Mentoring in acquisitions and mergers
Some years ago, a company, which I was chairman of, acquired its next largest rival at a time when the whole sector was in severe difficulties. The merged company survived and eventually flourished, while many other companies in the sector went out of business. Looking back on what we did right, one of the key factors was how the merger was handled – the formal acquisition process took nine months, yet within a matter of weeks from the agreement in principle, collaboration between the two teams was near seamless.
Mentoring was the secret ingredient to this rapid and effective integration. The starting point was “What experience and knowledge do we each have and what’s the most effective way of sharing it?” Every employee in the acquired company was paired with a colleague in the main company. Who was mentor and who mentee wasn’t always clear and somehow it didn’t matter, because the agenda of the mentoring sessions was to learn from each other as quickly and efficiently as possible. Working together on client proposals and existing projects enhanced the process.
Shortly after the completion of the merger, we moved into smaller premises and about a third of the staff opted to work partially or wholly from home. The mentoring relationships already established were vital in helping these homeworkers continue to feel connected.
This powerful experience is very different from what happens in a typical merger and acquisition situation. There, people from the two organizations are discouraged from talking with each other until the deal is completed. And then they may be left to compete for their own jobs with a new rival. If mentoring is considered, it happens some time after the acquisition, in response to stresses that become apparent in the integration process. One of the most common of these symptoms is the loss of talented people from the acquired company, who do not feel that they will be sufficiently valued in the new environment.
Here are some of the lessons I have learned from observation and research in both M&A and mentoring:
- Even if it isn’t possible or practical to initiate cross-company mentoring before the completion of the M&A deal, mentoring within the public negotiation period can have a powerful effect on the job commitment and retention of talented employees. In the year or so that Glaxo and SmithKline went through all the due diligence processes of their merger, the European finance and IT department initiated a mentoring programme. Not surprisingly, during the period, there was high turnover of staff – more than a quarter left. Yet of the people in the mentoring programme, only 2% quit. HR tested the assumption that the people in the programme were there because they had always intended to stay. What they found was that a strong motivation was for mentees to make themselves more marketable in the outside world. However, mentoring opened up mentees’ eyes to the opportunities in the merger and gave them increased self-confidence sufficient for them to decide to stay instead.
- Whether initiated before or after the conclusion of formal M&A negotiations, cross-organization mentoring helps to build trust, identify cultural and process barriers to integration and create informal communication networks. This last point is of increasing significance as companies become more and more reliant on the quality and effectiveness of their internal, informal social networks. Getting people together face to face to learn about each other and to build relationships takes time. E-mentoring with colleagues in the other organisation creates instant networks for the acquired employee to latch into.
- Conqueror syndrome is a common problem in M&A. Employees of the acquired company are made to feel inferior, especially if their company was bought because it was not doing well. Developmental mentoring provides a series of two-person forums, where stereotypes and assumptions about the two organisations can be challenged in a psychological safe environment.
- Mentoring is closely associated in both academic and practitioner literature with cultural acclimatization. Where a small company is acquired by a large one, it’s typically expected that people in the small company will have to adopt the processes of the larger, and the cultural assumptions that underlie those processes. This can be a very uncomfortable period for these employees, especially if they have a strong psychological contract with their original employer. Mentoring can substantially ease the trauma of this transition. The mentor’s role should not be simply to educate the newly acquired employee into the mainstream culture – it is much more about how to help the employee work within the culture and align their own values to those of the larger organization. Or to put it another way, it’s about achieving the emotional engagement of the mentee with their new employer organization.
- Mentors and mentees both need continued support. Of course, this is true of all mentoring programmes, but the extent of support required is likely to be greater, because of the uncertain environment. Mentors and mentees from the acquired company often talk of feeling isolated. Having an active mentoring programme manager, who keeps in touch with each mentoring pair, is essential. Also helpful is creating a community of mentors and a community of mentees, so that that can also call on each other for support. Because the mentors are likely o be drawn from the middle and senior levels of the two organizations, this community provides a neutral ground, where trust-building can occur on topics, which are unlikely to involve task or process conflict. For mentors, sharing the goal of retaining and developing the talent in the combined organization can also provide an altruistic motivation, when they may be unsure of their own future.
- The integration teams that some frequent acquirers parachute into any new acquisition can also benefit from being trained as mentors and coaches. However, a challenge for them as mentors is how to keep the relationships going, when they have been swiftly moved on to the next assignment. E-mentoring skills come into their own in this context. Also relevant are the skills of handing over to longer-term mentors.
- Giving senior managers in the acquired company responsibilities for mentoring both within their own company and in the larger entity also has benefits. It reinforces the perception that the acquirer values them; it speeds up the process of knowledge transfer (especially important if they are expected to work their way out of the organization in the next one to three years); and it raises their visibility outside their own unit. If leveraging the business contacts of other divisions and subsidiaries is part of the rationale for the acquisition, then mentoring relationships outside their own unit can be valuable in new business acquisition via other subsidiaries.
- Group mentoring also has a role to play. Cross-organization project teams to tackle integration and issues, such as new product development often run into problems in evolving through forming, storming and norming, to performing. An effective mentor to the team provides a rational, empathetic guide through this process, speeding up the time for the team to become fully effective, valuing and building on each other’s contributions.
It’s noteworthy that there is no significant literature specifically about mentoring in the context of M&A. There are studies that suggest mentoring is a key skill in M&A environments, but Google Scholar identifies no direct empirical research. This is clearly an area, where case studies and research would be beneficial.
© David Clutterbuck, 2011
 Liz Thach, Mark Nyman, (2001) “Leading in limbo land: the role of a leader during merger and acquisition transition”, Leadership & Organization Development Journal, Vol. 22 Iss: 4, pp.146 – 150
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