Corporate acquisitions are, by definition, a major change for both companies involved. But even changes perceived as good can turn out to be challenging, stressful and fraught with growing pains.
I’ve helped to manage 10 acquisitions—and a lot of change—throughout my 29-year career at Accenture and Accenture Federal Services. The most recent, the acquisition of Novetta—a highly specialized and leading-edge technology firm of 1,300 employees serving Department of Defense and intelligence organizations—was the largest.
As we mark the one-year acquisition anniversary, we’re keeping three guiding principles front and center as we continue the work of not just onboarding, but integrating Novetta’s people into our Accenture Federal Services family. I think these best practices can help other organizations too.
Principle 1: Seek first to understand
First, do your homework. Before the deal is signed, leaders from both companies should learn as much as possible about each other’s culture, people, how they work, what drives them and how the organizations consistently deliver successful outcomes. Finding areas of alignment is encouraging; this is common ground to build upon.
Where there are differences in terms of culture and business approaches, seek to understand the reasons for those differences. For the acquiring company, it’s critical to recognize the incoming company’s “secret sauce” and be intentional about preserving it!
Early on, we dispensed with the notion that, as the acquiring company, we have a fixed corporate culture, and the new company would simply need to wear ours like a new coat. Why? We didn’t want to drive out what was unique and wonderful about Novetta’s culture. Instead of force-fitting the new company into our existing structure, we evolved from three business units to four and cross-pollinated the newly created business unit with existing employee groups that worked with the same client set. Importantly, within the new business unit, we preserved key vestiges of culture, such as the internal chat tool, for people to surface what’s on their minds and crowd-source answers to common questions.
Principle 2: Keep people front and center
When managing an acquisition, there are multiple dimensions to consider, including new clients and contracts, administrative systems and processes, business systems and processes, and the list goes on. But ultimately success begins and ends with people.
While the ultimate goal is to create pathways for greater career growth and opportunity, we were intentional about making sure everyone benefited from the acquisition in the near term. We decided to invest heavily in financial incentives for all of our new employees, not just the senior executives, to demonstrate how much we value the talent and expertise they bring to the table each-and-every day.
We also prioritized applying a “do no harm” philosophy as we transitioned people to our employee package. In addition to looking at the aggregate value of all employee benefits, we analyzed how individuals would experience key benefits like healthcare. For those employees who we projected would experience increased cost due to differences in the structure of our healthcare programs, we calculated person-by-person that difference and offset it by adding to their base salary.
Principle 3: Make sure the acquiring company evolves too
The expectation in most acquisitions is that the company being acquired will adopt the business practices of its new owner. While probably the most expedient method of integration, this philosophy can result in missed opportunities for growth and new ideas. In my experience, to fully reap the benefits of an acquisition, acquiring companies should be open to importing the successful best practices of the company they have acquired.
While we’re still working through the integration process with Novetta, I expect in the end we’ll adopt roughly one-third of their pre-acquisition people practices, with one-third converting to our way of doing business, and another third evolving somewhere in between. As a large, complex organization with business processes to match, this approach to change requires a real-time investment on the front end to not only understand what the differences are but why they are. The payoff for all this upfront integration work is an end state that is better than either company was before; it truly elevates the organization to “1 +1 = 3” performance.
For example, we are presently working to blend the hiring approaches of our two companies as we take a long, hard look at our recruiting technology, processes and policies. We’re truly on a journey to an end state that will be a merging of best practices, as we pick and choose the very best of how we each excel at winning the war for talent in today’s hyper-competitive talent market.
It’s been a simultaneously exhilarating and challenging year getting to know our new colleagues and we’re working to deeply understand one another. These three principles helped us along the way, and I believe they can also help your organization—to minimize the friction that comes with change while recognizing the intended value of a powerful new corporate union.