Employee Secondment: A Secret to Successful Integration
While it is common to focus on due diligence and valuation when acquiring a company, integration is one of the most critical and challenging issues that determine merger and acquisition (M&A) success. Melding two entities with distinct cultures can be like mixing water and oil. But, eventually the workforces, systems, and operations of a newly merged organization must work side by side as a cohesive unit.
Many executives and consultants who have led an integration process will name communication as the key to a successful outcome. Some integration experts may even use motivational posters with messages such as “There’s no ‘I’ in team” as a means of “increasing communication with employees.” While inspirational, it’s unclear exactly how these messages help with integration. What do they mean by “teamwork” or “communicating more”? Does that mean more e-mails and staff-wide meetings? Often, the employees involved in a merger are close to their stress limits. Sometimes less is more—fewer meetings actually could improve communication.
So how can you positively address “communication” with employees? One often overlooked yet effective way to improve communication—both during the merger process and after closing the deal—is “secondment.” This involves taking employees from the buyer’s organization and placing them in the seller’s, and vice versa.
We like to call these seconded employees “embedded interpreters.” There’s no better way to understand culture and business practices than to have people in each organization move to the other’s organization. When employees from both buyer and seller trade places, you immediately increase your likelihood of integration success.
Ideally, your “embedded interpreters” will be employees from sales, accounting, and operations. These three areas are critical for any business for obvious reasons: You have to get sales, you have to manufacture a product or provide a service, and then you have to get paid for it and pay people to do it.
Secondment is particularly impactful in sales because by nature salespeople know how to get people to engage. If the salespeople from one organization interact with those at the opposite organization, their interactions eventually will permeate throughout the company and serve as a latent training to increase understanding of both organizations’ cultures.
The best employees for secondment are typically mid-level employees who have been with the company for some time and have a senior position. You don’t want new or junior-level employees to be seconded because they either don’t fully understand their own company culture or are not in a position to really understand what’s going on in other areas of the business. On the other hand, you shouldn’t send your top-level executives such as the CEO or COO or even a vice president because others may feel uncomfortable being honest with those in a high role.
Your ideal interpreters will be directors and manager-level employees because they are often the ones who are directly involved in implementing the integration process. You also want to select “doers”: people who take action and can break through cultural barriers.
Benefits of Secondment
The advantages of secondment often become most apparent during the execution of your integration plan after the deal has closed. Below are a couple of examples of secondment in action.
- Open communication. During integration, when an issue arises, the seller’s staff usually finds a way to communicate with the folks from their organization who are now in your company, and they will find out from them what’s really going on. In addition, by using secondment, you have established a “grapevine” or “back-channel” way for employees to communicate with these embedded interpreters at both organizations.
- Quickly address concerns. Embedded staff members can quickly identify hidden problems and bring them to management. For example, an employee notices that the organization he was seconded to had made an investment in brand new computers but had retained ancient monitors, keyboards, and other accessories. He takes this information back to his superiors, and they decide to invest in peripherals to match the new hardware. It’s a simple upgrade, but one that shows employees in the new organization that management is paying attention to detail.
- Control the rumor mill. In any acquisition, there are bound to be rumors. Seconded employees can help identify and dispel rumors. In one acquisition I worked on, there was a rumor that the buyer was taking away the seller’s health-care benefits. The truth was the buyer was changing the health-care benefits to a better plan. Seconded employees were able to dispel fears and share accurate information.
- Improved understanding of company culture. Secondment shines a light on what matters most to employees. One client purchased a company in rural Pennsylvania that traditionally closed its doors for the first week of deer-hunting season. While he wasn’t too thrilled to discover this new branch shut down for a week every year, his seconded employees warned him that if he took away this privilege, there would be a serious drop in productivity—due both to resentment and the number of people calling in sick during the first week of hunting season!
- Faster integration. By working alongside other employees, people are getting along. Typically, peer pressure has negative connotations, but in this case, seconded employees will be influenced by “positive peer pressure.” They’re going to be around employees from the seller’s organization and be exposed first-hand to their processes, procedures, nomenclature, etc.
- Increased credibility and goodwill. Using secondment shows you are invested in the other organization and care about its employees. This human aspect of M&A is critical to integration success. Ultimately, companies are only as strong as their people. Credibility and goodwill toward management help build a strong culture for your newly merged organization.
If You Can’t Use Secondment…
If for some reason, you can’t use secondment, you can try moving people temporarily for even a month. Nothing can replace actually being at the other organization, so even if the move is temporary, you still will gain valuable insights.
In some cases, it may not make sense to move multiple employees, for example, when acquiring a much smaller company. In this scenario, it’s best to move just one person from buyer to seller, so the seller does not feel overwhelmed.
Secondment is a powerful tool. Use your embedded interpreters to identify problems and concerns, gain a better understanding of company culture, communicate effectively with employees, and speed up integration. When it comes to integration, no matter how many e-mails you send or meetings you have, nothing is as effective as people actually working alongside the other employees.
David Braun is the founder and CEO of Capstone Strategic and author of Successful Acquisitions: A Proven Plan for Strategic Growth (AMACOM, April 2013). Braun has more than 20 years’ experience formulating growth strategies in a wide range of manufacturing and service industries and has particular expertise in closely held, not-for-sale acquisitions. Since founding Capstone in 1995, Braun has completed more than $1 billion in transactions. He also has authored numerous articles on external growth and has been featured in a variety of media outlets, including Fox Business News, CBS MoneyWatch, Financial Times, and CNNMoney. For more timely news, insights and practical tips on growth strategies and M&A, visit Braun’s blog at SuccessfulAcquisitions.net. To contact Braun: