Take It Or Lead It

I just read an article from 2002 entitled, “Making A Merger Work – AOL Time Warner, the largest merger in history, may succeed because of HR Leadership.”

Oh dear.

We all know, of course, what happened. Granted, the backside fell out of the dotcom boom not long after the merger, but it can’t be argued that AOL had gotten way too big for its online boots. For their part, Time Warner was so blinded by its desperation to get into bed with a digital powerhouse that executives didn’t realize AOL was actually a glass house sitting on the base of an active volcano.

Ooops.

I’m sure that everyone involved would cry that they could never have known the troubles ahead, that they did all their due diligence, that so much of what happened was outside their control, and, to give credit where it’s due, I am sure that is their truth.

The year that the merger was announced, John P. Kotter, the world-renowned business expert at Harvard Business School, wrote a short but brilliant book called Leading Change. In it, he outlined an eight-step process to leading organizational change of any kind, including how to handle Mergers and Acquisitions. He followed it up with an equally brilliant book with a co-author from Deloitte, Dan S. Cohen, called The Heart of Change, based on their research and detailing real life stories of how companies successfully changed their organizations. What they found was that successful change efforts share eight characteristics, and sometimes overlapping steps. They are:

1. A sense of urgency

2. A guiding team responsible for leading the change effort

3. A clear vision and strategy for the organization

4. Effective communication of that vision and strategy to everyone in the company

5. Swift, effective removal of any and all barriers to action

6. A focus on short-term wins to help create and maintain momentum

7. A relentless spirit that harnesses that momentum and continually builds it

8. A stickyness of message: rewarding the right behaviors, nurturing the new culture

We will talk more about those eight steps, and some of the stories of successful change, in upcoming blogs – we’re keeping an M&A theme here for a while – but the question has to be asked: Why isn’t the HR profession more effective in helping mergers and acquisitions succeed?

It’s a sad fact that about 50-75% of transformation efforts (which one can assume an M&A is) fail to achieve their strategic or financial objectives. The reasons they fail are as well documented as the statistics themselves:

-Culture and management differences (HP and Compaq, anyone?)

-Poor motivation

-Loss of talent

-Uncertain long-term goals

-Poor communication and lack of employee engagement

I can’t help feeling that HR has fought so long and hard to get “a seat at the table” and become so focused on “strategic planning” that they’ve forgotten why they exist in the first place: To attract, develop, motivate, reward and retain the talent that makes our organizations tick.

Instead of HR being up front and center, leading the change workshops alongside their line counterparts, I see consultants (not unlike myself, frankly), making pots of cash by putting words in the mouths of senior leaders that they know darn well won’t be matched by their deeds. So the audio and the video end up completely out of sync, employee cynicism sets in and before you can say “exodus,” the rot has well and truly set in, HR is scrambling with counter-offers and the consultants are laughing all the way to the bank.

So why isn’t HR taking more of a leadership role?

There are, I am sure, many answers, and none of them an absolute truth, but my impression is that our HR organizations are just not equipped with the skills to take the leadership role that is so very necessary in a successful M&A. The senior people in most organizations have grown up through their respective professional ranks mostly on the basis of their ability to make the numbers, improve efficiency, develop products and services and generally kick ass in every way they’ve been expected to do. HR is their support organization, not their lead organization. HR is there to help with tricky people stuff, make sure people get paid, and help out when somebody needs to be fired.

As a result, HR professionals have spent too long in the shade, digging their way out of narrowly defined perceptions by mimicking the words of their clients and “earning a seat at the table.” Strategic HR planning is all well and good, but I question any “strategic plan” that looks beyond one year in this day and age. The end result for HR, as far as I can see, is that they’ve traded genuine impact and influence over organizational culture for “respect for the function.” Bravo. But what’s the point in being respected if you’re not ensuring that change efforts succeed? Sooner or later, someone’s going to notice.