Acquisitions: ‘All aboard’ instead of ‘all messed up’

Recently I was working with an organization which acquired a smaller company with $100 million of annual sales. Fast forward one year. The newly merged business unit was struggling to bring in $30 million in sales. Sales continued to be flat for another two years before they started to grow again and didn’t reach their pre-acquisition size for five years. This was painful for everyone involved - the acquired company, the mothership and the stockholders.

Unfortunately, this is an all too common story.

Onboarding New Employees

Anyone who’s worked for more than one company has lived through a similar experience on a smaller, intimate level. It’s most commonly called onboarding and can be defined as:

Onboarding, also known as organizational socialization, describes the mechanism through which new employees acquire the necessary knowledge, skills, and behaviors to become effective organizational members and insiders.

It isn’t quick and easy by any stretch.

Successful onboarding involves a complex sequencing of systems, tools, training, mentoring, feedback and socialization at just the right moments. The recognized key to success is having a repeatable process that works for acquisition of many kinds of companies.

The focus can’t be stressed enough as the cost of failure is enormous in terms of high turnover and lost productivity. It looks more like the picture at right.

Onboarding New Companies

At a much larger scale, the same logic applies to acquiring companies. Not only does the acquiring firm need to onboard 50 or 100 or 1000 new employees all at once. They also need a structured way to deal with what are typically considered huge organizational changes, all at once. These include:

• Shared services - Executing an effective shared services strategy for marketing, HR, finance, contracting, and legal. This is perhaps the most challenging aspect: How do companies successfully merge functional areas without losing the expertise and secret sauce that they acquired and that may be critical to the success of the new business unit?
• Managing, merging or re-implementing multiple ERP and CRM systems
• Rationalizing product portfolios, engineering roadmaps and market positioning
• Training, compliance and general cultural indoctrination

The list is even bigger as you drill into the details.

Onboarding improvement

It isn’t sufficient to have a process. There needs to be someone who owns it, makes sure it gets executed well, and gets constantly improved based on each new experience. Doing that means debriefing and capturing what’s worked and failed (and being honest about it) and having a commitment to making each new onboarding more successful than the last.

If this seems onerous or costly, think of the alternative…or the example I started with.

Photo credit: Kim Newton