How to Make Your Post-Merger Reorg a Success

jun18_13_871734886
japatino/Getty Images

Mergers and acquisitions (M&A) activity is booming. From the $68 billion CVS-Aetna deal to the $27 billion merger of Microsoft and LinkedIn, 2017 set records with more than 50,000 deals, valued at $3.7 trillion. This momentum is continuing into 2018 with the bidding war for UK media company Sky ($24–$30 billion) and Microsoft’s $7.5 billion acquisition of GitHub.

Yet while mergers can offer a tremendous opportunity for expanding a business and creating value, they can be extremely disruptive — and handling the organizational changes of M&A is essential for realizing its benefits.

What ensures that M&A-driven reorganizations are successful? We took this question to our data. Over the past year, we carried out an online survey of 2,500 reorgs (you can still complete the survey and benchmark your reorg here). We compared the results of M&A-driven reorgs with other forms of reorgs to provide fact-based advice for executives.

Our analysis shows

Continue reading "How to Make Your Post-Merger Reorg a Success"

Making Government Reorgs Work

mar17-30-482212512

When governments attempt to reorganize themselves, the changes they make have a huge bearing on the effectiveness of the public sector. But, just like their corporate counterparts, government reorganizations have a poor record of success. Results from a survey on HBR.org on the effectiveness of reorganizations (covering over 1,000 reorgs across all sectors and geographies, of which 87 were government institutions), provide pointers for how to get them right.

Looking at the government institutions data, while 75% delivered some benefits, only 13% delivered the planned objectives in the planned time. About the same proportion (14%) actually hurt the organization. According to the survey, the three biggest challenges faced by government reorganizations are (in order): unforeseen issues that slowed the process (e.g., failing to rewire the IT systems); that leaders actively resisted the changes; and that employees actively resisted the changes. (Politicians should remember those last two, when they

Continue reading "Making Government Reorgs Work"

Assessment: How Successful Was Your Company’s Reorg?

assessment-reorg-1200
Has your firm recently undergone a reorg? If so, you’re in good company. Reorganizations, or reorgs, are a common business practice. And with change accelerating in almost any industry you can think of, we expect them to become more and more common. Think about the disruption being caused by electric and autonomous cars in automotive; by regulatory challenges in banking; by shale resources in oil and gas; and by a groundswell of public dissatisfaction in political institutions, to name just a few. All will require companies — and governments — to rethink the ways they are organized. Did your reorg meet your expectations? If not, again, you’re in good company. Reorgs can deliver significant value, yet they often cause misery. Some academic studies suggest that the psychological impact of uncertainty during a reorg can be even more distressing than an actual layoff. And the longer that badly planned reorgs drag on, the more the misery endures
Continue reading "Assessment: How Successful Was Your Company’s Reorg?"

A 5-Step Process for Reorganizing After a Merger

dec16-21-548554489
Reorganizations can be a useful management tool for finding new value and are often essential as part of a merger or acquisition integration. Getting this type of reorganization right allows business units from the merging companies to be brought together smoothly, corporate activities to be standardized and streamlined, people to be aligned behind desired outcomes, and integration synergies to be delivered quickly. But, according to McKinsey research, only 16% of merger reorgs fully deliver their objectives in the planned time, 41% take longer than expected, and in 10% of cases, the reorg actually harms the newly-formed organization. Common pitfalls are a lack of cultural understanding between the integrating parties, poor integration leadership, and a focus on the wrong activity set or the wrong targets. To help maximize the value and minimize the misery of reorgs, we have developed a five-step process for running them. The steps apply to all reorgs
Continue reading "A 5-Step Process for Reorganizing After a Merger"

A 5-Step Process for Reorganizing After a Merger

dec16-21-548554489
Reorganizations can be a useful management tool for finding new value and are often essential as part of a merger or acquisition integration. Getting this type of reorganization right allows business units from the merging companies to be brought together smoothly, corporate activities to be standardized and streamlined, people to be aligned behind desired outcomes, and integration synergies to be delivered quickly. But, according to McKinsey research, only 16% of merger reorgs fully deliver their objectives in the planned time, 41% take longer than expected, and in 10% of cases, the reorg actually harms the newly-formed organization. Common pitfalls are a lack of cultural understanding between the integrating parties, poor integration leadership, and a focus on the wrong activity set or the wrong targets. To help maximize the value and minimize the misery of reorgs, we have developed a five-step process for running them. The steps apply to all reorgs
Continue reading "A 5-Step Process for Reorganizing After a Merger"

The Two Biggest Communication Blunders During a Reorg

oct16-20-91311047
Leaders of reorgs typically fall into one of two traps when communicating with their employees. We’ll call the first one wait and see and the second ivory-tower idealism. Perhaps you have seen one, or both, in your own reorgs. In the first trap, wait and see, the leader of the reorg thinks everything should be kept secret until the last moment, when he or she has all the answers. The leader makes the reorg team and leadership swear to secrecy and then is surprised when the news leaks to the wider organization (it always does, we’re afraid). As the reorg team starts to engage with the rest of the organization, the rumors round the water cooler increase: “They were asking what my team does”; “I had to fill in an activity analysis form”; “I hear that 20 percent of jobs are going to go.” Everyone thinks the real
Continue reading "The Two Biggest Communication Blunders During a Reorg"