The Key to a Successful Merger? You Gotta Get Better, Not Just Bigger

“By the power invested in me, I hearby pronounce you man and wife. You may kiss the bride.”

At my 5 am workout last week, I noticed on Bloomberg TV that mergers and acquisitions were in the air. Omnicom and Publicis had agreed to merge. The announcement was made in Paris where Publicis is headquartered.

The transaction, presented as a merger of equals, would bring the necessary scale and investment firepower to cope with rapid changes wrought by technology on the advertising business. What that means for the uninitiated is that we just got bigger — and bigger is better.

Does bigger equal success?

I have always been intrigued by mergers because, in a lot of cases, it is just like a marriage. And like with marriage, the success rate is hovering around 50 percent. As I watched the two CEO’s sign the merger document, get up and hug each other, it struck me that we were seeing not only a merger of equals but a C-Level of merger equals, whatever that means.

Co-CEO’s is not the only co-model, though, that the company will face. Every department, every job within the organization will, for the most part, not be afforded that same opportunity. The co-model can’t be duplicated anywhere else, which means that somebody has to go.

The Co-model does not trickle down. In the end, someone will be anointed.

I don’t mean to be a nay-sayer, but we have seen these marriages before: a merger of equals, leveraging economies of scale, an explosion of big data, and all the other business euphemisms for making it work. Remember the word synergy? It is not used anymore because it came to denote failure during the last M&A cycle.

Nothing about the talent

But advertising depends on one thing: a creative campaign which comes back to the power of the idea.

Innovation is not about bigness. If that were the case Microsoft would be an innovative factory. Innovation is not about balance sheets, P&L statement and the other metrics that we gauge business.

Bigger does not mean innovation. Bigger does not mean new ideas. It never has and never will. The brainpower of that valuable asset we call people will come out the winner every time.

But as I read through all the articles on this merger later that afternoon, I could not find any mention of the talent aspects of the merger. The business metrics that I mentioned above do not move me. My business is HR, and that is (and should be0 about the talent within and the talent coming into the new combined company.

I chuckled when I found that the main issue in so many of these articles was the conflict of clients: Pepsi vs Coke, ATT vs Verizon, Microsoft vs Google. In any merger, there is a conflict about talent and who will manage the engagement and the ongoing merger process. That is the elephant in the room, and it will have to be addressed very soon.

All these talented people that build up these awesome, award-winning campaigns will be checking out their counterparts out like boxers entering a ring.

Article Continues Below

Vision means nothing, but Culture is everything

Some will want no part in this “big-ness” and will go the boutique route. Others will give it a chance to see how things go. And still others, which could be the 70 percent of employees that are disengaged, will still continue to look.

I had a friend that was a senior leader at a company was incensed that when a merger of his company was announced and he was not in the loop. He never got over it, and was soon getting his jacket and heading for the door.

You have people in each company checking their options like a scorecard. The nervousness, especially at the higher levels, is probably hiding below the surface. Engagement levels are in shock.

No matter how far reaching a leader’s vision, or how brilliant their strategy might be, success will not be realized if it is not supported by an organization’s culture. In a merger, two cultures are saying I DO. It does not matter how aligned their business is, culture is like a sleeping giant which will eventually wake up, take charge, and and be in control.

Strive to be better  — not bigger

I’m sure that the accountants, lawyers, and consultants were all over this Omnicom-Publicis merger — looking, poking, and peeling back everything possible to make the “numbers” work. But I saw words in all the coverage that to me are synonyms for impeding layoffs, and this marriage of equals screams out that some of the equals will have to go.

As I said earlier, the co-model is not a duplicative model.

I remember reading an article about Charles Handy, the management guru, which tackled this big merger culture. He said:

If I were to visit a symphony orchestra and ask them about their growth plans for the future, how would they respond They would talk about their plans to extend their repertoire and to bring their work to new audiences, not about increasing the number of violinists. The same holds true for a school or a hospital. Once they get to the appropriate size, they strive to be better, not bigger. Why should it be different for business?”

Bigger may be louder, but it won’t matter if you are tone deaf.

Ron Thomas is Managing Director, Strategy Focused Group DWC LLC, based in Dubai. He is also a senior faculty member and representative of the Human Capital Institute covering the MENA/Asia Pacific region.

He was formerly CEO of Great Place to Work-Gulf and former CHRO based in Riyadh. He holds certifications from the Human Capital Institute as Global Human Capital Strategist, Master Human Capital Strategist, and Strategic Workforce Planner.

He's been cited by CIPD as one of the top 5 HR Thinkers in the Middle East. He received the Outstanding Leadership Award for Global HR Excellence at the World Human Resources Development Congress in Mumbai, and was named as one of the 50 Most Talented Global HR Leaders in Asia

Ron's prior roles included senior HR positions with Xerox HR services, IBM, and Martha Stewart Living.

Board memberships include the Harvard Business Review Advisory Council, McKinsey Quarterly's Executive Online Panel, and HCI's Expert Advisory Council on Talent Management Strategy.

His work has been featured in the Wall Street Journal, Inc. Magazine, Workforce Management and numerous international HR magazines covering Africa, India and the Middle East.

Topics

Leave a Comment

Your email address will not be published. Required fields are marked *