Implementing change takes time and involves many complex processes. The success of the implementation of the change plan hinges on the leaders and managers’ understanding of the different aspects of organisational change.
The Theory and Practice of Implementing Change: 7 Core Activities
Organisations that want to implement change by acquiring another organisation need to perform 7 core activities to help ensure the success of their endeavour.
- Determination of growth markets or services.
Organisations that want to acquire another organisation should identify growth opportunities in the markets served, the service lines, or the business.
- Identification of candidates for acquisition or merger.
Companies need to determine the organisations that have the potential to help them in their growth. These organisations are the candidates for merger or acquisition.
- Assessment of the target organisation’s strategic fit and financial position.
The organisation must analyse the fitness of each potential acquisition candidate to the needs of the acquiring organisation. Will it be beneficial? Will there be risks? It also takes into consideration the financial position of the target organisation and how it will impact the financial position of the buying organisation.
- Making the decision to acquire the organisation or not.
Based on the information at hand, the organisation makes an informed decision whether to pursue with the acquisition of the target organisation or not.
- Conducting a thorough valuation.
This involves the assessment of the target organisation’s value. It can include the analysis of discounted cash flows or a comparison of the target organisation’s value against a publicly traded company or one with comparable transactions.
- Performing due diligence, negotiating an agreement, and executing the acquisition.
The buying organisation needs to perform a comprehensive due diligence review to make a definitive agreement. Both parties can then execute the transaction.
- Implementing the change and monitoring performance.
The aim here is to maximise the strategic value of the buying organisation, while minimising the disruption of its existing operations.
Implementing the Decision to Acquire Another Organization
Acquiring another organisation does not occur overnight. It takes time, often ranging from a few months to a few years, trying to understand the implications of such a move on both the acquiring organisation and the acquired organisation. There are several things that the acquiring organisation must address.
- Due Diligence
This requires a very thorough, exhaustive, and comprehensive assessment, audit, or investigation of the organisation that is being considered for acquisition. The outcome of due diligence is whether the potential acquired organisation is a good investment.
- Range and Complexity of Issues
The more complex the issues are, the longer is the time needed for the effective implementation of change. This is also true for issues that have far-reaching implications.
- Fragmentation of Data Collection
In 1986, Jemison & Sitkin said that organisations often must contend with differing views, perceptions, and opinions about the way the acquisition should proceed. This can lead to fragmentation of data collection.
- Accessing Required Information
An important aspect of due diligence review is the availability and accessibility of required information. This is crucial to creating an accurate picture of the target organisation.
- Mindset of those Leading the Change: The Buy Team
Marks & Mirvis published the “Making Mergers and Acquisitions Work” in 2001, giving organisations an insight into the importance of psychology in ensuring a successful combination of two different organisations.
- Composition of the Group Leading the Change
Organisations that want to acquire another organisation must have a group of leaders that share a common vision for the organisation.
- Pressure to Complete the Due Diligence Review Quickly
Jemison & Sitkin observed that there is undue pressure on managers to hasten the completion of the due diligence review. They must distinguish between a sound corporate strategy and ego issues, small group interests, or individual career.
- Integrating the Two Organisations
The thorough understanding and appreciation of the overall value of acquiring another organisation can provide the necessary impetus for integration.
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Acquisition Overview
Hubbard proposed a systematic approach to ensuring a more comprehensive overview of any form of acquisition. It starts with a detailed assessment and terminates with the implementation of the change plan.
- Assessment of Organisation Fit
Hubbard described four distinct possibilities when it comes to assessing organisation fit. These include person-job fit, person-organisation fit, person-group fit, and person-supervisor fit. The evaluation of these different aspects can provide organisations with a clear idea of the level of fit of the target organisation to their own.
- Detailed Planning
The buying organisation should have a very detailed blueprint on how it wants to acquire another organisation. This includes goals and objectives and the different strategies designed to meet such goals and objectives.
- Implementing the Change Plan
The change plan should specify the specific interventions necessary to achieve the objectives. Managers should be ready to monitor the progress of the change plan.
Managing People Issues
It is not surprising that there will always be people issues whenever an organisation acquires another organisation. Leaders should know how to manage these issues if they want their change plan to produce the expected results.
- Managing Stakeholders
Maintaining an open line of communication with the different stakeholders is crucial. Everyone should be on the same page as to how the acquisition process is moving.
- Aligning and Coordinating
Managers need to align the different aspects of the organisation to ensure a smoother transition into the new organisation. It also includes coordination with different organisational units.
- Promoting Trust and Procedural Justice
Several authors underscored the importance of promoting trust among the people of the organisation. Meeting expectations, strengthening decision-making processes, and providing support to everyone can help build trust and ensure procedural justice.
- Responding to Pressure to Deliver Quick Wins
Managers should never fall for the trap of the ‘quick wins paradox’. The success of an acquisition does not occur overnight or in a very short time. Managers should be able to handle this pressure if they want the acquisition to be successful.
- Providing Socioemotional Support
Organisations should make their employees feel valued for their contributions. Managers should care about the well-being of the people in the organisation. These are key ideas forwarded by Rhoades and Eisenberger in 2002.
Implementing change, especially within the context of acquisitions and mergers, is a very tedious process of assessing and evaluating the merits of the proposed change. It also includes addressing people issues that can have a negative impact on the success of the acquisition. Managers would do well to take their time in ensuring the successful implementation of different change processes.