I wrote last time about this concept at an overall corporate level. Today I’m going to address the same challenge but at a much more local level…why do we continue to think about integration programme structures from a purely functional perspective? Let me break down the discussion a little. For ease of understanding, allow me to define the functions of an organisation as Sales, Marketing, Product Development, Product Management, Research, HR, Finance, Technology, Operations, Internal Audit, Risk Management..and depending on what type of business you’re involved in, a whole host of others. 

Where did / how did these functions actually start? If you look at any start up, I suspect you’ll find that the entrepreneur who is building the business, is not recruiting on the basis of these functions…”I must have an HR Director, otherwise my business will fail”! 

No, the entrepreneur is extremely interested in the skill set / the capability which might ultimately sit within an HR function…’I need to retain Jim, the software developer because he knows everything about my platform’, ‘Joanna is going through a hard time at the moment but she has the spark of innovation which we need…how can I support her’, ‘we’ve grown at such a pace that some kind of structure within our client team might be smart to think about’.

Who qualifies for these roles? I suspect that if you gave her the choice between someone who’s built their career in HR but doesn’t understand / or has no interest for what the company does, compared within someone internal who has knowledge of the business and a good intuitive feel of what might work with Jim and Joanna, the decision would be a simple one.

Post merger integration actively asks the same question in my experience:

How you integrate your function may be important to you (the drill), however how you add / retain value overall across the entire integrated organisation is much more important (the skill).

Let’s think about HR in the above context. From a purely functional perspective, the role of HR in integration is a simple one:

Aligning compensation and benefits structures, creating a single HR system which manages the employee base effectively, aligning policies around recruitment, promotion, disciplinary, managing IR and internal workers councils relationships, reviewing and aligning organisational design to reflect requirements of the new Target Operating Model. 

For those of us involved in post merger integration however, where does the real value lie from HR in an acquisition. The answer is a simple and yet complex one:

Retaining the key people (unlikely to defined by the organisational design), and:

Maintaining or enhancing the productivity of the employee base (acquired and acquiring)

Simple…yes. It’s not hard to understand the value retention / creation of the above two concepts. 

Complex…yes, because retention is far more than paying them more money; and whilst measuring productivity of your employee base is a relatively simple process, adapting / transforming your organisation to pay attention to those measures is more challenging.

The real value in M&A comes when these functions meet around a common goal which requires them to work together. That’s when you see real innovation and business driven change.

So why, tell me, do companies continue to run integration programmes on a functional basis? Answers on a virtual postcard please…or a comment below would do fine as well!

Sincerely,