The rapid development of technology, the convergence oftelecom and IT with a backdrop of deregulation has shaken the foundation of thetelecommunications, which is undergoing large-scale restructuring. Mergers andAlliances (M&As) are becoming the norm as companies look to becomingproviders of end-to-end services.

An aggressively precipitating business scenario has seriousimplications on the challenges facing the prospective survivors in theseindustries. How do you focus the activity that accompanies a merger and build anorganization with a strong foundation for the future?

Success rates for mergers are not very encouraging: As low as50 percent by some estimates. Why? Many companies have not yet mastered the artof post-merger integration and the human side of M&A deals. Figures 1 &2 show the results of a Hewitt Associates survey of companies involved in globalM&A activity.

This data creates the need to understand why the gaps existand what the critical success factors for M&As are. Results of the surveyreveal that these factors are

• Alignment to M&A Objectives: Creation of Synergy

• Satisfying Time Constraints

• Alignment to People Needs: Culture and HR Programmes

• Alignment to System Requirements: Operations and Processes

Approaching Integration

The rate at which the Telecom and IT industries areprecipitating calls for an efficient, quick and foolproof approach tointegration would ensure the success of the entity organizations. Binding theaforementioned critical success factors together, the guiding aim should focuson speed and ease of implementation, minimized digression from the seed goals ofthe merger, clear role definitions, discipline and accountability amongst thedrivers of the process. This would help obtain full value desired out of themerger. In designing such an approach, one needs to make the integration processa series of planned change activities that begins at identification of synergyobjectives and is completed when there is alignment of people, system andsynergy needs.

Let us now look at two illustrations of the above approach,i.e. HR alignment based on synergy objectives.

Example 1

Synergy Objective: Improved market access

Desired Behaviors: Customer-orientation, team-orientation,flexibility, and fast-to-market

• Organization With a synergy objective of increased market access, it is necessary that the organization be structured in a fashion that focuses on customer-orientation. Structured customer teams with efficient inter-team channels of communication at all customer interfaces is something that would drive the objective to realization.

• Performance Success in the market is highly measurable and the performance criteria should therefore be driven by hard numbers. Since the employees would function in a team-based environment focused on customers, peer feedback or 360 feedback would be ideal. Also, such an environment calls for clear accountability for each employee in terms of targets and smooth channels of communication of organizational goals to bind individual performance to the bigger picture.

• Staffing Staffing criteria should be well tied in with the Synergy Objective. Since customer-orientation is a focus area, the individuals should have good communication skills, be highly team-oriented to function effectively within the given organization structure and should have a good mix of competencies (region, product, etc.). Also, in a performance driven culture, individuals should be growth-oriented.

• Rewards In order to drive the performance culture one has to positively reinforce performers and motivate the rest. Pay for performance and high variable incentives based on formulae, which reflect "market access objectives" becomes a must.

• Development Satisfying developmental needs of employees would entail imparting in-depth product/market knowledge. Open communication of organizational objectives/strategy should be developed. Programmes on customer skills, selling skills as well as knowledge transfer between teams should be encouraged. Clear indication of career development with focus on team leadership is necessary.

Example 2

Synergy Objective: Vertical Integration

Desired Behaviors: Strong cost and productivity orientation,process orientation

• Organization With a Synergy Objective of Vertical Integration, it is necessary that the organization be structured in a fashion that focuses on process orientation. The structure should preferably be in business units to deliver end-to-end processes with centralized staff functions. Rigid controls between units in terms of process documentation, internal customer approach should be built in.

• Performance A process-oriented structure, which maintains a core of productivity and cost-effectiveness, should be driven by hard financial numbers. Performance measures should incorporate own business numbers as well as interfaces with other units. Peer evaluation would drive an internal customer approach.

• Staffing Staffing criteria should strongly reflect the Synergy Objective. The employees should have an eye for detail and a strong process orientation. Systematic and procedural approach to work, consultative nature to tackle critical process problems are a must. An ability to handle short-term objectives and envisage long-term implications would effectively bind employees to organizational goals.

• Rewards Positively reinforcing performance, thereby driving motivation calls for building in variable incentives and pay for performance into the reward scheme. Formulae reflecting the end-to-end processes or the business units would be well aligned with the structure.

• Development Keeping in mind the developmental needs, one should focus on methods, new process learning, process management and control. These programmes should also entail knowledge of end-to-end systems and awareness of standards. Cross-functional exposure to provide a holistic perspective of the business unit within the entire organization is critical.

The above examples identify value drivers that are criticalto the main objectives of the merger or acquisition (or Synergy Drivers), andthrough a planned process, move the organization towards accomplishing them.Certain tangible indicators of success are mapped on to each stage of alignment,which serve as a monitoring mechanism for financial and operational efficiency.Hence the approach works at programmes, policies, culture, communication andother intangible concepts but the real measure of success is reflected in thetangible indicators. Thus, what makes this approach value creating is the factthat it acknowledges the importance of tangible as well as intangible factors inthe success of a merger. The approach accounts for transition management in allspheres of the new corporation i.e. the people, the systems and the synergycreated.

The market has already begun corroborating the theme of thisarticle. Global telecom companies like Ericsson and Motorola have tied up withsmall Internet companies in India and the rest of the world for developingapplications for mobile Internet. The merger of JT Mobile with AirTel, Max Touchand Orange, and Vodafone AirTouch PLC and Bell Atlantic Corp. are but theharbingers of time to come. The convergence has set in India and in a scenariosuch as this, the words of Ambrose Bierce, although not directly relevant, dothrow a word of caution. In the words of Ambrose Bierce, "The world hassuffered more from the ravages of ill-advised marriages than from anythingelse."

Vivek Chachra, is a consultant with Hewitt Associates.