Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are...

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Top 10 Integration Mistakes and How To Avoid Them

Transcript of Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are...

Page 1: Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are disruptive. Period. Expect your integration to disrupt operations and hamper business

Top 10 Integration Mistakes and How To Avoid Them

Page 2: Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are disruptive. Period. Expect your integration to disrupt operations and hamper business

Copyright © 2016 Global PMI Partners 2

Top 10 Integration Mistakes

Integrations are disruptive. Period.

Expect your integration to disrupt operations and hamper business continuity. Do not underestimate the preparation and work required to manage a successful integration—they can be ugly, time consuming, and contentious. As the saying goes, prepare for the worst and

expect the best.

The following slides outline 10 fairly typical mistakes and provide some advice on how to avoid them

Page 3: Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are disruptive. Period. Expect your integration to disrupt operations and hamper business

Copyright © 2016 Global PMI Partners

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Lack of Pre-Planning

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Lack of adequate pre-planning is one of the leading causes of poorly executed integrations. When integrations fall short of their objectives, 70%

of the shortfall is linked to inadequate integration planning & execution.

Page 4: Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are disruptive. Period. Expect your integration to disrupt operations and hamper business

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Symptoms and Signs

• No formal integration oversight authority or responsibility established

• Limited or no risk assessment activities completed

• Incomplete due diligence documentation

• No confirmed closing date

• Confusion and anxiety among employees

• Establish Integration Management Office (IMO) at least 60 days prior to deal close

• Draft integration strategy to help prioritize workstreams

• Complete operational and cultural and risk assessments

• Secure access to due diligence documents

• Draft integration charter and confirm governance (IMO should report into C-suite executive)

• Confirm talent assessment process (if required) and get documents completed by Day 0

Steps to Address

Potential Outcomes

• Integration gets off to a slow start and never recovers

• Failure to deliver on synergy targets

• Employee morale and retention issues

• Customer defections

• Major disruption to business continuity

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No Formal Integration Strategy

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Integration managers must ensure alignment between a company’s operating strategy and the integration strategy to make sure they are

“integrating with the end in mind.”

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Symptoms and Signs

• NewCo operating model still in flux or undefined

• Organizational structure still TBD

• Integration objectives undefined

• No executive support for integration resources

• Closing date delays

• Complete integration strategy strawman to help solidify direction and secure buy-in from executives

• Complete integration risk assessments to inform strategy

• Develop integration workstream prioritization framework

• Establish Integration Management Office (IMO)

Steps to Address

Potential Outcomes

• Integration efforts may be incongruent with operating strategy

• Limited to no ability for functional leads to prioritize integration workstreams

• Integration will take longer than expected, and may even require a “do over”

• Inability to deliver on synergy targets

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Copyright © 2016 Global PMI Partners

Failure to Prioritize Work streams

3

Without work stream prioritization, every functional integration plan and work stream will be considered as important as the next, and it

will be difficult to focus on high-priority work streams that can deliver the most business value.

7

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Symptoms and Signs

• Integration work feels overwhelming to most functional leads

• Functional leads requesting more info on integration strategy and objectives

• Senior management anxious regarding integration progress

• Too many “low value” workstreams

Ensure integration strategy, objectives, and timetables have been communicated.

Create integration workstream prioritization framework to assist functional leads.

Where applicable, assign specific synergy or business benefit values to high-priority workstreams.

Make sure IMO reporting for senior management focuses on high-priority workstreams.

When necessary, deprioritize medium-priority workstreams if functional leads are having difficulty managing their workload.

Have IMO personnel assist with functional workstreams.

Steps to Address

Potential Outcomes

• Low value” workstreams dominate activity

• Integration milestones slip

• Synergy realization negatively impacted

• Functional leads get frustrated and deprioritize integration work

• Senior management becomes frustrated with integration progress

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Senior Leadership Void

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Integration Management Office and leaders need to report to a C-level executive to ensure consistent focus and accountability. Also,

IMO offices frequently need an expedient escalation and issue resolution to manage conflicts.

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Symptoms and Signs

• Integration managers or IMO reporting into a single function like HR or Finance

• Confusion at senior executive level as to who “owns” the integration work

• No sense or urgency among integration leads

• Fluid post-close organization may mean senior executives are still “TBD”

Accelerate post-close organizational planning to solidify leadership structure.

Establish charter and governance from C-level office to begin with.

Establish IMO as transparent extension of designated C-level executive’s office.

Create issue escalation and decision-making framework for senior executive team to ensure high-priority issues get “moved up the chain” quickly.

Steps to Address

Potential Outcomes

• Integration work is deprioritized among functional leads

• Communication planning impacted negatively because of no central office to use as pivot point for integration updates

• Failure to achieve synergy targets within specified time frame

• Lack of “quick wins” and success stories

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Poor Communication Planning

5

Frequent communication to all stakeholder audiences is one of the hallmarks of a sound integration plan. Poor communication planning can negatively impact morale and even slow your integration down

as people clamor for information.

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Symptoms and Signs

• Executives’ communication reactive vs. proactive

• Lack of established communication vehicles for acquiring organization

• Limited risk assessment prework to determine high priority communication needs

• Information sharing to date on as “as needed basis”

Solidify key messages for each key stakeholder audience in advance of Day 0.

Create communication plan matrix for Day 0 thru 90 days.

Establish communication channels and vehicles (if needed, create new ones to support the integration).

Draft communications for senior executives to speed execution.

Create “rolling FAQ log” that can be updated weekly and shared with affected employees.

Steps to Address

Potential Outcomes

• Employee morale negatively impacted as they are “kept in the dark”

• Customers are confused as to next steps and become prime targets of competitors

• Employee defections (good people leave when they feel they are not valued)

• Integration energy spent on reactive issues and putting out fires

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Poor Synergy Program Management

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Synergies are typically among the most important underlying reasons why companies undertake mergers and acquisitions, but

companies fail to achieve projected synergies over 50% of the time!

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Symptoms and Signs

• Synergy estimates are inflated, overly optimistic, and/or lack costs to achieve budgets

• Time frame to achieve is unrealistic

• No formal executive or functional ownership of synergy targets

• No connection between synergy targets and integration workstreams

• “Stress test” synergy targets during due diligence to confirm projections and rework if necessary.

• Confirm cost to achieve (CTA) budgets.

• Confirm which synergy targets are the responsibility of the Integration Management Office.

• Confirm frequency and source of synergy reporting updates and coordinate delivery with IMO.

• Make sure synergy workstreams are clearly accounted for in functional workstreams.

• Ensure synergy-related workstreams are marked as a high priority.

Steps to Address

Potential Outcomes

• Deal fails to deliver on targeted value

• Cost overruns due to poor estimates for CTA (Costs to Achieve)

• Delayed integration time frame

• Synergy targets get dispersed among functions and become impossible to properly monitor and track

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Inadequate Resourcing

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Integrations require dedicated time and resources, and poorly resourced integrations and take longer, cost more, delay synergy

realization, and burn people out!

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Symptoms and Signs

• No formal scope or governance to guide resource planning and set expectations

• Integration work treated as “second priority,” and everyone’s “day job” overwhelms work day

• No air cover from senior executives to support having dedicated resources

• Good people avoid integration work

• Create integration charter with formalized functional resource expectations and timing.

• Create job description summaries for functional leads.

• Scope and prioritize integration workstreams so functional leaders have a solid understanding of the level of effort and time required to complete integration work.

• Secure external resources to offload special projects and other integration work.

Steps to Address

Potential Outcomes

• Delayed integration time frame

• “Revolving door” for functional integration leads

• Burnout and resentment of integration work

• Failure to achieve synergy targets

• Failure to establish reliable resourcing requirements baseline for next integration

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Lack of End-State Transition

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Every integration needs to have an end. Planning for your End State is just as important as planning the integration itself.

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Symptoms and Signs

• Functional End State is undefined, confusing and functional leads are frustrated

• No formal end date where bulk of integration activity should be concluding

• Integration work and regular work is intermingled-making End State an impossible thing to define

• Develop formal End-State transition process with anticipated timing and clarified roles and responsibilities.

• Document deadlines and deliverables associated with the remaining open items.

• Make sure open integration workstreams are documented and handed off to functional leads via a formalized transition.

• Provide a full understanding of what has to be done, by when, and by whom. Make sure people have an understanding of the negative implications should the project get delayed.

Steps to Address

Potential Outcomes

• Delayed integration time frame

• Integration work becomes functional work and vice versa…meaning integration workstreams get deprioritized

• Open-ended integration workstreams become huge headaches for functional leads

Page 19: Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are disruptive. Period. Expect your integration to disrupt operations and hamper business

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Poor Organizational Planning

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Organizational design is a critical part of any NewCo merger scenario, and poorly planned and executed transitions can have

adverse affects on the new entity.

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Symptoms and Signs

• Competing business models and priorities linger well after merger closes

• Too many executives and key leaders unsure of eventual role and responsibilities

• Poor communication to rank and file regarding NewCo organizational design and leadership structure

• Clarify NewCo business strategy and operating principles as soon as possible.

• Accelerate organizational design and the “naming” of key executives—making it a high-priority workstream.

• Make leaders aware of risks and side affects of delays—keep them informed and updated as to the consequences of delayed decisions.

• Make decision on workforce reductions early and expedite the position elimination process so affected employees can quickly return to focusing on their work or transitioning out of the company.

Steps to Address

Potential Outcomes

• “A” Players depart as they become frustrated with dysfunction and lack of communication

• Temporary business strategies and practices become “hard coded” due to delays in solidifying new org design and leadership

• Employees become demotivated and morale suffers due to fear of unknown

Page 21: Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are disruptive. Period. Expect your integration to disrupt operations and hamper business

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No Formal Measurements

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Collecting feedback from all stakeholder groups to continually optimize your integration process is critical for making integration a

core competency in any organization.

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Symptoms and Signs

• Information on previous integrations is confusing, hard to locate, and/or non-existent

• “Feedback” is all via rumor mill and informal communication channels

• No established process to address and correct poor practices

• At day 100, initiate a formal process to collect feedback from integration team members and acquired company employees.

• Conduct an employee survey developed and administered through HR and implemented after any downsizing or RIFs (reductions in force).

• Be sure to include a sample from senior management, integration team members, employees (from both companies), and consultants involved in project.

• Make sure the integration manager facilitates a “Lessons Learned” meeting with integration team members and functional leads.

Steps to Address

Potential Outcomes

• Integration competency becomes static, never improving and most often getting worse

• Employees feel they have no voice in helping improve execution and become passive

• Acquiring company gets reputation as being insensitive and irresponsive to employee concerns

Page 23: Top 10 Integration Mistakes - Global PMI Partners · Top 10 Integration Mistakes Integrations are disruptive. Period. Expect your integration to disrupt operations and hamper business

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