M&A: shared assessment on human element reduces risk and failure rate

_**The figures for failure of mergers and acquisitions (M&A) vary, while pointing to the same

finding of failure in 50 to 85% of cases depending on sources… Either far worse than a coin toss!… Among the main factors for failure, the same one explaining conversely the greatest company successes: the human element.***

***Yet it is striking to note that this human dimension –

quality of leadership, relational processes in activities and thus capacity for interactions and decision-making – is the poor relation of "due diligences", these detailed analysis exercises prior to M&A.**_ There is no fatality: there is no insurmountable incompatibility a priori between individuals, teams and company cultures – "only" a particular effort and work of bringing together in the creation of new common modes of representation and operation – in other words a new shared culture. And above all, identification of gaps between existing cultures and thus anticipation of the effort to envisage for transcending them into a new shared culture is an entirely doable exercise, and for a truly marginal cost relative to any M&A "deal"… Our purpose is not to develop here the modalities for creating a new culture "that works" and a performing organization – that is where goals and desired effects are aligned and clearly shared, where people work while talking frankly without evasion, false pretence or risk of undue "backlash", admitting one's own apprehensions and needs and without thinking one is right a priori*… We want to stress the possibility of integrating into the due diligence phase of an M&A a shared assessment with all transaction stakeholders, bearing on key dimensions of structures and dynamics of organizations concerned. It is not a possible HR audit oriented like the entire due diligence on very strategic and financial aspects, in which case with social and legal risk dimensions linked to the HR function. But rather a genuine analysis of the potential for optimal integration for collective operational activity effectiveness. Precisely, this assessment makes it possible to evaluate where we stand on the aforementioned conditions for performing organization, as well as the level of effort potentially necessary to reach them – which provides a decisive element to analysing the risk of proper implementation and integration of the M&A operation studied, just like "classic" dimensions of any due diligence on strategic, product, financial risks and efforts… For this, at All Leaders Initiative, we implement a dual device, quantitative and qualitative, applicable in several languages: - Quantitative component in the form of an online survey for all employees (management included) makes it possible to measure their state of mind in terms of current experience on dimensions such as managerial culture, psychological safety, etc. as well as their aspirations, and the gap between the two. The tool used benefits from 15 years of R&D experience, more than 80 organizations and more than 25,000 respondents analysed. - Qualitative component in the form of interviews with a significant sample makes it possible to identify and analyse globally and systemically the components structuring team activities – leadership in its different forms, status and appropriation of "standards" (vision & objectives, rules and culture), quality of relational processes, articulation between activity and identified environmental issues. This analysis is based on teachings and experience of "Berne organizational Theory (B.O.T.)" – a branch of Transactional Analysis dedicated to groups and organizations. Benefits of this dual device: provide a global, systemic and objective reading of the situation on all key dimensions of structures and dynamics of organizations, with data on aspirations or desired states, as well as the gap (easily apprehended as a map): – between employees with each other, – between their experience and their aspirations, – as well as the gap between current state and the acquirer's strategic vision. This therefore makes it possible to identify and share what separates the current situation from a state of optimal collective effectiveness and the mode of operation envisaged and aimed for by the acquirer. One thus has a clear vision of any effort to be produced to reach a desired situation – including with an assessment of this effort's cost and a valuation of development potential. In short, for a relatively marginal cost, one has decisive additional elements on the viability of the planned transaction… And if the "deal" is finalised, the learnings from such an approach particularly well prepare the integration phase. With more very positive induced effects on employee trust and commitment whose state of mind and voice are collected and recognised… Of course, this particularly shared assessment device adapted to the M&A context can be activated in many other circumstances such as reorganization, change of strategic direction, taking up position by new management… _**Do not hesitate to contact us to learn more!**_ *: we have recognised here certain criteria of performing teams dear to Will Schutz, founder of the "Human Element" approach which is a key resource in the integrative approach driving All Leaders Initiative