Getting Post-Merger Talent Selection Right

Mark Herndon of M&A Partners
By Mark Herndon
Mar 6, 2018

Today it’s an honor to provide a few brief examples of senior executives who have put their convictions into practice in order to get post-merger staffing and talent selection right. While these essential aspects of post-merger integration often get overlooked, we believe getting the organization set and the talent decisions right are imperative to achieve integration strategy and deal value-capture. (For more on these subjects, please refer to Setting the Organization Cures Many Ills and "Are You My Boss?")

Make No Compromises in Seeking Efficiency

Two high-profile CEOs have underscored the importance of these very topics. I had an opportunity to hear Michel Orsinger, Worldwide Chairman of DePuy Synthes Companies, speak at The Conference Board Post-Merger Integration Conference. As CEO of Synthes, Orsinger led both the 2012 sale and subsequent integration of Synthes to the DePuy division of Johnson & Johnson, thus creating a $10 billion global leader in orthopedic and neuroscience solutions.

His advice on organization design and leadership selection was outstanding and bears repeating. “I would be tougher in selecting the truly top talent. Don’t worry about rocking the boat. Make no compromises in retaining and getting the best. Be willing to inject new talent into the organization. Identify a few, clear organization design principles and stick with them.” 

"I would be tougher in selecting the truly top talent. Don't worry about rocking the boat. Make no compromises in retaining and getting the best."

Add to that advice the insight of Roland Smith, who became CEO of Office Depot soon after its merger with Office Max in 2013. In an interview with the Wall Street Journal, Smith explained the biggest challenge he faced in merging two companies, which is instructive for all senior executives leading integration.

Smith said, “The toughest task is to implement a major restructuring. In many cases, there were two of everything. The organizations also were not as lean and efficient as they needed to be. We didn’t just reduce headcount. We restructured positions, what people were responsible for and who was accountable. We eliminated several management layers throughout the organization.”

Don't Be Afraid to Get Involved

One of the best talent management integration efforts I have personally been involved with goes back a few years to a major deal in the flexible workspace sector. At that time, a number of flexible workspace providers were consolidating globally, several of which ultimately merged into Regus, today’s world leader in this business. My client, HQ Global Workplaces, was buying another major competitor in a consolidating transaction that would substantially increase their combined footprint in many new markets, but also would require heavy organizational restructuring in multiple markets where both companies had an established presence.

As is true with any B2B service business, the success of the NewCo was highly dependent on getting and keeping the best and most successful talent from both companies, quickly getting the right organization and staffing decisions made, and effectively onboarding and aligning all managers under a common philosophy and culture.

HQ Global's CEO at the time was Gary Kusin, a forward-thinking leader with several prior entrepreneurial and corporate successes to his credit. Kusin asked for something that, at first, seemed incredible and only later was heralded as a principal success strategy. “I want to personally lead the talent selection process,” he said. “As CEO, I believe it is my ultimate responsibility to ensure that we get the right team members in the right roles throughout the organization. The only way others will perceive this to be as important as I do is if I am directly accountable and deeply involved.”

Over the next few weeks, we built a comprehensive organization design approach and a team-based interview process in all major markets throughout North America. A fundamentally important part of the process to CEO Kusin was to personally meet, get to know and interview approximately 300 managers from both legacy organizations. Participating in each team interview were Kusin, HQ’s Vice President of HR, and the Senior Vice President of Operations from the to-be acquired company, who was to become the division Executive Vice President post-closing. Supporting this executive interview team was an outside expert from my firm serving as an objective process manager, coach and tie-breaker, as needed.

It was an extraordinary commitment for any CEO to make, but the results clearly warranted the investment. Kusin later recounted that this one strategy enabled him not only to confidently get the right team on the field, but to start from Day 1 with personal relationships with all key managers throughout the organization to propel and accelerate through the integration and early launch of the combined business plan.

Admittedly, not everyone was happy. There were de-selections, layoffs and some reassignments for those not placed in top jobs. But the objectivity and transparency of the process, combined with the high-level personal interaction with the three key leaders of the combined business, created such a definitive statement as to the logic and values of the company that few, if any, complaints were received.

Don't Shy Away from Correcting Mistakes

But that’s not always the case. Sometimes you have to quickly catch and correct mistakes, whether overt or inadvertent,  to verify that both the right decisions were made and that they were made for the right reasons. One of the best examples of proactive executive accountability for staffing decisions comes from the integration of global pharmaceutical firm SmithKline Beechum as told in Promise to Performance, Harvard Business School Press, 1997.

In this example, after much work and painstaking effort to ensure that all structure and staffing decisions worldwide would actually be made according to the desired values and performance-based principles, the company demonstrated that it meant what it had said. As soon as news broke that the hiring manager for the leadership team in one country’s business unit had composed a new management team entirely of his old colleagues, the Vice President of Human Resources, Peter Jackson, was on a plane. With only a day’s notice, Jackson flew in to speak directly with managers from both partner companies to gain an understanding of how the staffing decisions had been reached.

After hours of one-on-one meetings, Jackson learned that the violation had been more an error of judgment than a blatant attempt to protect former colleagues. The country manager had based his decisions on the short-term sales objectives, which were largely driven by existing products most familiar to the present team, rather than considering who had the best ability to grow the business over the long term.

Given the enormous potential for negative fallout from this apparent high-level disregard for the stated cultural and business objectives, Jackson had the country manager reconsider his recommendations and worked closely with him to redefine the new team, this time with more of a strategic composition for longer-term business requirements.

Here’s to many more success stories like these examples of really “walking the walk” on the importance of getting the organization and talent decisions right in merger integration. 

For more insights on talent selection, change management and other difficult challenges facing HR leaders following an acquisition, please join us for The Art of M&A for HR Leaders this May. This unique M&A executive training program includes case studies, breakout sessions and panel discussions, along with plenty of opportunities to network with M&A thought leaders.

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