News this week that Mike Lynch is to leave Hewlett-Packard (H-P), just a year after the technology giant bought Autonomy, the data company that Lynch built from scratch, has sparked much speculation about a ‘clash of cultures’ between the two companies which highlights importance of a robust HR strategy to guide companies through the managerial perils of mergers and acquisitions.
Autonomy – known for its ‘Intelligent Data Operating Layer’ technology – was set up as an extension of Lynch’s Cambridge PhD research, and has been described as a company with a ‘collegiate’ culture. When several of Autonomy’s top people departed soon after the £7bn H-P acquisition, and the company failed to performed as well as expected, murmurs started circulating of a ‘culture clash’ between the large, bureaucratic approach of H-P and the lean management systems which Autonomy brought with it.
Of course, this is all speculation. Lynch, a former CBI Entrepreneur of the Year, may simply be hankering for a new challenge after bedding Autonomy in at H-P. However, whatever Lynch’s motivations, this high-profile case and the media attention it has attracted, is a prime example of the some of the managerial and HR challenges which companies face after the legal forms of a merger or acquisition have been signed.
When businesses merge, it is crucial to ensure that their leaders consider how well aligned they are, not just on their long-term business strategies negotiated at the top, but all the way down to the values and priorities of employees – and the many factors in-between which help to make up the culture and personality of the company. HR professionals should be involved early in the process to ensure that a strategy is developed to support staff, managers and leaders alike through the inevitable changes as this is the real key to maximising on success after the merger or acquisition.
Making the most of individual employees’ strengths and preferred working patterns takes time and thought in order to make sure that responsibilities are not being duplicated, undervalued or miscommunicated. Employees are also likely to be worried on several different levels about how the acquisition will impact their personal career path, their role within the company and the culture of their working environment. A well planned and implemented HR and internal communications strategy to combat these concerns is essential as, without this, team dynamics are likely to suffer and companies are less likely to retain key talent.
Whilst teams thrive on diversity, those that are also well aligned in terms of working patterns, motivation and business ideals are more likely to succeed. When cultural alignment is achieved, merging businesses reap the benefits of a smooth transition, co-operative working and the injection of diverse skills, ideas and experience.
Top HR tips for happy acquisitions:
· Honesty from the outset about what is expected on both sides – setting short and long term targets which will be monitored in early months to ensure each business keeps to its side of the bargain
· Making sure that expectations and performance indicators are channelled down the ranks of each company, as staff will feel more engaged and motivated if they understand what their role is within the bigger picture
· Communicating clearly to employees if their terms of employment may change, or remain different from their new parent company. Even minor discrepancies or changes to contractual working hours, holidays, job titles, promotion opportunities, bonuses and pension schemes can cause resentment on both sides so it’s important to address these issues head on
· Discussing with employees how the merger will impact their personal career path. Demonstrate the benefits for all of working with the bigger parent company (for example through increased opportunities, more varied experiences, larger pool of mentors etc) and is not just lining the pockets of leaders
· Engaging your employees in an open discussion about what they considered to the be most important parts of their company culture, what is essential to keep and also what cultural practices they would like to embrace from their new parent company
· On the intra-personal level, a ‘buddying’ scheme which helps introduce employees to their new colleagues and working environment, and fosters communication between teams so that they work together rather than competing for the same market
· Finally, don’t fall into the trap of assuming that once the merger has been communicated and the initial change has been managed all will be plain sailing. The first year is crucial as changes will continue to be felt for some time and new challenges will come up throughout the annual cycle. It’s important to keep the communications lines open and to regularly review staff moral, motivation and performance for any potential problems
Penny de Valk is chief executive of Fairplace Cedar, people development consultancy which specialises in leadership, management development and talent management.