With India stepping harder on the peddle to drive into the acquisition arenain 2007, skillful handling of people post mergers has become crucial. Peopleissues are becoming more and more complex with mergers and acquisitionshappening so frequently -- Fortis buying Escorts, Kingfisher Airlines getting astake in Air Deccan, Jet buying Sahara Airlines and so on -- in the businessarena. India Inc is realising that this factor would distinguish the winnersfrom the also rans.
Clear, well defined strategic direction, consistency between strategic intentand post merger integration and engagement with the society in which thebusiness is located have become intrinsic to practices of Indian companies.Studies reveal that 60-75 per cent of the M&As fail due to integrationissues.
While the economic goals of an M&A deal are hard and clear -- improvedprofit margins, greater market share, economies of scale -- the means to achievethem are largely `soft'. These include formation of a transition managementteam, assigning a people-sensitive executive leader with excellent strategic andinterpersonal skills to oversee the post-acquisition integration processfull-time; and clear, timely, messages to the employees. Indian companies areveering around to adopt some of these tools.
Along with these acquisitions, people issues are also becoming more and morecomplex, feels Santhosh Babu, Managing Director, Training Alternatives."Some of the typical problems faced by employees include feeling of loss asteams are split up and are merged into a new team, lack of trust in the new teammembers and unclear roles that give rise to uncertainty and negativity,"says Babu, who has customised programmes for Airtel, VST, Dalmia Sugar, DakshIBM, Ranbaxy, Birla Soft among others.
Groups like the Tatas conduct what they call a "cultural duediligence". For example, when Tata Steel acquired NatSteel in Singapore,the code of conduct was put together and several sessions held to communicatewhat was acceptable behaviour. During the Voltas and Kelvinator acquisition byElectrolux, HR officials thought it was essential to reach out. First they usedthe informal channel--basically opinion leaders and spokespersons in theacquired company, who influence opinion and who people listen to. The employeeswere then also allowed to operate in their same designations for six monthsmore, working parallel. In six months a proper assessment of the performance wasmade, and background and profiling, then only were they given a level setting.
Companies like Hinduja stress on a strong leadership to steer cross culturaldynamics into a fruitful integration exercise. "With that in mind, hiringof talent at the level of leadership has also undergone a subtle change,"says Ramachandra Rao, Group President, HR, Hinduja Group India Ltd. "Peoplewith global mindsets, who have the potential to function and take challengesacross borders, ability to tackle complicated environments and are flexibleenough to be deployed anywhere are favoured. At the same time, potential leadersare rotated across geographies as part of their training to tackle integrationissues."
For a particular bank acquisition in India , the cultures and pay scales weredifferent, the imbalance was too difficult to mange. This resulted in allsynergies being lost.
Marriages are made in heaven, but M&A deals on earth, industry captainsare realising.
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