Post-Merger Organization Design

The impact of a merger or acquisition is intense and long-lasting. Designing an appropriate post-merger organization will help organizations weather the longer-term effects of a merger and realize the anticipated value.

Designing a new organizational structure is never easy, but Accenture research shows that it can be successful—and may be vital—in a merger or acquisition situation.

Traditionally regarded as a soft discipline, post-merger organization design has matured enough in concept and design to drive high performance, as measured in hard metrics. In an era when two out of every three mergers underperform, this is no small matter.

The basic conceptual assumptions of post-merger organizational design are straightforward. First, while details differ, each deal proceeds through predictable stages, which can be addressed through shared best practices. Second, the overall goal can be assumed to be creating the most value within the least time.

Accenture sees the post-merger organization as comprising five complementary streams of activity, namely:

• Operating model design
  
  
• Staffing process design and implementation
  
  
• Change management
  
  
• Communications
  
  
• Training

Post-merger organization planning is required because, contrary to what many believe, the impact of a merger or acquisition on an organization is not only deep, but also long-lasting.

Post-merger organization design must therefore be flexible enough to accommodate not only predictable, short-term factors, but the longer-term, and perhaps unanticipated, side effects. Some of them include:

• Workforce effectiveness. If the process goes on for too long, the remaining workforce may experience burn out. Executives continue to leave post-merger organizations for up to nine years for a variety of reasons, creating a destabilizing effect on the rest of the workforce.
  
  
  
• Culture. Long underweighted in pre-deal analysis, cultural differences are the most commonly cited root cause for merger or acquisition failure. Newly available measurement tools allow for much more precise analysis of factors such as decision-making flows, information sharing and collaboration protocols.

Another reason why post-merger organizational design is important: the drive for personal survival that takes over in the newly merged organization. Rational, strategic behavior becomes rarer, at least for a while, and the company structure needs to be designed with this in mind.

Accenture's marketplace conversations suggest that post-merger organization design is a challenge that only a few C-suite executives are well equipped to meet from existing strengths.

The skill set is too infrequently exercised and the competing demands for attention are easier to address. The idea that the systematic, strategic treatment of "soft-side" merger integration issues can create tangible value is still new to many participants in the world of mergers and acquisitions strategy. But as measured against the definition of a merger's success, the C-suite executive's promotion and how companies become high-performance enterprises, it is clear that it does.