Transcript Leadership Alignment

IBM M&A
The consultant’s contribution to the M&A process Cultural & Leadership aspects –
The IBM experience
IPPA conference – January 28
Dr. Patricia Pedigo
Dr. Rita Aloni
Ms. Dorit Shahaf
© 2009 IBM Corporation
IBM M&A
Goals of an acquisition
 Acquiring the product and the knowledge of
production.
 Acquiring the product, the knowledge of
production, customer support and potential
development of new features for the product.
 Acquiring the product and the potential
development of new variety of products.
22
 Acquiring a company with its human capital,
customers – acquiring a brand.
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Dr. Patricia (Pat) Pedigo
Pat is currently an Executive Consultant with IBM’s Acquisition
Integration organization where she is responsible for Culture and
Leadership assessments for acquisition due diligence and
subsequently leading organization change and leader enablement
during the integration effort. Leveraging 15 years of consulting
experience in large scale organization change efforts, Pat is
currently assigned to several of IBM’s largest and most complex
acquisitions.
Prior to this role, Pat led a global effort to unify and transform how
IBM identifies, manages and develops its current and future
leaders. Pat was an Associate Partner in the Strategic Change &
Human Capital Solutions practices coming to IBM as part of the
PricewaterhouseCoopers Consulting acquisition.
Pat holds a Ph.D. in Industrial/ Organizational Psychology from the
University of South Florida
33
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Ms. Dorit Shahaf
Dorit Shahaf is currently the HR Manager of the IBM
R&D labs in Israel. For the last 20 years, Dorit has
led HR teams & OD projects in various
organizations in Israel. She is also active in the
management of the Haifa University Center for
research & management of organizations and
was on the the managing board of the Israel
Association for research, development &
management of HR from 2005 to 2007.
44
Dorit is the co-author of the "Ethical code for HR
Managers“ and holds an M.Sc. in behavioral
© 2009
2006 IBM
IBM Corporation
Corporation
IBM Confidential
7/16/2015
©
sciences and management from the Technion.
IBM M&A
Dr. Rita Aloni
Rita Aloni, Ph.D is senior lecturer in RuppinAcademic Center, School of Management where
she supervises OD consultants and is also a
consultant to IBM organizations in Israel
Dr. Aloni is one of the first OD consultants in Israel.
She was is founder and partner of PAN and for
the past 7 years, president of IODA. In addition
she was chairperson of the Ethic Committee in
IPPA for last 6 years during which time the first
code of ethic for consultants was written.
55
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
IBM Values
 Dedication to every client’s success
 Innovation that matters – for our
company and for the world
 Trust and personal responsibility in all
relationships
66
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
IBM: Managing the Matrix
160,000
15,000
15k
sales
people
salespeople
9k
9,000
salespeople
sales people
58,000
5k
5,000
salespeople
sales people
32,000
102,000
77
IBM Confidential
7/16/2015
10k
10,000
salespeople
sales people
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
IBM’s Acquisition History
Deal Metrics
# of Acquisitions
(Israel)
2004
12
2005
2006
2007
YTD
2008
16
14
12
15
(1)
(1)
(2)
(3)
 2008 acquisition portfolio was successful and typical of IBM’s
results in the past few years:
– Revenue attainment of 96%
– 68% success rate vs. industry benchmark of 20-40% (4Q)
88
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Dilemmas: Global Corporate & Local Country
 Retention of local talent and leadership?
 Adjusting IBM M&A best practices to Israeli
culture
 Adjusting to IBM’s perception of the role of
the manager
 Culture transition: From an informal small
start-up to a large process driven
organization
 Adjusting to the change in the service level
- from a hand holding to a self service
mode
 Small country syndrome and implication
for career development options
99
 Intrusion of American visitors who were
IBM Confidential
present
on site for a long period of time7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Retention of local talent and leaders
 How to keep employees who chose a small family
oriented start-up and got big global IBM?
 Is it possible to keep the founder/CEO?
 How to sustain leaders’ influence and impact?
 How to attract the same talented candidates as before
the acquisition?
 How to integrate the special knowledge of the
acquired into the acquiring company?
10
10
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Adjusting IBM M&A best practices to Israeli culture
 When should we do a complete adjustment and when
partial?
 When to keep a separate service team in an acquired
company?
 Other acquired companies reactions when we apply
different approaches in Israel
 Should everyone move to IBM central building?
 The importance of social events and family focus
 Keeping the balance between long term assimilation
of employees to IBM and initial on-boarding activities
11
11
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Adjusting to IBM’s perception of the role of the manager
 Manager’s role at IBM focuses on people
management with many administrative duties
 Team leaders in acquired companies are technical
experts with almost no managerial background, skill or
identity
 In most cases CEO held most of the power and
knowledge
 What if being an IBM manager is not attractive to the
acquired managers?
12
12
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Culture transition: From an informal small start-up to a
large process driven organization
 Israeli start-up culture – most know each other from
the army, no job descriptions, no performance
assessment
 Israelis know better, they want to change IBM
 Israelis would not simple follow directive but would
buy good arguments
 High touch (F2F communication, little formality) versus
hi tech interactions (pervasive use of web, e-mails,
chats, global)
 Conflict between IBMs process orientation which is
required to drive consistency across all business units
and geographies versus Israeli results orientation
13
13
 HowIBMto
adjust to a slower and longer
decision making
© 2009
2006 IBM
IBM Corporation
Corporation
Confidential
7/16/2015
©
IBM M&A
Adjusting to the change in the service level - from a
hand holding to a self service mode
 In IBM more reliance on electronic based and self
service communication than F2F sometimes viewed
as less personal
 Start-up brings a wealthy administrative support that
probably will not stay with them long term
 Who handles administrative activities, e.g., Who will
pick up the car for washing? Who will handle
business trips & receipts?
 How to make the team trust the local shared service ?
14
14
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Small country syndrome and implication for career
development options
 Being remote from where key business decisions are
made
 Becoming one of over 350,000 IBMers
 In order to have impact globally one needs exposure
to very senior executives and working abroad
 Influencing/strategic roles usually exist abroad not in
Israel
 IBM Israel R&D labs are not recognized as a brand
 How to enable the acquired companies impact IBM?
15
15
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Intrusion of American visitors who were present on site
for a long period of time
 Sudden intrusion of IBMers on site, e.g., 4-5 IBM
executives sitting in one room working on their LT
 Frequent visits of local IBMers to get to know the
acquired company
 What may the acquired employees tell and what
shouldn’t they tell the Americans?
 Language assumptions
 How do Americans get involved in the culture and the
work environment?
 How and who becomes respected by the Israelis?
16
16
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Input from the audience
 What other dilemmas do
you see or expect?
 What other aspects would
you like for us to discuss?
17
17
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Retention of local talent and leaders
 Identification and management of key talent
– Leadership assessments: Behavioral Events Interviews/
Personality assessments
– Create long term retention packages & career paths
– Assign mentors and initiate personal coaching
 Integration structure and governance
– Two in A Box method for pairing of leaders for integration
– Involvement and participation of leaders in integration decision
making
– Keep the key teams intact
– Monitor and retain good climate – survey, feedback, trust
building activities, leadership summit
 Visibility to Company leaders
18
18
– Presentations to senior executives and their teams around the
globe
– Publish
and celebrate team’s achievements
© 2009
2006 IBM
IBM Corporation
Corporation
IBM Confidential
7/16/2015
©
IBM M&A
Adjusting IBM M&A best practices to local culture
 Culture assessment: Understanding the culture:
– Diagnose the gaps between the cultures and openly discuss them
– Recognize all acquisitions are different; need flexibility;
– Preserve local traditions
 Leadership alignment workshops- right after day 1 and then periodic
– Functional counterparts to begin partnership early
– Nominate Israeli key role players that are present on site; e.g. integration project
manager, HR
 Communications
– Tailored “Day 1” and orientation day – employee testimonial from prior acquisition.
– “Landscape of change” and employee experience documents
– Frequent visits to acquisition site by IBM Israeli integration team, frontal training
 Enable open culture discussions
– Cross culture workshops if required, e.g., shades of blue
– Initiate a training plan which includes “knowing who has bought you” and whom
you bought
19
19
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Structured closed-loop approach to predict and align cultural
challenges
IBM
Company
A
Executive
Interviews
Interviews
- Culture &
Integration
Focus Groups
-Managers
Web
Survey
-Employees
 First 3
Key
monthsbaseline
acquired
leaders
 40
questions
about 30
min with
comments
Core
Values
Focus
Groups
 90 min focus
group to
discuss
survey
results &
gain insights
Cultural
Gap
Analysis
 Gap report
 Proposed
solutions
Leadership
Team
Review
& Action
Plan
 90 min
session to
review
report and
take action
Follow up
survey/
assessment
 Survey 6
months
after close
for 2 years
 Follow up
on issues
and
progress
 Report to
corporate
1. Data collection
20
20
IBM Confidential
2. Analysis
7/16/2015
3. Actions
4. Results
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Culture transition: From an informal small start-up to a
large process driven organization
 Phase in process implementation: recognize the need for
flexibility
– ‘lite’ HR processes during the first year or more
– Stay in site/ location
 Develop understanding
– Open and bi-directional communications
– Roundtables, employee meetings
– Candid message about what changes and what does not
change
– Respect cohesiveness of the team; team spirit
– Add experienced IBMers in key process roles to facilitate process-intensive
needs
 Make it personal
– Interpersonal relationships to build trust; face to face
– Friendly interfaces and effective IBM websites and team rooms
21
21
IBM Confidential
– Humor
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Adjusting to IBM’s perception of the role of the
manager
 Enabling managers: IBM Manager’s
School
– “Fast Break” workshop on IBMs values, managers
role, leadership competencies & change management
– HR integration activities with the management team are
oriented to develop the team and facilitate open dialogues
– Mentors
 Phase in role:
– HR handle the enormous workload on managers during the first months
– Gradual exposure of the managers to people management tasks
– Encourage senior manager to delegate tasks
 Reassess managers’ motivation to manage in IBM’s environment
22
22
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
How to adjust to the change in the service level - from a
hand holding to a self service mode
 Phase-in implementation:
– Two year integration period with designated staff to support the team with
most support in the first year, e.g., project manager, HR Transition
Manager, Integration Executive
– Gradual transition to local model of joint services
 Dedicated local integration support
– Local coach / champion for all administrative processes
– Train local integration team to be aware, support and enable the change
process
– Prioritize tasks of the other support functions to quickly address the
acquisitions needs
– Recognize needs of acquired and acquiring teams
23
23
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Small country syndrome and implication for career
development options
 Making connections/ network:
– Connect people to IBM communities
– Expose to influential IBM leaders
– Networking workshops
– Provide buddies who have similar functional
roles
– Distribute a list of existing technological
forums & networks
 Providing opportunities:
– Career Day to showcase IBM opportunities/ technical professions
– Present cross R&D labs career value
– Provide travel, international assignment opportunities for those wanting the
exposure
 Selected career development activities
– Talent programs: Executive Resources, Technical Resources, Top Talent
– Development classes
24
24
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Intrusion of American visitors to be present on site for
a long period of time
 Preparing visitors
– Company and Israel culture briefing before arrival at acquired
company site. Expectations
– Sponsored/ clear purpose for trip/ coordinated with local team;
– Guide American visitors with Israeli culture and how to become part of
the internal circle
– Control visitors to avoid overwhelming the company- “loved to death
by IBM colleagues”
 Preparing the local teams:
– Communications
– Clarify roles and reasons for visits
– Expectations of visitors- wireless connections, dinners, etc.- who
manages
– English
25
25
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©
IBM M&A
Integration Critical Success Factors
 Thorough Due Diligence that includes culture and leadership topics
 Recognizing that all acquisitions are different; flexibility
 Securing necessary local consultants to support the integration.
 Leverage leading edge tools to assist in diagnosis
 Corporate focus on integration on a quarterly basis
for 2 years includes
– Business results
– People results: Morale and Leadership
 Dedicated integration resources
– Global
•
•
Business unit
Corporate
– Local
•
•
Country
Region
 AND IT WORKS!
26
26
IBM Confidential
7/16/2015
© 2009
2006 IBM
IBM Corporation
Corporation
©