For a winning bank merger, successful
integration is key and ‘Human Capital
Strategy’ must be applied to gain
competitive advantage, explores
While acquisitions will continue to be a significant contributor to growth, it has become imperative that acquiring banks have a ‘no error room’ in securing integration benefits despite the unpredictable environment in which integration is happening. A detailed ‘Human Capital Strategy’, including talent, leadership, culture and organisation framework, can assist a bank deal with integration challenges and gain longer competitive advantage.
Announcement of an acquisition sends shockwaves of anxiety across an organisation hierarchy. Employees worry about losing jobs, managers struggle to maintain control in a dynamic environment, leaders agonise over difficult decisions and everyone included, may lie awake wondering about their future roles. This initial shock is often followed by aftershocks, defections of key talent, organisational panic caused by rumours, declines in productivity and poor performance.
We have assisted in over four strategic bank acquisitions in the region, including one of the largest local banks acquiring the retail and SME portfolio of a multinational bank and successfully executed the integration. These were based on what we term as the ‘Human Capital Octagon’ or the ‘Eight Dimensions,’ detailed by the following principles:
An effective acquisition hinges on deploying an organisation’s diverse talent to meet business needs. A good organisational design can facilitate this by creating a new reporting structure with defined roles. It can also help address questions like - How will the acquisition affect me? Will I have a job? Where will I work? Who will I work for? This encompasses a deep understanding of business across functional, crossfunctional areas and geographic regions. Capabilities need to be identified that leverage the new organisation’s objectives through detailed competency assessments and identifying the ‘best fit’ talent. Then key stakeholders need to be interviewed from both sides of the deal without bias in order to build synergies and then finally communicate the new structure on its rationale and the way it will work.
Retention of ‘High Potential Talent’
Even though an acquisition might be a great opportunity, employees generally view it as a threat. Sometimes, most people who should have the least to worry start making alternative plans and then this turns out to be the best poaching field for competition. It is imperative to have a talent strategy that binds people, knowledge and focus on what you most want to keep. For a successful integration you need to identify right talent, ensure they feel valued and do not get an instance to think about leaving. One must initiate specific steps to involve, engage, empower employees and finally design HR initiatives that keep people/business knowledge aligned.
The New Organisation Culture
Corporate culture might be difficult to quantify - some organisations ignore this, others design an ‘ideal’ culture and assume that employee behaviour will automatically fall in line. In reality neither is effective as corporate culture needs to be built on and not replaced. It is imperative to understand underlying principles, desired behaviours and then plan activities on this foundation. One must focus on cultural differences that have most significant impact on post-acquisition results and encourage new behaviours that are a natural extension of the current cultures. Initiatives need to be carefully designed in order to sow an ‘end-state’ employer brand, which reflects the new cultural ethos.
Transformation Leadership Team
It is important to look objectively across both legacy companies, recognise people who are good leaders and have ability to lead through change. We need forward thinkers who can bring two organisations together to work side-by-side and focus on achieving the end-state vision. The key is to spot people with leadership qualities, regardless of their previous roles and give training to develop change-management skills. One must avoid the ‘blame game’, keep focus on future effectiveness and refrain from discussing legacy flaws. It’s about leading from the front and pulling the team together towards the final destination.
Rumours in acquisitions spread beyond the workforce, damaging customer relationships and impinge an organisation’s reputation and brand. A strategic interactive programme must target key stakeholders like employees, customers, suppliers, shareholders, board members and media with communication tailored to specific needs. A defined communication plan with pinpointed agendas, timelines and query response mechanism is a must. It’s simple - just identify communication ambassadors who have good people impact and ensure regular communication across the board through proactive engagement.
A simple approach for aftershocks is to address issues decisively, with timely responses and intensive employee engagement
The Day of Reckoning
The first day of combined operations, often referred to as ‘Day One’, is an acquisition milestone that must be acknowledged. It provides an opportunity for the leaders to shift attention to the future and build excitement about the organisation’s strategic goals. ‘Day One’ must go smoothly in order to make this experience special and bring both organisations together to boost morale. A good ‘Big Bang’ announcement gets the morale high and spreads news that it’s a start of even better things to come. On ‘Day One’, the organisation’s new strategy must get reinforced through the top leadership team, in order to ensure that key stakeholders know that this is the beginning.
It is imperative to stay focussed on achieving integration goals and ensure that project activities are not lists of never-ending tasks. The focus is always on ways to serve customers better and get operational effectiveness. New problems will surface and integration activities must be revisited through detailed project planning and monitored by a project management office (PMO). Focus on documentation is key to ensure audit trail to trace what happened during the integration and obviously this ends with an acquisition blue print for any future acquisitions.
Solving the Puzzle
The last dimension is the most critical and is about putting the above ‘Puzzle Together’. People actions must be aligned with integration initiatives between business operations, information systems and administrative functions. A simple approach for aftershocks is to address issues decisively, with timely responses and intensive employee engagement. People issues that result from an acquisition needs discipline and the rewards are longlasting and facilitates in building a high performing organisation. It’s about people working together for a ‘One Company, One Vision’ which eventually results in enhancing shareholder value.