Why Integration Efforts Often Fail (2004)

When The Honeymoon Is Over

by Nick Jarrett-Kerr

We are living the world of the Seven Day Wonder. Today's headlines are soon forgotten, and some of the world's greatest human tragedies -- such as the victims of famine, pestilence and war - soon fade into obscurity unless constantly and persistently brought to our attention.

The same seven day wonder phenomenon seems to be true with the arrival of new people at Professional Service Firms. The song and dance which accompanies the arrival of a new star or a new array of stars can be quite intense. But efforts all too often die away within weeks leaving the new arrival to lament the early end to the honeymoon.

I have noticed that Professional Service Firms in general (and there are of course some notable exceptions) do little or nothing to support new people in the months, and even years, after the initial fan-fares have ceased. This omission is at its most acute in the case of lateral hires, but also holds true following a merger.

There are, I think, five main obstacles to successful integration.

First, people's memory and attention spans are both crowded and easily distracted. It does not take long to slip back into old routines and friendships, and to assume that your new colleagues are settling in effortlessly. In the case of a merger, particularly a multi office merger, both sides can all too often revert easily back into their pre-existing teams and working practices. It's very easy in most firms to ignore modifications in the working environment. And, what's more, partners in Professional Service Firms generally make as few changes to their working lives as they can get away with.

The second reason is the problem of raised and unfulfilled expectations on both sides of the equation. For the acquiring firm, new stars do not always look so glittering a little while after their arrival, particularly if some of the expected client following does not quickly materialize. For the new arrivals, the grass, which seemed to look so much greener from the other side of the fence, often looks a little more worn and patchy on closer inspection.

There is a third and brutal truth about the integration of new teams. The fact is that there are usually some casualties, ranging from underperforming partners through to surplus support staff. Partners and staff are instinctively aware of this - their first reaction, when confronted with any form of change, is to wonder what that change might mean for them, and whether their job is safe. I have found that until this issue is addressed, feelings of insecurity and paranoia exist and tend to gather pace far wider than might be anticipated.

A fourth and quite common problem is, put bluntly, a lack of cultural alignment between the parties, who may have got carried away by the idea of joining forces without thinking through whether they are suited. This hazard is to a large extent avoidable. At Edge International, we make use of our Cultural Inventory (based on the internationally recognized work of Professor Denison of the University of Michigan) to test the areas of compatibility and differences between firms and between individuals in firms. This brilliant diagnostic tool provides both due diligence (prior to the deal) and a subsequent agenda to action-plan important cultural and behavioral developments and team building exercises. Without such an approach, it is easy in recruitment or merger negotiations to spend too little time on compatibility and to focus disproportionately on the tangible elements on the checklist -- such as client base, technical skills, and the financial negotiations.

The final difficulty arises when too little time is spent planning and implementing integration efforts after the arrival of individuals or post merger. Failure to address this area is akin to a young couple spending all their time planning the wedding and none of their time planning the marriage. Many merger observers have noticed that in well planned mergers, for example, only about 20% of the merger effort commonly takes place prior to the merger date, with the remaining 80% after the event. There is a point to highlight here; whether the focus is on a merger or the hire of individuals, an integration program and action plan should be implemented over a period of several months and longer if necessary.

The problem of course is largely one of resources. Nobody wants to see either a merger or a senior level recruitment fail, but it's never easy to keep all the management plates spinning at the same time. The reality is that Managing Partners and their support teams usually have many more than enough projects to keep them constantly busy and continually shuffling their priorities. In these circumstances, it is all too tempting to declare victory prematurely or to assume that the partners will get on with the integration effort without constant nagging and reminders from above. Added to this, most Professionals are used to definable transactions and assignments in their working lives, which are at the 'hard' end of the project spectrum. It's the 'soft' projects (those involving people, teamwork, behaviors, values and culture) which time and time again have proved to be so much harder to implement. Such projects are important at all times, but particularly when new people are around. And what's more, these projects need sustained and committed leadership from the top and much more than lip service from the Partners at all levels.

So what is the solution? Learning from my own experience of both bitter failures and pleasing successes, there seem to be at least seven items on the checklist. This is true whether the focus is on the integration of a single person or a whole firm.

1. Prior to doing a deal, spend sufficient time on working out whether or not you are likely to be compatible. Using tools can help -- like Edge International's Cultural Inventory, or some form of profiling, to establish what drives or motivates people, and what their values are.

2. Prior to D-Day:

* Work out an Integration Program or Project which is long-lasting and sustained, and which reaches team and individual level

* Spend as much time as possible getting to know each other both formally and informally

* Use the Cultural Inventory to form action plans and to work out particular areas of difference which need development

3. Treat the Integration Project both as a change management program, using change management techniques and methodologies, and as a Team Building exercise

4. Consider using an external facilitator to work with team on a regular and sustained basis. In Edge International, we find that, where we are used in such a capacity, an external discipline and focus adds value. Such an intervention is seen as non-political and helps to ensure that a logical internal program is followed, that team meetings actually take place, and that action plans are made and followed up.

5. Never sign off the project until you are absolutely sure that you can proclaim both on an individual and a team basis that "he or she is truly one of us".

6. It is seldom too late to work on integrating new people. Think about those who have joined the firm within the last year (or perhaps even longer) and ask yourself how firmly they are woven into the fabric of the Firm, and what can be done further to enhance working relationships.

7. Recognize, finally that despite all best efforts, regrettably not everybody will always fit in to your organization. In such cases, at the end of the day, both you and they might be better off parting company, doing everything you can to ensure you remain on friendly terms.

Copyright 2004. Edge International

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