you are doing it.
   
• Specify that the tracking has nothing to do with personnel selection.  Make clear that tracking has nothing to do with the selection process for jobs in the combined organization.
   
• Maintain confidentiality throughout the process.  Especially when using write-in comments in surveys or in notes from focus group interviews, take care to ensure that anonymity is always protected and confidentiality is never compromised.
   
• Be aware of language differences between the partner organizations.  Words and phrases may be used differently in the partner organization.  Does an “associate” refer to a co-worker or subordinate?  Does “leadership” refer to everyone with supervisory responsibility or just to the most senior levels of the hierarchy?   Take care to check that terms mean the same things across both employee populations.  Avoid using acronyms and, for global companies, make some provisions, where feasible, to have interviews and surveys conducted in employee’s first language. 
   
• Separate people from the partner organizations in focus group interviews and questionnaire administrations.  Some consultants urge executives to “model” a combined organization as soon as possible and act in ways that unify the partners.  That advice is a big mistake when it comes to measurement.  People are more likely to be on good behavior and less likely to speak up when sitting in a room with counterparts from the partner organization.  These self-imposed pressures are not going to yield high quality and useful data.

Conclusion

As I mentioned in the first part of this series, managers’ resistance to formally measuring the impact of a merger or acquisition typically is motivated by their fear of being assessed.  It is important, then, to set a developmental tone for tracking and to engage managers and their teams in shaping the data gathering and using the results. Messages from the top clarify that data is being collected to understand and focus on key issues, not as a performance appraisal for managers.  Moreover, many managers wrongly assume that employees expect changes be made reflecting their input and use this as an excuse to thwart tracking.  The only obligation when conducting employee research is to convey that the findings were heard and considered.  A straightforward explanation of why an issue cannot be addressed or a change cannot be made at this time is one way to act responsibly on the data. 

More positively, however, conducting and engaging employees in a formal tracking program sends a clear message to employees that the lead organization has a genuine interest in their perspective. A formal survey process signals the importance of two-way communication and conveys management’s genuine interest in people’s problems and perspectives.  By comparison, the absence of any formal feedback channels can imply that leadership doesn’t care about what people think or feel now during the transition and later in the combined organization.

CLICK HERE to read PART 1

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About the Author:  Mitchell Lee Marks is Professor of Leadership at the College of Business at San Francisco State University and leads the change management consulting firm JoiningForces.org.   Over the past 30 years, he has been involved in over 100 mergers and acquisitions as a researcher or advisor.  He is the author of six books on organizational change; most recently “Joining Forces:  Making One Plus One Equal Three in Mergers, Acquisitions and Alliances” with Philip H. Mirvis.  Dr. Marks is a member of the Advisory Board of the M&A Leadership Council.  He can be reached at [email protected]