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Streamlining M&A Integration Effectiveness with Organisational Network Analytics

Over 70% of M&As fail. With companies spending over 2 trillion dollars on M&A every year, this failure rate is a massive call-to-action. One of the key elements to making M&As work is to improve the effectiveness of the integration between the two workforces.

Organizational Network Analytics (ONA) enables leaders to create a Social Graph of the company and leverage that to identify who is “central” to the org and which are the informal communities driving the zeitgeist. This means ONA is ideally positioned to help leaders visualize and analyze the quality of collaboration throughout the integration journey.

The visuals used in this article are a representative sample of an M&A journey across 3 key stages i.e. Pre Merger, Merger, and Post-Merger (for convenience, these graphs only include interactions between leaders — ideally we should analyze the Social Graph of interactions across all levels). Each node represents an individual, each link is a relationship between individuals, node size represents how central the individual is to the group and node color represents which entity he/she belongs to.

It is important to look at the integration journey from these three perspectives since ONA is leveraged differently at each stage. Before we get into specifics of how ONA can help — let’s first understand the two ways to create an organization’s Social Graph.

1. Active ONA — This is a survey-based approach where participants are asked specific questions like “Who do you reach out to for expert advice?” or “Who do reach out for mentorship?”. The responses to these questions are highly contextual but limited in volume since the response rate for voluntary surveys is notoriously low and repeating surveys too often can lead to survey fatigue.
2. Passive ONA — This is based on meta-data (it does not look at the conversation text) from emails or conversations on Enterprise Social Platforms like Slack / Yammer / Chatter etc. While this data source is low context (as any mail could be about any topic), it can generate high data volumes since organizations generate 1000s of emails or conversations every day.

With this context, let’s get into how ONA should be leveraged at each stage of the integration.

Pre-Merger Stage

At this stage, the M&A agreement is about to be signed and now would be an ideal time to launch an Active ONA survey within each of the two entities to create two independent Social Graphs — which will look something like this.

Figure 1: Pre-Merger Stage — Both entities have separate Social Graphs.

Each of these graphs (and the corresponding analytics generated by ONA) can generate the following insights

1. Identify central associates — Network Analytics can help identify the key associates who are serving as the “glue” in each of these firms by acting connectors and influencers. The important point is to identify non-leaders within this group since these associates will have the energy and enthusiasm to contribute to organizational initiatives. These associates will be key to sustain the momentum of the integration process.
2. Identify disengaged associates — Another insight from ONA is which of these associates are disengaged from the larger clusters or exist in silos where they interact only with a small group of individuals. Identifying and engaging with these associates will be key to ensure the stragglers are kept engaged during the integration process.
3. Identify major clusters — A key graph-level insight is identifying the major clusters in the firms Social Graph. These clusters could be aligned to locations, departments, communities of interest, communities of practice, or any such shared identity or priority. The important point is these affiliations are formed organically and tend to be quite strong. Leveraging these structures is key to sustainably driving engagement during the integration process.

One key actionable at this stage is to create a list of “Key Employees” at each entity (using data from Point #1) and ensure that every Core Committee or Panel has some representation from both these lists.

Merger Stage

At this stage, the formal merger process has been initiated and associates in both firms have started interacting with each other. The formal integration process can vary widely but 6 months is a usual timeframe. Using Active or Passive ONA, start periodically generating the Social Graph through these 6 months especially around key milestones like Systems Integration. A sample graph would look something like this.

Figure 2: Merger Stage — Both entities start interacting with each other.

The best way to leverage ONA during this stage is as follows

1. Has the influencer landscape changed? — Regenerate the list of central employees in this new graph and see if this list differs from the one generated in the Pre Merger stage. Any new additions need to be nurtured to ensure they are being leveraged for key communication programs and are adequately represented in key panels.
2. Establish Goals — Generate org-level metrics like Overall Collaboration Level and establish goals for collaboration levels to be achieved by each key Integration Milestone and Post Merger. Practically speaking, the key priority is to create opportunities for associates to interact at least once with someone from the other entity.
3. Leverage the power of communities —Create or leverage communities around light and informal like special interests (eg: Movies, Music, Books, etc), skills development, or key events (eg: Town Halls). The idea is to create opportunities to connect outside of the work context.

Post-Merger State

At this stage, all the legal steps related to the merger have been completed and associates across both entities have interacted for upwards of six months. The state of interactions looks something like the image given below.

With brass tacks taken care of, leaders will now focus on issues like aligning the culture across these two entities in a quantifiable and sustainable manner with clear linkages to business metrics.

Figure 3: Post Merger Stage — Both entities have moderate levels of communication, focus on Culture Alignment.

At the post-merger stage, ONA can deliver value in the following ways

1. Create a tracking framework — Using Passive ONA (only), create a framework to frequently and continuously track the evolution of the organization’s Social Graph. This close tracking is critical to ensure that collaboration levels are not dipping below a minimum threshold. This also gives near-real-time feedback if the key employees are able to contribute effectively towards change management/culture alignment both at an organization level or at specific locations/departments. Active ONA is not an option here since frequent surveys can lead to survey fatigue, however, surveys can be done on a quarterly/half-yearly basis to generate high context insights.
2. Set thresholds — Both at the organizational and location/department levels, set thresholds for minimum and desired levels of collaboration. This is a critical step since every part of the organization has a different context. For example — the largest location in the org should be expected to have a relatively high level of engagement while a newly formed Business Unit should be given some time to reach a min level of engagement.
3. Be ready with an action plan — Once we have identified the thresholds mentioned in the earlier point, it is important to have a Standard Operating Procedure (SoP) when these thresholds are breached. When the min threshold is breached downwards — there should be a standardized corrective action like enhancing the level of engagement with key associates. Likewise, when the desired threshold is breached upwards — leadership needs to recognize the location/department which has achieved this distinction.

Conclusion — M&As are incredibly complex phenomena requiring alignment across multiple areas like strategy and culture. An additional layer of complexity is the highly dynamic nature of this exercise, where the merged entity may have a completely different network structure as compared to the pre-merger entities and is constantly evolving. ONA is ideally positioned to help by leveraging real-time data-driven actionable insights.