by Deborah Kops
I once woke up to an announcement on the radio that the bank whose business services operations I was leading was being sold to a mega-banking major. Notwithstanding the fact that I reported to one of the vice chairs, and he left me off his call list, I should have recognized the signs. That day was an emotional rollercoaster, but it was nothing compared to the ups and downs I experienced over the next year.
Is a merger or acquisition (M&A) in your GBS future? Or has been in the past? Likely so. But don’t take it from me, take it from ChatGPT. According to that font of all knowledge, 40-50% of the current F1000 company list have been formed through mergers and acquisitions to increase market share, diversify products, or enter new markets. With GBS ground zero for integration—and expected to deliver much of the justification for combination, its team members bear more than their share of change and angst.
With the average time from an announcement of a merger or acquisition to the completion of the transaction at 6-12 months for mid-sized to larger deals, with the duration of post-merger integration taking another 1.5 years or more, M&A activity wreaks special havoc on the global business services model, its leaders, and its people.
Why is that? Finance and others are functions that are policy- or rules-driven, fairly cut-and-dried that face the challenges or scale or streamlining in merger and acquisition activity. However, GBS is an ecosystem that delivers work; certainly, there are some rules but a varied range of levers to pull. Each is different. So, at an event, combination sets a series of reactions, depending on the integration scenario, of which there are four:
- The acquirer’s GBS has all the answers, and the acquired are subsumed into their model. In this scenario—which occurs most often—the delivery model and often the leadership chairs are fully occupied. Because the acquired organization has some level of certainty as to its fate, its roadmap is shut down, investment stops, and the acquired or merged team members become disaffected and start to tune off and look elsewhere.
- The acquired have a more evolved GBS, so it drives transformation. This scenario is challenging if the management team slots remain with the acquirer, less so when there is a “merger of equals.” In the former case, the GBS model can feel like a graft that may or may not take, forcing the powers that be to think and work differently; tables are turned when it comes to which GBS team is feeling the pain.
- Management believes that the event is a catalyst to design and implement a new GBS model. Under the banner of integration, management may take the opportunity to rethink the model, perhaps repatriating scope to the business, realigning work into CoEs, consolidating locations, or pushing an automation agenda. This scenario creates both uncertainty and opportunity for both organizations.
- Neither has a mature GBS, so integration drives the design and implementation of a new model. Nothing like a merger or acquisition focuses the mind on the benefits of the model; in this scenario, trusted leaders from the business, usually supported by a consultant, cook up a new business services platform.
But there’s potentially a silver lining for GBS organizations. With the typical integration budget as much or more than 5% of the transaction’s value, GBS is likely to benefit. Here are a just a few.
- Heightened importance GBS organizations almost always have a seat at the table when it comes to strategy for integration and resultant implementation. If the model delivers, there may be an afterglow that results in GBS becoming more integral to enterprise strategy and operations
- Ability to transform Under the aegis of an integration budget, GBS may finally be able to justify and grab some funding for resources that it and the enterprise believe necessary to drive transformation.
- New investment in infrastructure and technology The event should drive system standardization and investment to get at those critical synergies. It could be a perfect catalyst for the expansion of delivery locations or the implementation of technology that’s been on the wish list but out of reach.
Regardless of the approach the enterprise takes, the greatest challenge is not model design or whether to close down Costa Rica in favor of Bogota—it’s down to people. Helping them cope and modeling the right behaviors is paramount to getting through this most trying of periods. Based on my experience, here are some tips to ensure productivity and engagement
- Don’t panic The team will take their cue from its leaders. Be stoic.
- Don’t play your hand If you are ready to retire or move on, keep it to yourself.
- Keep momentum going and make it obvious to the team Decide which initiatives are likely to be unaffected by the event, and which will not survive. The teams need to understand it’s business as usual until it isn’t (there’s always a risk that the deal won’t proceed) but also not feel that they are responsible for busy work that doesn’t have a prayer of surviving Day 1. A thoughtful “stop-start-continue” exercise is very useful and should be conducted at the announcement and during key points during integration planning.
- Maintain routines Nothing says all is lost more than truncating or stopping embedded management routines.
- Be respectful of the other party GBS is highly contextual. No GBS is “best” or has all the answers. We can be a very catty bunch when it comes to talking about our peers. When the organizations come to the table, superior or dismissive behavior is out of place. Help your teams keep an open mind.
- Take the opportunity to learn M&A is fascinating; it allows the opportunity to have a window into another enterprise’s operations since rats and mice come out during the planning for and execution of integration. Ultimately, knowing how to foster an integration is a resume booster.
- Keep everyone informed Not knowing facts such as events, timelines, and packages is harder than not knowing. Be as forthcoming as you can and admit when you don’t know or can’t yet share an answer. And be careful about sharing appropriately with your inner circle; it creates an “us and them.”
- Create opportunities to come together frequently I ran weekly brown bag lunches as therapy for my team. Knowing that they were not alone was a great help in keeping them focusedon their work.
- Administer hyper care to your team when possible There will be situations that will send a message to the team. For example, I had to pull strings to bridge one month of service to obtain retirement status for one of my employees. The team will be acutely aware of what their leaders will do to ease their concerns and keep chugging on.
- Read Elisabeth Kubler-Ross’s Five Stages of Grief Especially if you are acquired, it’s a must-read to keep your sanity. After all, M&A represents the loss of an institution and potentially of a work family and the creation of something new and unknown. For example, I experienced an acute sense of loss with a fixation on what I could have achieved without that “bloody acquisition.” Elizabeth helped.
And remember, GBS models are never static even without M&A activity. This too shall pass. GBS has evolved to be exceptionally resilient.