GlaxoSmithKline, (GSK) a British drug maker, recently purchased the Human Genome Sciences (HGS) based in Rockville, MD.Their first order of business – fire the executive team and most of the board of directors – seems they chose the often too typical and sometimes detrimental approach – we bought them so let’s get rid of their people and processes and do it our way. Why wouldn’t GSK take – what I think to be – the smart approach to an acquisition – let’s try and retain the intellectual capital (you know, the people who know stuff) of the company we purchased and explore how to best transition knowledge and merge our cultures and strategy?
Now to be fair, it’s not uncommon in M&A situations for the acquiring company to oust some high level executives and to begin consolidation of certain functions – though there is a way to approach it which can yield a higher rate of long term success.
“Leadership that’s reliant on mergers and acquisitions is dangerous leadership.” – John Varley
For one thing, if you’re the acquiring company, don’t replace the entire executive team with your own people – this not only sends the wrong message to employees (which can have a direct negative impact on engagement and retention and thus performance), but you also risk losing leadership with a deep understanding of the culture and politics of the organization. For GSK to purchase HGS – I am sure there had to have been a lot of great work being accomplished by the staff employed by HGS. These are folks who helped to shape the organizations success, which contributed to why GSK acquired the organization to begin with.
This type of action usually contributes to employee concern – most of the staff is probably hanging by the water cooler gossiping about what took place, updating their resume, or looking at new jobs fearing they’ll be next.
It’s a common result from something that could have been solved by a little thing called “communication and transition management.”
The investment made by GSK (3.6 billion is no chump change) could very well endure months, if not years of work to recoup their investment. Those executives who were fired couldn’t possibly share all of the insider knowledge they possess in 1 month. When September begins – there will be people, process, and strategy issues to deal with – some that could have been lessened or prevented.
Here is how you can avoid losing money in your acquisition and get the most out of your investment:
- Leadership…leadership of the acquiring organization needs to take time to build relationships with the leadership of the organization they’re purchasing. Those leaders know the culture, the politics, the unspoken rules and processes to get things done. They have built important trusted relationships with employees and stakeholders. Acquiring this knowledge takes more than a 30 day “stay on board and help” plan. If the new organization just swoops in and fires them all then they lose this important knowledge and those relationships. Lack of knowledge transfer and relationship building can have a negative impact on the ease of transition and the overall success of the acquisition
- Communication…communication is imperative for a successful acquisition. Clear communication strategies must be implemented inclusive of audience specific messaging. Content, vehicles, and frequencies must be identified for disseminating the right info to the right people at the right time. Leaders, employees, stakeholders and even vendors need to be made aware of what the acquisition means to them and how it impacts their jobs and roles and responsibilities. Once people start assuming the worst and making up their own versions of what is happening, it becomes very hard to reverse the trend. Without clear and targeted communication the rumor mill begins, and this impacts performance and profitability.
- Change and Transition…change is an inevitable part of a merger or acquisition – so is transition. You must have a plan – an actionable plan – in place to address both. Change is never easy. Change is a bumpy process. But why is change so hard? Change is hard because it is an emotional experience for most. An emotional experience, particularly an experience one often has little choice in being part of, creates resistance. Resistance is a natural emotion, though an emotion that can make change even harder. However, resistance must be managed to harness that energy for positive change. Managing resistance requires focusing on not just change, but also transition. People go through the phases of transition at their own pace, not necessarily at the pace of others or the pace of an organization. People need to be supported in each phase. To ease the difficulties of the change process a focus on transition must run in parallel to a focus on change.
For an acquisition to be successful the organizations must truly merge and become high performing and enable meaningful change to improve their programs, services, products, and processes, to create new value for the organization’s stakeholders.
“Plans are nothing; planning is everything.” –Dwight D. Eisenhower
Moral of the story – when an acquisition is taking place – don’t take a “my way or the highway” a “we’re bigger and better” or “thanks now get lost” approach. Take the time needed for leadership (old and new) to build relationships and understanding and create a smooth transition strategy for all involved. This helps alleviate anxiety – allowing the staff to focus on what they do best and helping to create a new combined success.
About Scott Span, MSOD: is President of Tolero Solutions Organizational Development & Change Management firm. He helps clients to facilitate sustainable growth by developing people and organizations to be more responsive, focused, productive and profitable.
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