How NOT to conduct a Merger
Client: Mining Services
Background: An international services company had acquired an Australian mining services company with 250 people – but failed to undertake proper due diligence nor establish a project plan for the merger integration and had appointed an up and coming young professional from overseas to lead the merged businesses.
Problem: Integration of systems and processes had not progressed, and two operating and financial systems continued 18 months after the merger with no real plan or accountability for integration. Experienced leadership and equity owners from the acquired business remained in the business and the workplace remained divided between a more entrepreneurial Australian team culture, el beit peppered with nepotism, and a more bureaucratic corporate culture, operating from central Europe. As a result of the dysfunction, turnover in head office shared services was 72% annually, resulting in loss of corporate knowledge and impacting customer relationships, service and profitability. Both entities had lost considerable value as a result of the merger.
Project: Sharon of AblesonHowes and Associates was initially engaged to provide HR and IR transition support, negotiate a new industrial agreement in WA, and lead the recruitment process for a new head of HR and Safety and Training, and recruit and develop a new national HR team with capability aligned with the needs of the business. New HR Managers in eastern and western Australia and a new head of Training and their associated teams were recruited.
The acquiring international organisation also sought an independent view regarding the lack of merger integration progress and barriers to achieving a high performing culture.
An overview regarding the cost of turnover and key issues with respect of M&A execution failures by the acquiring company was produced.
Following the recruitment of the new team of experienced HR and Safety professionals, AblesonHowes facilitated a process of eliciting their independent insights into the business (people, processes, systems) and developed an analysis of all the barriers to success, actions needed and accountabilities for delivery for presentation to the Asia Pacific Leadership.
This work, and the feedback from a staff engagement survey, set the foundation for a strategic HR and Training plan, focused on developing a more collaborative and innovative culture and high levels of customer service.
High on the list was ensuring the organisation structure aligned with the business plan and that the right people were in the right roles. Work was undertaken on understanding the key technical and leadership capabilities required across the business and psychometric assessments undertaken across the top 40 leaders. These assessments were supplemented by interviews focused on aspirations and motivation. Development plans were established for many individuals and a front-line leadership course introduced – to not only improve leadership capability, but to support a common language and vision and standards across the merged entity.
The new HR team working across Australia, set a benchmark for how effective teams should operate and was recognised by the new MD as the most effective team in the business. The draft strategic HR plan and staff survey results became the foundation for the newly appointed CEO and Head of HR and Training to build on and embed change and deliver a more united and integrated merged business. Project timing – 6 months to handover to new head of HR and Training.
Project learnings: Mergers and Acquisitions will fail to deliver value unless 1. Thorough due diligence is undertaken and risks identified are mitigated and 2. A comprehensive integration project plan led by the right people is in place which includes people and culture as well as systems, assets and sales outcomes. 3. Appropriate Leadership is everything.