M&A: Does your talent approach fit your deal?
August 27, 2020
RESEARCH REPORT
In brief
In brief
- An increasing number of mergers and acquisitions (M&A) are focused on innovation capabilities and the talent that fuels them.
- Successfully addressing the talent side of the equation as a deal progresses is key to maximizing M&A value.
- Advanced analytics technologies enable M&A leaders to leapfrog to the next level of performance during a deal, rather than after.
- We break down how organization and talent approaches should vary for three common deal types, using technology to accelerate and sustain M&A value.
Transforming with talent
The M&A landscape has changed. Beyond market share and cost synergies, the value of M&A increasingly lies in transformation and growth.
Companies can’t afford to delay transformation for the sake of integration, as it freezes their ability to innovate while competitors surge ahead. Deal approaches need to change, allowing organizations to transform, and talent to flourish during integration.
Using deal intent as a guide, C-suite leaders can move beyond the one-size-fits-all approach that no longer works. We see three major deal intents requiring different approaches to talent, with advanced analytics technologies bringing out more value in each of these deal types.
Add-on deals
These “in with the new” deals are meant to expand a company’s portfolio—from new products and brands, to new capabilities, to new geographies and markets.
Company leaders generally integrate support functions but take a light hand in coordinating innovation and go-to-market capabilities. Usually, the acquired entity brings something special to the table in these areas and leaders want to preserve it.
Organization approach
The acquired company’s structure, reporting lines and governance are largely kept the same to minimize change and preserve the target’s culture.
Talent approach
In designing new teams, employees are not separated from their roles. This allows for swift business stabilization, with less focus on comprehensive transformation.
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Consolidation deals
In pure consolidation deals, wholesale transformation is not the end goal. Instead, the focus is on achieving greater scale and the benefits that come with it—for example, cost reduction.
But some deals are a hybrid, where certain aspects of a deal will be treated as consolidation while other parts of the business might be viewed with a transformational lens.
Organization approach
The target company’s structure, reporting lines and governance are most often integrated into the acquirer’s model to speed integration and get to value quickly.
Talent approach
At the leadership level, talent selection occurs across both companies. For all other levels, the organization is designed with incumbents in their roles. This provides quick stabilization while enabling transformation at the top of the organization.
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Transformation deals
Transformation deals are created for wholesale change—from positioning, to growth, to new capabilities.
Organization approach
These deals often involve significant shifts to structure, reporting lines and governance of both companies. Existing roles are reassessed as leaders seek a new business model—possibly nurturing new capabilities or reinventing operations.
Talent approach
Leaders start from a blank slate, designing roles without looking at current talent. Only then does talent selection takes place across all levels of the new entity, addressing the future needs of the business across all parts of the organization.
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Client transformation journey
A global consumer goods company made a major acquisition of a high-growth, leading beverage business.
Organization design approach
The acquiring company was seeking how best to protect the innovation capabilities of the beverage business, but also unlock its growth potential. Leaders considered multiple operating model options—standalone/add-on, different alignment options by geography or product category—but ultimately moved to a new operating model, creating a new division for the acquired company as well as its own relevant brands.
Talent approach
Careful consideration was given to retention of key talent to preserve the strong innovation culture of the beverage company. Talent largely stayed in their incumbent roles, with opportunities offered at the acquiring company for those who wanted to extend their experience and grow.
Lessons learned
The acquiring company was seeking to protect and nurture the capabilities and brand power of its acquisition, while leveraging the breadth and scale of its own operations to catapult growth. With a best-of-both transformation of the commercial model and increased investment in driving growth, the business thrived.
Technology makes experimentation so much easier
While 58% of executives in an Accenture Strategy survey reported that technology is already allowing them to achieve targets and capture value faster, many leaders don’t use their digital tools to full advantage. A mindset shift—gravitating toward purposeful experimentation and scenario testing—is necessary.
We’ve seen companies design combined organizations in half the time it used to take, leveraging a suite of analytics techniques. And the additional insight and flexibility these tools provide can be invaluable in an uncertain world.
People analytics tools allow for real-time, central management of a complex organization design and selection process, increasing speed to value while providing pinpoint accuracy.
In addition, the use of analytics enables insight-driven decisions at every major step of the organization design process, from a better understanding of costs to addressing organizational agility.
In our experience, companies that use M&A analytics technologies to their full advantage, designing a new organization to maximize transformation, give themselves a speed and accuracy advantage versus organizations that don’t.
We’ve seen companies design combined organizations in half the time it used to take, leveraging a suite of analytics techniques.
Smart first moves
While there are myriad first moves depending on your company’s situation, a few overarching ones help the majority of companies hit the ground running:
Choose your spots to leapfrog
Create a roadmap as part of your integration planning. With the intent of the deal in mind, prioritize tasks by business value and complexity. Drive the talent agenda from your next-generation operating and organization model.
Focus on enablers
In bringing together two cultures, seek to understand the barriers and enablers for both companies, then leverage the enablers. Engage leadership with a pragmatic, quantifiable culture change roadmap to institutionalize the process.
Stop assuming, start modeling
Be data driven and leverage analytics techniques and AI not just to come more prepared for Day One, but also as the integration progresses. Doing so will give you a pulse on the sentiment of your people or can help diagnose where transformation gets stuck, providing both greater speed and certainty.
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Talent can’t be an afterthought in M&A. It’s an essential part of any new combined organization. Leaders who know its value are determined to use a tailored approach—and in the process, enable a better organization.
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