“The OD practitioner who insists on a single approach—either an individual, team, or whole organization intervention—will fail to appreciate the importance of integrating employees at multiple levels and targets.”
Organization Development Interventions and Four Targets of Post-Acquisition Integration
By Donald L. Anderson Both scholarly research and manage- ment activity in the area of mergers and acquisitions devote more attention to the early stages of the M&A effort than to post-combination efforts. Among scholars, the post-acquisition integration process commands increasing attention, but our current knowledge has been described as “fragmented” and “incomplete” (Lauser, 2010, p. 7). Among managers, interest in the post-acquisition phase gives way to eagerness to declare victory and move on.
This lack of attention is unfortu- nate, because many observers trace later problems to poor post-acquisition integra- tion. According to Buono (2003), “pre- combination transition planning teams continue to be disbanded too early” and “far too many organizations continue to treat the merger and acquisition process as an engineering exercise… rather than a far more chaotic set of events that read- ily affect people’s lives” (p. 91). Such chaos continues long after the integration activities are completed and the compa- nies legally become one. Indeed, as Krug (2009) reports, “acquisitions create long periods of instability in target company top management teams” (p. 12). The result is that the post-acquisition stage often means stumbling through problems as they arise rather than directing conscious attention to the integration process.
Years later, the failure to attend to post- acquisition needs haunts many organiza- tions. Galpin and Herndon (2008) report the results of a study of executives from 21 different industries who had experi- enced a merger or acquisition. Almost
half of respondents (49%) reported that their organization was in need of “merger repair—that is, my company has several operational, productivity, service, and/or performance issues resulting from poorly conducted M&A integration efforts” (p. 7). As Marks and Mirvis (1992) rightly and candidly assert, “Post-merger malaise begins the day top executives declare that the merger is done” (p. 19). Far from being an ending, the day one legal formalities are really the beginning of the challenges to come in integrating individuals, teams, departments, and organizations.
At multiple levels, M&A activity creates substantial disruption that organization development practitioners are primed to address. The goal of this essay is to provide an introduction, grounded in recent theory and research, to common problems or “trouble signs” in post-acquisition integra- tion (summarized in Table 1) and to iden- tify relevant OD interventions to improve four levels or “targets” of integration: indi- viduals, teams, cross-teams/departments, and the organization as a whole. It is my hope that by directing conscious attention to all four of these interrelated components of the system, OD practitioners can take advantage of our knowledge and expertise to propose interventions that proactively tackle these common integration chal- lenges. As Bradford and Burke (2005) put it, “with more than two-thirds of change efforts failing and an even greater number of mergers and acquisitions not achieving their financial promise, OD practitioners’ expertise on implementation is crucial” (p. 196).
19Organization Development Interventions and Four Targets of Post-Acquisition Integration
Many of the interventions described here will be familiar to seasoned OD prac- titioners and are not necessarily unique to acquisition scenarios. However, I do not believe the lack of acquisition-specific or “fad” solutions negates the applicability of these interventions. Instead, I propose that the quantity, diversity, and complexity of challenges in an acquisition demand that the OD practitioner identify an equally diverse set of practices to match. Some practitioners prefer to focus on the areas of incompatibility in organizational cultures, whereas others immediately focus on the challenges of individual transitions. The OD practitioner who insists on a single approach—either an individual, team, or whole organization intervention—will fail to appreciate the importance of integrating employees at multiple levels and targets. What is unique to OD interventions in acquisitions is the need for a combination of approaches to target the diversity of chal- lenges that exist at these multiple levels.
In early stages of the integration, OD practitioners should consider conducting organization assessments and sensing surveys as data gathering mechanisms to help identify sources of conflict and prioritize these interventions. Questions should address potential trouble signs at each of the following target levels to enable the practitioner and client to select and customize appropriate interventions that match the organization’s unique needs.
Beard and Zuniga (2006), for example, explain the development of a culture assessment that provided an integration team with guidance on the most appropri- ate interventions.
Target 1: Individual Integration
Repeatedly over the past 20 years of research, M&A activity has been noted for the significant psychological stress it places on employees, described variously as a sense of loss, anger, anxiety, uncertainty, and grief. Individuals experiencing these emotions are likely to exhibit increased conflict, low motivation, and greater mental and physical illness, while for the organiza- tion this translates to absenteeism, turn- over, and low productivity, among other outcomes (Cartwright & Cooper, 1993; Seo & Hill, 2005).
Early on in the acquisition process, concerns are naturally very personal: “Peo- ple’s first reaction to a merger is to think of their own interests: They become preoc- cupied with what the deal means for their jobs, livelihood, and careers” (Marks & Mirvis, 1992, p. 20). Once the “survivors” are confirmed, at a similarly very basic level the logistics of the job become important. Technology, facilities, telephones, badges, signage, and business cards have the potential to easily disrupt productivity if not handled accurately and swiftly. Policy and procedure questions that were once
routine and mundane to answer are now time consuming and disruptive to address. Employees’ time and attention is thus directed away from everyday work activities to solving basic problems of getting set up with basic needs and finding answers to their procedural questions. More danger- ous to the integration process, however, is the natural tendency for employees to respond to the vacuum of information by returning to familiar ways, old processes, tools, and systems. In this respect, one very obvious barrier to individual integration is poor handling of onboarding and orienta- tion activities.
Interventions for Individual Integration
“Focusing on the individual earlier in the due diligence process can yield significant long-term benefits,” writes Tim Merrifield (2006, p. 11), reflecting on his experience with research and development talent integration at Cisco. Seo and Hill (2005) identify a number of prescriptions to help individuals cope with the stress of indi- vidual transitions, including counseling and social support, disengagement efforts, or grieving meetings in which individu- als can share feelings of uncertainty and anxiety with others experiencing similar emotions, and two-way communication with leaders. Not all communication is useful, however. In particular, in one study of information adequacy during a merger,
Table 1: Common Problems in Integration at Four Levels
» Employees spend too much time finding information and get- ting set up
» Employees lack motivation, engage- ment, translating to increased turnover, absenteeism, and low productivity
» Employees desire to return to “old” ways, or fail to adapt to new processes, tools, and systems
» Acquired employees lack understanding of team goals, purpose, and processes
» Employees do not understand or accept new roles
» Unclear team charter
» Long decision making cycles, unproductive meetings, and com- munication patterns
Cross-Team/ Department Integration
» Newly formed teams working at cross purposes, missing handoffs, or duplicat- ing work
» Confusion about which team handles which tasks
» Unclear strategy, little buy-in to strategy
» Gridlock; failure to make changes over time and realize com- petitive opportunities
» Two companies still remain
OD PRACTITIONER Vol. 44 No. 3 201220
researchers found that communication ses- sions promoted job satisfaction only when the communication sessions were carefully designed and concerned matters employ- ees were truly anxious about (such as how decisions are made and what aspects of their jobs will be changing) (Zhu, May, & Rosenfeld, 2004).
Collective socialization tactics (such as those that occur in onboarding ses- sions, new employee orientations, and new manager orientations), in which employees and managers participate in group learn- ing, provide opportunities to socialize with peers. Such activities have been shown to increase embeddedness (i.e., increased con- nections to the job and organization) and reduce turnover among newcomers in at least one study (Allen, 2006), though this study did not focus on acquisition onboard- ing specifically.
Target 2: Team Integration
As new teams form following an acquisi- tion, managers and team members “have to face the consequences of high-level deci- sions about work-unit charters, structures, and systems” (Marks & Mirvis, 1992, p. 21). Newly acquired employees may not under- stand the purpose, goals, or direction of the new team or their role on it. The team’s charter or mission may have changed due to the acquisition as well, and even existing (pre-acquisition) team members are likely to have questions about their responsibili- ties and how the new team members will fit with existing roles and processes. The result can be long and unproductive cycles of trial and error, where team members struggle to determine who makes what decisions, miss important handoffs, duplicate work unnecessarily among team members who do not understand or respect one another’s unique roles or responsibilities, or engage in ineffective communication patterns.
However, managers often fail to recognize that even comparatively small transitions in team membership (just one or a few members joining or leaving) will change team dynamics, as members ques- tion what will happen to the work that a departing member used to do, or what role
the new member(s) will play. Managers, perhaps pressured to get on with the team’s tasks, tend to throw new members into the team and expect them to pick things up as time goes on. Since both new and ten- ured team members are working through Bridges’ (1980) classic stages of endings and new beginnings, failing to pay con- scious attention to the transition will slow down the team integration process.
Interventions for Team Integration
Team start-up meeting interventions can be effective to start teams off quickly and increase acquired employees’ identification with their new teams. West (2004) writes, “The beginning of a team’s life has a sig- nificant influence on its later development and effectiveness, especially when crises occur. Start-up interventions can help cre- ate team ethos, determine clarity of direc- tion, and shape team working practices” (p. 77). A well-structured team start-up intervention can also do the following: » Quickly establish agreements and
norms so that the team can begin to function more quickly.
» Provide opportunities to surface team member disagreements and misunder- standings earlier rather than later.
» Clarify basic team functions such as goals and operating methods.
» Allow team members to begin to develop interpersonal relationships.
» Provide team members with clear and well-defined roles.
A sample team startup meeting is pre- sented in Table 2. Managers can lead the startup meeting themselves, if provided with a template and explanation about the structure and purpose of the meet- ing. Alternately, startup meetings may be facilitated by OD practitioners if the stakes are high or resources permit it. In either case, attention to the initial phase of team development at this stage is likely to aid the team in solving problems early on and reduce the ambiguity that often occurs in the post-acquisition integration stage of a new team.
Management development initiatives can support managers with acquired team members in identifying common transition challenges to monitor. In consultation with an OD practitioner, managers can learn about actions they can take to support their new teams through common stages of team development.
Table 2: A Sample Team Start-Up Meeting Agenda
1. Introductions of each team member » Career history and background, education, family, personal interests or hobbies
2. Talk with the leader » The leader’s vision of and expectations of the team » Leadership style, “hot buttons,” work preferences, values » Team member expectations and needs of the leader
3. Exploration of team charter, mission, and purpose
4. Exploration of team goals and objectives » Priorities » Timelines and milestones » Metrics (type, number, frequency of updates, targets, communication of results)
5. Exploration of team member roles and responsibilities » Team member roles, titles, job functions, interdependencies among members
6. Agreement on team norms and guidelines for work » How will we make decisions? » How will we communicate and resolve differences?
(Anderson, 2012, p. 231)
21Organization Development Interventions and Four Targets of Post-Acquisition Integration
Target 3: Cross-Team/Department Integration
Recent research confirms that the longer a group has been together, the greater the feeling of loss of the historical identity, the greater the resistance to a merger or acquisition, and the more actively mem- bers will work to protect and maintain the former identity (Jetten & Hutchison, 2011). Interestingly, participants in that study felt less resistance when they were allowed to retain their pre-merger group names. Simi- larly, Colman, and Lunnan (2011) found
that strong identification with a former company increases employees’ resistance to new processes and approaches they are now more likely to see as substandard. These findings underscore social identity theory (Tajfel & Turner, 1985) that proposes that a significant part of our identity is developed and shaped by the social groups to which we belong.
The pragmatic advantages of this iden- tification, of course, are that team members that hold a strong sense of team identity are more likely to engage with fellow team members in team goals to achieve shared outcomes. In a merger or acquisition, how- ever, this same sense of ingroup identity can have “tribal” consequences as fighting between internal teams overtakes coopera- tion. McGee-Cooper (2005) notes that in an acquisition, “new hires and old hands
face off. The company treats new people as foreign and ‘dangerous’…as the tribe closes ranks to defend against new ideas and cultural differences” (p. 14). Much research attributes inter- and intra-team conflicts to cultural differences, which “tend to grow into aversive feelings in situations of direct confrontation, sometimes triggering a vicious cycle” (Bijlsma-Frankema, 2001, p. 194). Rather than working cooperatively in the new organization, teams, or func- tions, people now see themselves as pitted against one another in competition, a phenomenon that may become even more
prevalent when organizations structure the acquired company as a stand-alone entity or choose to maintain the acquired compa- ny’s old department structures in the new company. The addition of new functions, bolted on to the pre-acquisition structure (for example, a new product engineering group), may now create confusion about which department handles which tasks, how charters overlap, where tasks intersect and handoffs must occur, where power lies in decision making, or how information is to be shared between divisions.
In addition, leaders of the new orga- nization must reflect a common under- standing and shared commitment to the strategies, plans, and goals of the combined organization. This highlights the impor- tance of relationships among the leader- ship and management community where
these issues can be openly shared, dis- cussed, and decided. For the acquired man- ager, challenges exist in communicating to the division when employees require infor- mation about transitions from old to new. One study noted that acquired managers face a contradictory role in which they have to maintain old processes, networks, and relationships but simultaneously adapt and negotiate these in a new context (Chreim & Tafaghod, 2012). The authors found that a critical factor in acquisition integration success for these managers is the quality of the relationships among acquired and acquiring managers. In successful integra- tions, managers had positive, constructive, and frequent interaction, whereas those integrations that were unsuccessful were marked by new–old manager relationships that displayed either apathy or counterpro- ductive interaction.
Interventions for Cross-Team/ Department Integration
First, OD practitioners can aid leaders in managing intergroup conflict between intact teams that existed prior to the acqui- sition and newly acquired teams. Organiza- tion mirror activities (where perceptions of similarities and differences between groups are thoughtfully exchanged in a facilitated session), joint problem solving workshops, and microcosm groups (where a subset of members of each group negotiate solutions to process problems) can all be effective in increasing intergroup contact and reduc- ing stereotypes of other teams (Anderson, 2012). Intergroup contact alone is not likely to reduce conflicts, but it can do so when the teams develop a shared ownership of a goal to which they are both committed. Leaders of both groups can agree on a com- bined strategy and shared superordinate goals, facilitated by OD practitioners skilled in strategic planning and goal setting.
Leadership development activi- ties can provide leaders and managers with increased skills in managing cross- functional challenges. Following Adobe’s acquisition of Macromedia in 2005, cross-team collaboration became criti- cal as the integrated company sought to increase its leadership skills to compete
Rather than working cooperatively in the new organization, teams, or functions, people now see themselves as pitted against one another in competition, a phenomenon that may become even more prevalent when organizations structure the acquired company as a stand-alone entity or choose to maintain the acquired company’s old department structures in the new company. The addition of new functions, bolted on to the pre- acquisition structure (for example, a new product engineering group), may now create confusion about which department handles which tasks, how charters overlap, where tasks intersect and handoffs must occur, where power lies in decision making, or how information is to be shared between divisions.
OD PRACTITIONER Vol. 44 No. 3 201222
in new markets. Morris (2009) outlines the development of the Adobe Leader- ship Experience that set expectations for both pre- and post-acquisition leaders with a common set of leadership attri- butes and values. Leadership development sessions, including the assignment of a “buddy” s ystem for acquired and acquir- ing managers, can also provide oppor- tunities for increasing networking and management contact.
Target 4: Organization-wide Integration
In large acquisitions, before the legal combination takes place, it is common for leaders and the transition team to determine how the organizations will be operationally combined. This includes an initial set of decisions about how pro- cesses will be integrated, which employees will be retained and which will not, how reporting relationships will be structured, and much more. Barkema and Schi- jven (2008) note that this stage typically demands more decisions to be made than the organization can optimally handle. As a result, some decisions are quickly made on a pragmatic basis (e.g., “we’ll just leave the two product maintenance organizations intact”).
In the integration stage, as the orga- nization’s capacity to address these issues
increases, new information usually comes to light that provides more data for effective decision making. (Overlap between the two product maintenance organizations now becomes increasingly apparent.) This research suggests that continual monitor- ing and adjustment following the close of the combination is a key competency in achieving a successful merger or acquisi- tion. Indeed, Barkema and Schijven (2008) note that “acquirers are typically unable to optimally integrate acquisitions the first time around” (p. 702) and that “restructur- ing plays an important role in more fully realizing the potential of the firm’s acquisi- tions” (p. 715). Importantly, they note that post-acquisition decisions about organiza- tion design are not a “one-shot game, but a process that extends far beyond” initial integration efforts (p. 715). During the integration process, new capabilities or opportunities may be realized that require leaders to rethink previous decisions about the organization’s design to truly realize the benefits of the acquisition.
Interventions for Organization-wide Integration
Organization design work early in the pro- cess and in the years following the acquisi- tion is important. Jasinski (2010), writing about MetLife’s organization design and
acquisition process, argues that “sound organization design, applied from early in the acquisition process through imple- mentation, can be an effective catalyst for ensuring that the structure, process, gov- ernance, metrics, and people are optimally configured and aligned to fulfill the strat- egy of the newly integrated organizations” (p. 6). Supporting the research findings above, in the MetLife process “organization design activity peaks during M&A integra- tion planning, subsides after integration, and then spikes later as the longitudinal effects of the design are observed and adjustments are indicated” (p. 9).
As day to day integration challenges fade in the months following the acquisi- tion, leaders are likely to ask, for example, “where are we failing to see value from this acquisition?”, “what untapped poten- tial remains?”, and “what might the next step be in our evolution?” These broad questions are likely to force them to rethink strategies, reporting structures, processes, and more. Skilled OD practitio- ners can work with leaders to help them through organization design questions in a structured process. Questions about the future and the organization’s vision of it can imply the benefits of participative, large group interventions that can engage employees from both the acquiring and acquired organizations.
Table 3: OD Interventions that Address Common Integration Problems
Support employees through acquisition stress and foundational needs, and develop employee engagement
» Onboarding sessions
» New employee orientation
» New manager orientation
» Two way communica- tion sessions
Form productive teams
» Team startup meetings
» Manager develop- ment to foster team transitions
Cross-Team/ Department Integration
Develop cooperative interactions between leaders and teams
» Intergroup/ interteam interventions
» Strategic planning and goal setting to jointly develop super- ordinate goals
» Leadership develop- ment to promote cross-functional networks and shared values
Remove gridlock and promote future potential
» Organization design
» Large group interventions
23Organization Development Interventions and Four Targets of Post-Acquisition Integration
If my argument is valid—that organiza- tion development practitioners can add maximum value to the integration stage of mergers and acquisitions through a diver- sity of approaches that address multiple targets—then we must be skilled at main- taining our attention simultaneously on the development of individuals, teams, depart- ments, and the organization as a whole in what clearly involves a high touch, resource intensive effort. One possible approach would involve forming a combined OD team, composed of practitioners in both the acquired and acquiring organizations, to collaborate. Practitioners with expertise in each organization and target area can join forces to develop a comprehensive post-integration organization development strategy. This approach has the benefit of putting the practitioner team in the shoes of the clients they are working to support (forming a team, negotiating roles and pro- cesses, observing cultural differences, and collaborating across organizations), allow- ing the practitioners to experience similar challenges to those of their clients.
This is by no means an exhaustive list of the kinds of problems that can occur at these levels, nor is it a comprehensive list of OD interventions that practitioners might use to address them. Instead, I hope that this preliminary argument about the benefits of OD work at multiple levels and targets prompts practitioners—and managers—to take seriously the ability for OD interventions to reduce the number of “merger repair” scenarios.
Allen, D. G. (2006). Do organizational socialization tactics influence new- comer embeddedness and turnover? Journal of Management, 32, 237–256. DOI: 10.1177/0149206305280103.
Anderson, D. L. (2012). Organization devel- opment: The process of leading organiza- tional change (2nd ed.). Thousand Oaks, CA: Sage.
Barkema, H. G., & Schijven, M. (2008). Toward unlocking the full potential of acquisitions: The role of organizational
restructuring. Academy of Management Journal, 51, 696–722.
Beard, M. J., & Zuniga, L. C. (2006). Achieving the right flavor: A study of designing a cultural integration pro- cess. The Psychologist-Manager Journal, 9(1), 13–25.
Bijlsma-Frankema, K. (2001). On manag- ing cultural integration and cultural change processes in mergers and acqui- sitions. Journal of European Industrial Training, 25, 192–207.
Bradford, D. L., & Burke, W. W. (2005). The future of OD? In D. L. Bradford & W. W. Burke (Eds.), Reinventing organiza- tion development (pp. 195–214). San Francisco, CA: Pfeiffer.
Bridges, W. (1980). Transitions. Reading, MA: Addision-Wesley.
Buono, A. F. (2003). SEAM-less post- merger integration strategies: A cause for concern. Journal of Organizational Change Management, 16, 90–98.
Cartwright, S., & Cooper, C. L. (1993). The psychological impact of merger and acquisition on the individual: A study of building society managers. Human Relations, 46, 327–347.
Chreim, S., & Tafaghod, M. (2012). Con- tradiction and sensemaking in acquisi- tion integration. The Journal of Applied Behavioral Science, 48, 5–32.
Colman, H. E., & Lunnan, R. (2011). Orga- nizational identification and serendipi- tous value creation in post-acquisition integration. Journal of Management, 37, 839–860.
Galpin, T., & Herndon, M. (2008). Merger repair: When M&As go wrong. Journal of Business Strategy, 29, 4–12.
Jasinski, T. J. (2010, March/April). How MetLife balances effective organization design with the need for speed in post- acquisition integration. Global Business and Organizational Excellence, 6–16.
Jetten, J., & Hutchison, P. (2011). When groups have a lot to lose: Historical con- tinuity enhances resistance to a merger. European Journal of Social Psychology, 41, 335–343.
Krug, J. A. (2009). Brain drain: Why top management bolts after M&As. Journal of Business Strategy, 30, 4–14.
Lauser, B. (2010). Post-merger integration
and change processes from a complex- ity perspective. Baltic Journal of Manage- ment, 5, 6–27.
Marks, M. L., & Mirvis, P. H. (1992). Rebuilding after the merger: Dealing with “survivor sickness.” Organizational Dynamics, 21, 18–32.
McGee-Cooper, A. (2005). Tribalism: Culture wars at work. The Journal for Quality & Participation, 28(1), 12–15.
Merrifield, T. (2006). Optimizing R&D staff integration. Research Technology Management, 39(4), 11–14.
Morris, D. (2009). The Adobe leadership experience. T+D, 63(5), 51–53.
Seo, M., & Hill, N. S. (2005). Understand- ing the human side of merger and acquisition: An integrative framework. The Journal of Applied Behavioral Sci- ence, 41, 422–433.
Tajfel, H., & Turner, J. C. (1985). The social identity theory of intergroup behavior. In S. Worchel & W. G. Austin (Eds.), Psychology of intergroup relations (2nd ed., pp. 7–24). Chicago: Nelson-Hall.
West, M. A. (2004). Effective teamwork: Practical lessons from organizational research (2nd ed.). Malden, MA: Blackwell.
Zhu, Y, May, S. K., & Rosenfeld, L. B. (2004). Information adequacy and job satisfaction during merger and acqui- sition. Management Communication Quarterly, 18, 241–270.
Donald L. Anderson is the author of Organization Development: The Process of Leading Organi- zational Change (2nd ed., Sage Publications, 2012) and the editor of Cases and Exercises in Organization Development & Change (Sage, 2012). He is a practicing consultant and teaches organization development and organization design at the Univer- sity of Denver. He can be reached at Donald.Anderson@du.edu.
OD PRACTITIONER Vol. 44 No. 3 201224
Copyright © 2012 by the Organization Development Network, Inc. All rights reserved.
Copyright of OD Practitioner is the property of Organization Development Network and its content may not be
copied or emailed to multiple sites or posted to a listserv without the copyright holder’s express written
permission. However, users may print, download, or email articles for individual use.