Integrating multiple organizations is a time-consuming, labor-intensive process. And while it’s fraught with numerous inflection points, navigating the process successfully can lead to long-term sustainability.
ECG has helped numerous organizations through the process of integration, and we firmly believe that applying the 10 factors identified below will help organizations achieve their desired goals.
- Senior Leadership Engagement and Involvement: Senior leaders from both organizations must be visible during the process. They need to be present at meetings and chair appropriate work groups (Executive Steering Committee [ESC], etc.).
- A Governance Structure with Defined Work Streams: Integrating two organizations while both are operating requires a flexible, coherent, focused governance structure developed along key work streams (finance/accounting, workforce innovation, clinical operations, nonlabor/supply chain, physician engagement, etc.).
- Integration Leadership Dyads: Senior leaders need to create dyad leadership structures for integration work groups to ensure consistent representation and a diverse set of perspectives.
- Committed Resources to Assist in Integration Work Streams and Tasks: A successful integration relies on the organizations’ ability to come together and grow the combined entity. Participation from both organizations’ leaders will be critical to ensure appropriate buy-in across the new enterprise.
- Open/Transparent and Routine Communication to Stakeholders: The ESC needs to communicate appropriate messages to all stakeholders, internal and external, on a regular basis.
- Identification and Understanding of Differences in Organizational Cultures: While they share numerous qualities, both the target and acquirer have different organizational cultures. Any integration must allow for an understanding of those differences and meld the cultures into a positive, supportive, cohesive environment.
- Implementation of Best Practices—Regardless of Their Origin: Leadership needs take an objective view of these practices and determine the most effective processes moving forward.
- Willingness to Make the Hard Decisions: Many integrations fail to yield their stated purpose due to senior leadership succumbing to organizational inertia and refusing to make difficult but necessary decisions. This often leads to stakeholders losing confidence in leadership and inhibits the new entity’s ability to thrive.
- Ability to Meet Deadlines: With hundreds of tasks being completed concurrently, it is easy to let deadlines slip. Leaders need to ensure the integration remains on task and on schedule with no tolerance for missing key milestones. A management work group needs to oversee the integration and report on progress, identify and help resolve issues, and hold all parties accountable for results.
- Ability to Prioritize Day 1, Day 180, and Day 365 Objectives: For an integration to succeed, leaders need to understand what can be done and what must be done in a given time frame. Identifying those focus areas and key tasks along a time continuum will enable stakeholders to home in on the right tasks at the right time.
We have all read the reports published by various new outlets about the merger/integration failure rate (e.g., Harvard Business Review), and history is littered with examples of grand failures. Given the size and scale of mergers, acquisitions, and transactions, it is critical to ensure a cohesive work environment and set of processes for leaders to use during the difficult times that will present themselves as organizations integrate. Applying the factors identified above, with the assistance of trusted advisers, helps organizations lay the foundation for success.
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Edited by Matt Maslin
