Post Merger People Integration

Whitepaper on
Post Merger
People
Integration
CONTENTS
Merger and Acquisition: The story so far
Post Merger People Integration
Addressing Key People and
Organization Risks
1
5
Managing Change during Post

Merger Integration 13
Addressing Key Leadership
Challenges 17
2011 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
FOREWORD
As the global economy shows preliminary signs of recovery, merger and acquisition (M&A) activity is
poised to resurface. Last year, global M&A activity totaled USD 2.4 trillion, up 23 percent from the
year before, marking the first positive growth since 20071. Smaller deals dominated 2010, but each of
the four largest deals topped USD 20 billion1. There exist multiple triggers for companies to merge
or acquire. Most of them can be grouped into reasons such as growth, synergy, diversification,
horizontal & vertical integration, defensive measures and pressure to do a deal, any deal.
Anyone who has researched merger success rate knows that more than 70 percent of all
mergers and acquisitions fail to produce any benefit for the shareholders, and over half
actually destroy value2. Majority of the companies report that their M&A deal failures may
be attributed to people and organization issues such as lack of shared vision, leadership
clash, cultural mismatch, loss of key talent, misaligned structures, lack of management
commitment, lack of employee motivation, poor communication and poor change
management.
Financial advisors may guide merger managers in broad areas in which merger
synergies may be realized, but the success of a merger or an acquisition depends more
on getting the people equation right. Thus, it is vital for the organizations to be mindful
of people issues right from the design stage to the implementation stage.
However, when it comes to due diligence most activities relate to the tangible
assets such as financial structures, IT systems, or intellectual property, leaving
out the intangible assets such as organizational capital, relational capital,
cultural fitment and human resources. Thus the critical issue here is to have a
comprehensive yet tailored approach to Post-Merger People Integration.
Mismanagement of post merger people integration may lead to employee
disengagement, key talent attrition, goal misalignment, culture misalignment
and litigations. Thus may adversely affect the realization of merger synergies.
Effective post merger people integration program may help identify key
people and organizations related risks, and thereafter support creation of
appropriate risk mitigation strategies. It is also advisable to put in place a
dedicated merger project organization to ensure focused and expedient
integration.
Lastly, it is essential that Human Resources (HR) be involved and
kept abreast of the CEOs agenda with regard to the proposed
merger. The function should be proactively involved in all the stages
of a typical M&A, namely, scoping, due diligence, integration and
change institutionalization.
Dr. Ganesh Shermon
Partner and Head,

People and Change Advisory,
Management Consulting, KPMG in India
1 Knowledge@Wharton KPMG Survey 2011:

Confidence Grows for M&A in 2011, February 2011
2 McKinsey&Company, Perspectives on Merger
Integration, June 2010
EXECUTIVE SUMMARY
Organizations typically undertake
Merger and Acquisition (M&A)
activity for variety of reasons such
as growth, synergy, diversification,
horizontal or vertical integration,
defensive measure and sometimes
pressure to do a deal, any deal.
Each reason may have its unique
impact on the integration strategy
of the merging entities. For
instance, in some cases top teams
are expected to closely collaborate
in key areas of synergies, whereas
in some other cases parallel
structures are retained to leverage
unique market capabilities.
People issues in a merger or an
acquisition can start surfacing in
the early stages of the deal if not
properly accounted and planned
for. Proactive post merger people
integration may help address
such issues. Entire process of
post merger people integration
may be broadly divided into four
stages, namely, scoping, HR due
diligence, integration and change
institutionalization. It is advisable
that HR be involved and kept
abreast of the CEOs agenda with
regard to the proposed merger in all
the stages.
Some of the key people &

organization related risks often
encountered in a typical M&A deal
may be broadly classified into six
categories, namely, people cost
risk, structure risk, talent risk,
culture risk, regulatory risk and
engagement risk. The risks may
be individually investigated and
evaluated for their adverse impact
on the M&A deal. Appropriate
cost-benefit analysis may be done
for various risk mitigating strategies.
Additionally, a Heat Map may
also be created to categorize the
risks as High (denoted by red color),
Medium (denoted by amber color)
and Low (denoted by green color).
Accordingly action plans be created
and resources be allocated to
mitigate high priority risks.
Effective change management is
the key to seamless post merger
integration. Thoughtful planning and
flawless execution may mitigate
most of the identified risks. Many
companies manage change during
post merger integration at three
levels- organizational level, team
level and individual level. Firms
may typically go through multiple
experiences (experience of ending,
neutral zone and new beginning)
while integrating into a new entity.
Ending and beginning are the

important features of mergers
and acquisitions, and these are
most usually addressed at the
team level. Depending on the
type of synergy expectations,
existing team structures may get
re-adjusted. Change management
at the individual level is more
about managing various employee
emotional states associated with
different stages of mergers and
acquisitions.
It is advisable to have a dedicated
project organization structure in
place to facilitate and expedite
the integration activities. Many
organizations typically deploy
a 3-layer project organization
structure.
Aspiration to conduct effective
post merger integration poses
unique leadership challenges for
the organizations. Leaders need
to steer the merging companies
in ways to unlock the potential
synergies. Also leaders need to play
an active role to conduct effective
change management at the
organization, team and individual
levels.
Mergers & Acquisitions: The story so far
It is interesting to track the changes in

direction that merger and acquisition
activity have gone through over the last
100 years. Economists and historians
primarily refer to 6 waves in the mergers
and acquisitions activity1 (refer figure-1
as illustration).
Fourth Wave (1981-1989): The era

of corporate raider, financed by junk
bonds.
Fifth Wave (1992- 2000): larger mega
mergers, more activity in Europe and
Asia.
First Wave (1897-1904): Horizontal

combinations and consolidations of
several industries; US dominated.
Sixth Wave (2003-till now): More

strategic mergers designed to
compliment company strategy. Focus
on post merger integration.
Second Wave (1916-1929): Mainly

horizontal deals, but also many
vertical deals; US dominated.
The adjoining figure illustrates six waves

in the merger and acquisition activity
with select examples.
Third Wave (1965-1969): The

conglomerate era involving
acquisition of companies in different
industries.
1 Esther Cameron & Mike Green (2009), Making

Sense of Change Management, Kogan Page,
London
Figure 1
There exist multiple reasons for

companies to merge or acquire. Most of
them can be grouped into one or more
of the following categories2.
Diversification: This type of M&A

activity was particularly significant in the
third wave era. It is commonly used as a
part of corporate risk mitigation strategy.
Defensive Measures: Some mergers

are defensive and are response to other
mergers that threaten the commercial
position of the company.
Growth: It is usually associated with

acquiring new customers. However,
it can also be about getting access to
facilities, brands, trademarks, patents,
technology or even employees.
Horizontal and Vertical Integration:

Many companies choose to merge with
or acquire their competitors to increase
their market share. Else companies may
decide to merge with or acquire their
customers or vendors to achieve one of
the following.
Dependable source of supply
Ability to demand specialized supply
Lower costs of supply
Improved competitive position.
Pressure to do a Deal, Any Deal: There

is often tremendous pressure on the
CEO to reinvent cash and grow reported
earnings (Seldon and Colvin, 2003).
Synergy: It represents the potential

ability of the merged entity to be
more successful than the individual
companies. It may translate into:
Growth in revenue
Cost reduction
Financial synergies
More competent, clearer governance.

London
Each respective reason for embarking on the M&A activity has corresponding people and organization related implications.
Table-1 illustrates such implications.
Table 1 - People and Organization Related Implications of M&As

M&A Type
Key People and Organization Related Implication
Growth
Senior management team expected to make discrete changes in performance goals

Some new entrants may join top team
Expected administrative efficiencies in term of common support functions
Process and systemic integration may be considered in specific areas depending on the
requirement.
Synergy
Top teams to collaborate on key areas of synergy. Other areas are left intact.
Diversification
Loosely coupled management teams

Expected administrative efficiencies in terms of common support functions
Joint reporting to the holding company/corporate office
Separate identities and logos.
Horizontal and Vertical

Integration
Integrated top teams

Merged administrative systems in terms of common support functions
Tightly coupled core processes
Single corporate identity
Better partnership working
Pooled resources.
Defensive Measures
If managed well, it may lead to greater commercial strength.
Source: KPMG Analysis
Anyone who has researched merger success rate knows that more than 70 percent
of all the mergers and acquisitions fail to produce any benefit for the shareholders,
and over half actually destroy value3. Majority of the companies report that their
M&A deal failures may be attributed to people and organization issues such
as lack of shared vision, leadership clash, cultural mismatch, loss of key talent,
misaligned structures, lack of management commitment, lack of employee
motivation, poor communication and poor change management.
People issues in a merger can begin at the earliest stages of the deal if not properly
accounted and planned for. It is essential that HR be involved and kept abreast of
the CEOs agenda with regard to the proposed merger. It is imperative that HR asks
critical questions in the initial meetings as well as across the merger process. The
function must be aware of the key stages and milestones in the process This would
also enable HR to effectively assess the key pitfalls that needed to be overcome to
support the CEOs agenda and manage human capital risks.
3 McKinsey&Company, Perspectives on Merger

Integration, June 2010
Post merger people integration
Entire process of post merger people integration may be broadly divided into 4 stages, namely, scoping, HR due diligence,
integration and change institutionalization (refer figure-2 as illustration)1.
Figure 2
1 KPMG Analysis
Scoping: In this stage companies agree

on the reasons and potential benefits of
the proposed merger or acquisition. Top
teams identify key areas of synergies/
collaborations and clearly define go
& no-go areas. Also in this stage,
vision of the merged entity is clearly
articulated.
HR Due Diligence: HR due diligence is
a systematic intelligence performed for
ascertaining the viability and possible
integration of the human aspects of
the transaction, process, scheme or
company so as to determine the worth
or verify the fulfillment of definite
requirements. Also HR Due Diligence
is conducted to assess the quantum of
people and organization risks associated
with an M&A. Such risks may be broadly
classified into following 6 categories.
People Cost Risk
Structure Risk
Talent Risk
Culture Risk
Regulatory Risk
Engagement Risk.
Some part of risk identification also
overlaps with the scoping stage of the
M&A process.
People and Organization Integration:

Companies need to clearly identify
the extent of potential people and
organization related risks in the scoping
and the due diligence stage. The risks
may be individually investigated and
evaluated for their adverse impact on
the M&A deal. Appropriate cost benefit
analysis may be done consequently.
Additionally, People Risk Heat Map
may also be created to categorize the
risks as High (denoted by red color),
Medium (denoted by amber color)
and Low (denoted by green color).
Corresponding action plans be created
and resources allocated to mitigate the
identified risks.
of a merger or an acquisition. Research

says that the leadership of change is one
of the single most important defining
parameters of successful post merger
integration.
Thus, in a nutshell, top management
of the companies undertaking M&A
may focus on following issues to help
ensure effective post merger people
integration.
Addressing people and organization
risks
Managing change during post merger
integration
Addressing leadership challenges.
Change Institutionalization:
Appropriate change management
program may be put in place to manage
the change before and during the
integration, and to institutionalize the
change after the integration. Structure,
processes and metrics may be designed
to affect the same. However many
times in-spite of having the best in
class change management techniques,
many M&As do not reap the desired
result. This may be attributed to the
inability of the companies to address
the leadership challenges emerging out
Addressing key people and organization risks
One of the most important aspects of managing successful

post merger people integration is proactively addressing the
risks associated with people and organization. Most of such
risks can be grouped into six broad categories, namely, people
cost risk, structure risk, talent risk, culture risk, regulatory

risk and engagement risk. Each risk category may consists of
multiple dimensions (Refer Figure-3 for Illustration)1.
Figure 3
1 KPMG Analysis
People Cost Risk

In M&A transactions most firms
diligently focus on the risks and liabilities
of existing businesses (hidden or off
balance sheet), e.g., adequacy of claim
reserves and claim exposures. But
there are also values, risks and liabilities
associated with the people side of the
businesses that are frequently missed
or overlooked.
One of the most important areas
in this regard is pension and other
rewards liabilities. These may have
huge underestimated obligations which
may not be immediately apparent. The
rewards which may indicate substantial
accruing liabilities could be in the
form of termination indemnities,
accrued performance payments, retiree
medical etc.
Some of other areas of concern that
carry future liabilities include:
Jubilee payments and contracts
liabilities
severance costs for excess
personnel
fixed-term contracts with key
executives
Structure Risk
Sound organization design applied
from early in the acquisition can be an
effective catalyst for ensuring that the
structure, process, governance, metrics,
and people are optimally configured and
aligned to fulfill the methodology of the
newly integrated company. The absence
of good design, on the other hand, can
result in ambiguous goals, lack of role
clarity, and inefficient decision making,
all potentially disastrous to a successful
integration.
Depending on the exact reason and

envisioned objective as why the merger
or acquisition occurred in the first
place, several approaches are taken to
harmonize the organization structures.
For instance, if one company (A) has
taken over another (B) to gain entry into
a new/related industry or new/related
market, then it is a good idea for A to
retain the organizational structure of B
and let it operate as a strategic business
unit on its own. A few structural changes
may occur at the top management
level where the role of the CEO/MD of
company (B) may become redundant,
or may report in to a role in Company A.
This is primarily on account of the fact
that Company B has knowledge that
Company A does not possess.
However, if a decision was taken to
merge Company A and Company B, a
horizontal merger (which again could
be due to several reasons) then the
following actions may be taken into
consideration:
With the sponsorship of senior
leaders, establish a new
organizational mission, objectives,
and strategies based on the merger.
Depending on the situation, the new
organizational structure may reflect an
effective new entity.
instance, combining a traditional

top-down organizational structure
with a collaboratively run organization
requires more planning to effectively
blend the two cultures, preserving
the best of both.
Train people for new roles. It is a good
practice to recognize that before
people can behave in new ways
in a new organizational reporting
structure, they need to develop
the skills and competence to do
so. Human Resources could work
towards establishing orientation
programs to ensure all functions
integrate effectively.
Also the new structure may be finalized
so as to help ensure appropriate
information flow within the organization.
This may be adjusted by introducing
suitable horizontal and vertical linkages
across the organization. The final step
while freezing the structure for the new
organization involves the identification
of unnecessary positions which could
be done away with.
Very often, when redesigning the

roles and responsibilities of top-level
managers, organizations prefer to
hold visioning workshops where
role-wise key metrics are deliberated
and discussed. It may also be a good
idea to present the new strategic
plan and envisioned structure to the
mid-level managers and allow them
to ask questions. This will allow for
an assessment of each companys
corporate culture as well, which
in turn to some extent is reflected
by the organization structure. For
Talent Risk
Very often one of the key objectives
of a merger or an acquisition is to
acquire valuable human talent of an
organization. The talent pool is a critical
success factors for many deals and as
a part of the due diligence process, it
is necessary to study and evaluate the
available pool. Various retention factors
within an organization need to be
assessed and the viability of the same
be evaluated. Also those in charge of
an acquisition often limit their focus to
a small handful of top people, ignoring
people at the middle and the line
levelsleaving valuable human capital
vulnerable to poaching by competitors.
An acquisition or merger can create
conditions in which a company is at
risk for losing just those people who
may be critical to immediate and
longer-term business goals by virtue of
their management skills, knowledge
of business systems and processes,
and intellectual capital. This can have
consequences, not only downstream,
but for the transaction itself.
Culture Risk
Additionally, there also exists a
need to appropriately integrate the
talent processes of the two merging
companies. Studies show that the
degree of integration is of high
importance to the success of mergers
or acquisitions. Depending upon the
kind of the acquirer and the target
organization, and the vision for the
merged organization, varying level
of integration of the different talent
processes may be established. On the
one hand integration can be minimal,
such that all differences between
the acquirer and the target remain in
place. On the other hand integration
can be maximal, such that there are no
differences left between the acquirer
and the target, making them one.
An organizations culture consists of

the underlying values, beliefs, and
practices that define an organizations
management philosophy. Numerous
authors have discussed the potential
troubles of culture dissonance between
merging organizations and report
the same to be one major source
of conflict. According to the report
from the Economic Intelligence Unit
organizational culture differences and
human capital integration issues ranked
as the two most significant challenges
faced by respondents in recent
transactions1.
Bipolar culture assessment may be
conducted to get the preliminary
indications on the degree of cultural
alignment/ misalignment between the
merging organizations. The assessment
may be conducted on key culture
dimensions with each dimensions
having two culture extremes. The
As-Is state indicates the existing
state of the firms culture on the given
dimension, whereas the To-Be state
indicates the desired state of the
merged entity on the same dimension.
Following may be referred to for
illustration purpose.
1 M&A Beyond Borders: Opportunities and Risks,

March 2008, Economist Intelligence Unit
10
Figure 4
11
Cultural compatibility can have

significant impact on the ultimate
success of the M&A. In the light of
perceived culture misalignments it
is suggested that a separate cultural
integration action plan be created and
worked upon. Mismanagement of
cultural issues may prevent the merging
firms to realize the full synergy.
Regulatory Risk
One of the critical parameters of
an HR due diligence process is the
assessment of people related matters
governed by laws and regulatory bodies.
Since companies being acquired/
merged might have no geographical
boundaries, and laws affecting human
capital might vary from place to place,
these laws need to be scrutinized very
carefully before articulating human
capital related laws for the overall entity.
Major areas of study impacting overall
HR processes include variations in labor
laws, HR contracts with the unions
and collective agreements, payroll and
staff structures, staff terms, payment
terms, industrial relations and relations
with statutory bodies. Labor laws and
HR contracts with unions are a major
area of concern as the laborers and
employees of the organization may feel
agitated and skeptical on account of
perceived mistrust. This is a sensitive
issue and very often can make or break
a deal especially in manufacturing and
other such labor heavy industries.
Engagement Risk
Research indicates that a firms
productivity can drop by between
25 and 50 percent while undergoing
such a large-scale change. Job losses,
restructuring, imposition of a new
corporate culture and top leadership
changes may lead to uncertainty and
anxiety among employees and thus may
result in reduced engagement levels.
Also, when employees feel disengaged
or are on the fence, they are likely to
watch for signals of failure, take cues
from the grapevine, intentionally reduce
their work output, distrust company
leaders and their messages, and hold
back on extra effort. Thus there exists
a need to prepare a comprehensive
change management plan and to partner
employees in the change journey.
Moreover, it is also suggested that
organizations undertaking M&A
activity may investigate the existing
engagement levels of employees in
the HR due diligence stage. Research
suggests that engaged employees are
20 percent more productive than the
disengaged ones3. Thus may possibly
impact the synergies expected out of a
merger or an acquisition.
3 Debashish Sengupta, S. Ramadoss (2011),

Employee Engagement,Wiley India
Goods and Services Tax - Ready. Steady. Go? | 12
13
Managing change during post merger

integration
Effective change management is

the key to seamless post merger
integration. Thoughtful planning and
flawless execution may mitigate most
of the identified risks. Many companies
manage change during post merger
integration at the following three levels.
Organizational Level
Team Level
Individual Level.
Furthermore, it is also advisable to
put in place a dedicated post merger
integration structure to conceptualize
and monitor various change
management related activities.
Managing Change at the

Organizational Level
Individual companies typically go
through following three organizational
experiences while integrating into a new
entity1 (refer figure-5 as illustration)
Ending
Neutral Zone
New Beginning.
Figure 5
1 Bridges, W (1991) Managing Transitions, Perseus,

Reading, MA
14
Ending
New beginning
Before one can begin something new,

one needs to end what used to be.
Companies need to identify who is
losing what, expect a reaction and
acknowledge the losses openly. It
may also be required to repeat the
information about what is currently
changing since it may take some time
for the happenings to sink in. Its equally
important to ceremoniously mark the
endings.
Employees need to understand and

wholeheartedly accept the following
to help them embark on the new
beginning.
Neutral zone
Employees may feel disoriented in the
neutral zone. Motivation levels falls and
anxiety rises. Consensus may break
down as attitudes become polarized.
Temporary structures may be needed to
manage the transitional issues. Leaders
are required to monitor the pulse of the
firm on regular basis.
The purpose behind the M&A

The picture of how the new entity will
look like
A step-by-step plan to get there
Part to play in the outcome.
The need for constant communication
with the employees in all the three
types of organziational experiences
cannot be over emphasized.
of synergy expectations, existing team

structures may get re-adjusted.
All teams go through a change process
when they are first formed, and when
significant events occur such as a
new member arriving, a key member
leaving, change of scope, increased
pressure from outside, or a change in
organizational climate.
Thus many teams go through
following stages of development/readjustments2. Table-2 further illustrates
the team activity with possible change
management responses.

Team Level
Ending and beginning are the important
features of mergers and acquisitions,
and these are most usually addressed at
the team level. Depending on the type
Table 2 - Development of a Merged Team

Stage
Team Activity
Possible Change Management (CM) Response
Forming
Confusion
Need to clearly define roles and responsibility in the new company/

function
Uncertainty
Need to define key customers for the team and begin to agree on
new ground rules for how the team will work together
Assessing Situation
Testing Ground Rules
Storming
Defining Goals & Establishing

Rules
Discuss team background in terms of previous structures, processes

and culture
Disagreement over priorities

Struggle for leadership
Need to conduct joint workshops/ discussion sessions to openly

resolve the issues relating to structure, processes and culture
Tension & Hostility
Clarity on direction and purpose of the team
Clique Formation
Norming
Consensus
Need to develop a decision making process
Leadership Accepted
Maintaining flexibility by reviewing goals and processes
Trust Established
Standards Set
Performing
Successful Performance
Need to encourage delegation more frequently
Flexible task roles
Need to encourage innovation and
Openness and helpfulness
2 Tuckman, B (1965) Development Sequence in

Small Groups, Psychological Bulletin, 63, pp 38499
15

Individual Level
Figure 6
Change management at the individual

level is about managing and facilitating
employee experiences in various stages
of a merger or an acquisition.
Employees typically go through multiple
emotional states while dealing with the
change3 (refer figure-6 as illustration).
Table-3 illustrates various phases of a merger or an acquisition and corresponding employee experiences. It further suggests
possible change management responses4.
Table 3 - Stages of Merger and Individual Employee Experiences
Stage of M&A
Employee Experience
Possible Change Management (CM) Response
Merger is
announced
Shock, disbelief and relief that

rumours are confirmed
Need to provide full and early communication of reasons behind, and

aim of the merger between
Specific plan are

announced
Denial: Its not really

happening
Need to discuss the implication of merger with individuals and team
Mixture of excitement and

anxiety
Giving employees timescale for clarification of the new structure and

when they will know what their role will be in the new company
Anger and Blame: This is all

about greed etc.
Changes start
to happen- new
boss, new
colleagues, new
customers etc.
Depression: Finally letting

go of two companies, and
accepting the new company
Need to acknowledge and communicate the end of an era
Acceptance
Forster development of the merged team and delegate new

responsibilities to the team
Hold a wake for the old company and keep one or two bits of
memorabilia (photos, T-Shirts)
Need to coach in new skills and behaviours

New organization
begins to take
shape
Trying new things out
Need to foster communication at all levels between the two parties
Finding new meaning

Optimism
Need to induct the employees of both the companies to the new

ways to doing business
New Energy
Need to review and consolidate the changes since the beginning

Need to celebrate success as a group
3 Kubler-Ross, E (1969) On Death and Dying,

Macmillan, New York

London
16
Merger Project Organization

It is important to have a dedicated
project organization structure in
place to affect seamless post merger
integration. The structure may typically
exist at 3 layers (refer figure-7 as
illustration).
Figure 7
At layer-1, there exists an overall steering committee. The committee is responsible

for all the activities related to post merger integration. It establishes the initial
guiding ideas and performance parameters for the transition and for the new
organization, develops and/or approves strategy, and establishes and oversees the
infrastructure for change.
At layer-2, there exists an executive committee for people and organization
integration. The committee is exclusively responsible to monitor and mitigate
the risks associated with people and organization integration, namely people
cost risk, structure risk, talent risk, culture risk, regulatory risk and engagement
risk. It is advisable that the committee is put in place before the due diligence
commencement. The committee may have the representation from both the
merging firms.
At layer-3, there exist various tasks forces with specific expectations and deadlines.
These task forces work to mitigate high impact people and organization risks. It is
advisable to create a comprehensive monitoring dashboard corresponding to each
of the identified risks. Tasks forces may have representation from both the merging
firms.
17
Addressing leadership challenges
Aspiration to conduct effective

post merger integration poses
unique leadership challenges for the
organizations. Leaders need to steer the
merging companies in ways to unlock
the potential synergies. Also leaders
need to play an active role to conduct
effective change management at the
organization, team and individual levels.
As mentioned in the preceding section,

individual companies may typically go
through following three experiences
while integrating into a new entity
Ending
Neutral Zone
New Beginning
Leaders need to demonstrate behaviors
addressing specific needs emerging out
of respective company experiences.
Some of the sample behavior
demonstrators corresponding to the
above types of firm experiences are
mentioned below1.
1 Bridges, W (1991) Managing Transitions, Perseus,

Reading, MA and Esther Cameron & Mike Green
(2009), Making Sense of Change Management,
Kogan Page, London
18
Leadership for the Ending
Leadership for the Neutral Zone
Leadership for the new beginning
Study changes carefully to understand

who is likely to lose what
Acknowledge the neutral zone to be a

state of flux and as an uncomfortable
time. Employees are usually anxious
during this time
Create a compelling business case for a

merger or an acquisition. Detail out the
pain points and also clearly detail out
the reasons for undertaking a merger or
an acquisition
Acknowledge losses openly. Sweeping

the losses under the carpet may spell
trouble for the organization
Incentivize employees to continue

doing their jobs during the neutral zone.
Try and establish personal connect
with key employees to address their
apprehensions
Create a vision for the merged entity
Employees may be allowed to grieve

and express their sense of loss. The
idea is to provide an environment
where sentiments are expressed
rather than concealed
Create temporary structures in

terms of creating temporary policies,
procedures, roles and reporting
relationships to get through the neutral
zone
Share comprehensively the overall

change management plan
Try to make up for the losses using

innovative means. For instance, firms
may introduce some new roles to
compensate for the loss of existing
roles. Or firms may provide specific
training to employees to compensate
for the loss of existing skills/
competencies
Create and constantly monitor a

comprehensive checklist of pitfalls
Explain the role to be played by the

employees in executing the plan
The importance of communication at

this stage cannot be overemphasized.
Provide as much information as is
feasible even at the cost of repetition
Set up a three layer merger project

organization structure as illustrated in
the preceding section
Build some occasion for quick

successes
Clearly delineate what will end and

what will continue
Celebrate the new beginning and the

conclusion of the time of transition
Come up with symbolic gestures to

mark the ending and honor the past. It
is advisable not to denigrate the past
19
Bibliography
Accenture/Economic Intelligence Unit 2006 Global M&A
Survey, 2006
Esther Cameron & Mike Green (2009), Making Sense of

Change Management, Kogan Page, London
Alistair Moffat, Adrian McLean, (2010) Merger as

conversation, Leadership & Organization Development
Journal, Vol. 31 Iss: 6, pp. 534 - 550
Grsslin, Jrgen 2000, The Making of an Auto Dynasty. New

York: McGraw-Hill
Alzira Salama, Wayne Holland, Gerald Vinten, (2003)

Challenges and opportunities in mergers and acquisitions:
three international case studies Deutsche Bank-Bankers
Trust; British Petroleum-Amoco; Ford-Volvo, Journal of
European Industrial Training, Vol. 27 Iss: 6, pp. 313 - 321
Basu, K.2006.Merging brands after mergers: California
Management Review, volume 48, Number 4
Appelbaum, Steven H., Gandell, Joy, Jobin, Francois, Proper,
Shay, and Yortis, Harry (2000), Anatomy of a merger:
behavior of organizational factors and processes throughout
the pre- during- post-stages, Management Decision, Vol. 38,
Numbers 9 and 10
Growing Through Acquisitions The Boston Consulting

Group, 2004
Han Nguyen, Brian H. Kleiner, (2003) The effective
management of mergers, Leadership & Organization
Development Journal, Vol. 24 Iss: 8, pp.447 - 454
Havenga Werner, Stanz Karel and Visagie Ja. Evaluating
the difference in employee engagement before and after
business and cultural transformation interventions. African
Journal of Business Management Vol.5 (22), pp. 88048820,30 September, 2011.
How MetLife Balances Effective Organization Design With
the Need for Speed in Postacquisition Integration - THOMAS
J. JASINSKI
Ben De Haldevang (2009), A New Direction in M&A

Integration: How Companies Find Solutions to Value
Destruction in People-Based Activity, Global Business and
Organizational Excellence, Wiley Periodicals
HR Issues and Activities in Mergers and Acquisitions by

RANDALL SCHULER and SUSAN JACKSON, Rutgers
University, New Jersey
Betania Tanure and Roberto Gonzalez-Duarte (2007),

Managing people in radical changes (M&As), International
Journal of Manpower Vol. 28 No. 5, pp. 369-383
http://lifewavebr.com/post-merger-acquisition-challengessolutions-a-contemporary-perspective.html
Bundy, 2007, The Culture of Combination: Changing

Behaviours and Deal Success in Mergers and Acquisitions,
World at Work Journal, Second Quarter
Business Case for HR Involvement across the M&A Process
Corporate Executive Board, 2006
C. Lakshman, HR issues in post-acquisition integration:
A knowledge-based approach ,Academy of Management
Proceedings
Carol-Ann Morgan. Understanding And Developing Your
(People) Assets - A White Paper on Employee Satisfaction by
B2B International.
Charles Parker (2009) On becoming a processenabled organization: How to seed a culture of quality
in a postacquisition environment, Global Business and
Organizational Excellence, Vol. 29 Iss: 2, pp 2639
Chris Rees and Tony Edwards (2009), Management
strategy and HR in international mergers: choice, constraint
and pragmatism, Human Resource Management Journal,
Vol 19, no 1, pages 2439
Corporate Executive Board Research
Effectively Downsizing Management Structures Philip R.
Nienstedt, PhD, Motorola Inc
Elina M. Antila and Anne Kakkonen (2008), Factors
affecting the role of HR managers in international mergers
and acquisitions, Personnel Review, Vol. 37 No. 3, pp. 280299
HRs Role in Mergers and Acquisitions by Ethan A. Winning
http://lifewavebr.com/post-merger-acquisition-challengessolutions-a-contemporary-perspective.html
http://peoplematters.in/articles/leadership/talent-andorganization-challenges-in-m-and-a-an-indian-perspective
http://www.c4eo.org.uk/changemodels/modeldescriptions/
managingtransitions.aspx
Ibid
Ingmar Bjorkman (2006), The HR function in large-scale
mergers and acquisitions: the case study of Nordea,
Personnel Review, Vol. 35 No. 6, pp. 654-670
Institute of mergers, acquisitions and alliances, annual
report 2010
John O. Nigh and Marco Boschetti, M&A DUE DILIGENCE:
THE 360-DEGREE VIEW, Emphasis, 2006
Katinka Bijlsma-Frankema, (2001) On managing cultural
integration and cultural change processes in mergers and
acquisitions, Journal of European Industrial Training, Vol. 25
Iss: 2/3/4, pp.192 - 207
Kelloggs M&A Toolkit for HR
Kevin D. Wilde (2004), HR systems drive successful
Post acquisition integration at General mills, Journal Of
Organizational Excellence
Knowledge @ Wharton / KPMG LLP Survey: Confidence
Grows for M&A in 2011
20
Kummer, C. (2009) Overcoming the challenges and issues

of post-merger integration: putting PMI in the drivers seat
in the M&A process, Mergers and Acquisitions: Issues and
Perspectives from the Asia-Pacific Region, Tokyo, pp. 316318
Steven H. Appelbaum, Frederic Lefrancois, Roberto Tonna,

Barbara T. Shapiro, (2007) Mergers 101 (part one): training
managers for communications and leadership challenges,
Industrial and Commercial Training, Vol. 39 Iss: 3, pp.128 136
LaVerne Shook and Gene Roth (2010), Downsizings,

mergers, and acquisitions - Perspectives of human resource
development practitioners, Journal of European Industrial
Training, Vol. 35 No. 2, pp. 135-153
Steven H. Appelbaum, Frederic Lefrancois, Roberto Tonna,

Barbara T. Shapiro, (2007) Mergers 101 (part two): training
managers for culture, stress, and change challenges,
Industrial and Commercial Training, Vol. 39 Iss: 4, pp.191 200
M&A Integration.2007.Merger market report on issues

surrounding post M&A activity for European companies
Marco Zappa, 2008, The Fundamentals of Strategic Logic
and Integration for Merger and Acquisition
Marco Zappa, 2008, The Fundamentals of Strategic Logic
and Integration for Merger and Acquisition
McDonald, J. Coulthard, M., DeLange, P.2005. Planning for a
successful merger or acquisition: Journal of Global Business
and Technology, volume 1, number 2.
MERGERS AND ACQUISITIONS - M&A DUE DILIGENCE:
THE 360-DEGREE VIEW by By John O. Nigh and Marco
Boschetti
Mitchell Lee Marks, (1997) Consulting in mergers and
acquisitions: Interventions spawned by recent trends,
Journal of Organizational Change Management, Vol. 10 Iss:
3, pp.267 279
Mohibullah, 2009, The impact of culture on Mergers and
Acquisitions: A Theoretical Framework, International Review
of Business Research Papers Vol.5
Oliver Wyman 2008 Report: Post-merger integration: A
tailored approach to sustainable transaction success
Organization Change: Theory & Practice By Burke-Litwin
Paul J. Siegenthaler (2011), What role for HR during
mergers and acquisitions? Human Resource Management
International Digest, vol. 19 , pp. 4-6
Paul Shrivastava, (1986) POSTMERGER INTEGRATION,
Journal of Business Strategy, Vol. 7 Iss: 1, pp.65 - 76
Steven H. Appelbaum, Joy Gandell, Barbara T. Shapiro, Pierre

Belisle, Eugene Hoeven, (2000) Anatomy of a merger:
the pre- during- post- stages (part 2), Management
Decision, Vol. 38 Iss: 10, pp.674 - 684
Steven H. Appelbaum, Joy Gandell, Harry Yortis, Shay
Proper, Francois Jobin, (2000) Anatomy of a merger:
the pre- during- post-stages (part 1), Management Decision,
Vol. 38 Iss: 9, pp.649 - 662
Tetenbaum, Tony J. (1999), Beating the odds of merger
and acquisition failure: seven key practices that improve
the chance for expected integration and synergies,
Organizational Dynamics, Autumn 1999
The Human Side of Due Diligence: Protecting the M&A
Investment by Mark Braveman
The Merger Dividend by Ron Ashkenas, Suzanne Francis,
and Rick Heinick
Think Executive, 2009, Mergers and Acquisitions in
Logistics Industry: The Logistics Institute, Asia Pacific
Vassilis Papadakis, (2007) Growth through mergers and
acquisitions: how it wont be a losers game, Business
Strategy Series, Vol. 8 Iss: 1, pp.43 50
Wayne Holland and Alzira Salama (2010), Organisational
learning through international M&A integration strategies,
The Learning Organization, Vol. 17 No. 3, pp. 268-283
Redesigning the Due Diligence Model by Marven Bonsen,

Wenzel Freiherr von der Heydte and Monika Wlasynowicz
Wayne Holland, Alzira Salama, (2010) Organisational

learning through international M&A integration strategies,
Learning Organization, The, Vol. 17 Iss: 3, pp.268 - 283
Roland Berger: Making post-merger integration work and

safeguarding value growth : 2005
Why HR Can Make or Break Your M&A by By Andrew F.

Giffin and Jeffrey A. Schmidt
Schuler and Jackson, 2001, HR Issues and Activities in

Mergers and Acquisitions, European Management Journal
Vol. 19
www.Communicaid.com
Schuler, A.J.2004.You bought it so dont break it, Best

practices in post M&A integration
Schweiger, D.M. (1999) Communication with Employees
following a Merger: A Longitudinal Field Experiment, The
Academy of Management Journal, Vol. 34, No. 1 (Mar.,
1991), pp. 110-135
Schweiger, D.M. (2002) M&A Integration: A Framework for
Executives and Managers, New York: McGraw-Hill
Shelton, Hall, Darling When Cultures Collide: the challenge
of global integration, European Business Review, Volume
15, pp. 312-323
www.communicaid.com
www.dream-catcher-consulting.com/booksculturearticle.
htm
www.en.wikipedia.org/wiki/Organizational_culture
www.managementconsultingnews.com/.../bridges_
interview.php
www.strategies-for-managing-change.com/william-bridges.
html
Leading through transition Perspectives on the people side
of M&A Kevin Knowles, Kimberly Storin, Danielle Feinblum
and Stephanie Meyer from Deloitte
The DaimlerChrysler Merger, Tuck School of Business at
Dartmouth
21
22
Contact us
Nishchae Suri
Partner and Head
People & Change Advisory Services
KPMG Management Consulting
T: + 91 124 307 4000
E: nishchaesuri@kpmg.com
Bhrigu Joshi
Senior Consultant
People & Change Advisory Services
KPMG Management Consulting
M: + 91 82874 80006
E: bhrigu@kpmg.com
kpmg.com/in
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we
endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will
continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the
particular situation.
2011 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved.
The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

Post Merger People Integration

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Post Merger People Integration

Uploaded by

Copyright:

Available Formats

Whitepaper on

Managing Change during Post

Dr. Ganesh Shermon

Partner and Head,

1 Knowledge@Wharton KPMG Survey 2011:

Some of the key people &

Ending and beginning are the

Mergers & Acquisitions: The story so far

It is interesting to track the changes in

Fourth Wave (1981-1989): The era

First Wave (1897-1904): Horizontal

Sixth Wave (2003-till now): More

Second Wave (1916-1929): Mainly

The adjoining figure illustrates six waves

Third Wave (1965-1969): The

1 Esther Cameron & Mike Green (2009), Making

There exist multiple reasons for

Diversification: This type of M&A

Defensive Measures: Some mergers

Growth: It is usually associated with

Horizontal and Vertical Integration:

Pressure to do a Deal, Any Deal: There

Synergy: It represents the potential

2 Esther Cameron & Mike Green (2009), Making

Table 1 - People and Organization Related Implications of M&As

Key People and Organization Related Implication

Senior management team expected to make discrete changes in performance goals

Loosely coupled management teams

Horizontal and Vertical

Integrated top teams

If managed well, it may lead to greater commercial strength.

Source: KPMG Analysis

3 McKinsey&Company, Perspectives on Merger

Post merger people integration

Scoping: In this stage companies agree

People and Organization Integration:

of a merger or an acquisition. Research

Addressing key people and organization risks

One of the most important aspects of managing successful

cost risk, structure risk, talent risk, culture risk, regulatory

People Cost Risk

Depending on the exact reason and

instance, combining a traditional

Very often, when redesigning the

An organizations culture consists of

1 M&A Beyond Borders: Opportunities and Risks,

Cultural compatibility can have

3 Debashish Sengupta, S. Ramadoss (2011),

Goods and Services Tax - Ready. Steady. Go? | 12

Managing change during post merger

Effective change management is

Managing Change at the

1 Bridges, W (1991) Managing Transitions, Perseus,

Before one can begin something new,

Employees need to understand and

The purpose behind the M&A

of synergy expectations, existing team

Managing Change at the

Table 2 - Development of a Merged Team

Possible Change Management (CM) Response

Need to clearly define roles and responsibility in the new company/

Defining Goals & Establishing

Discuss team background in terms of previous structures, processes

Disagreement over priorities