The role of mentoring in M&A
Fusing together two organizations is not an easy feat. At all. Various studies show that about 50% of mergers and acquisitions (M&A) fail to deliver the desired results, sometimes in a big and painful way.
While many reasons lead to a merger or acquisition, the objective is generally the same: to achieve synergy so the whole is greater than the sum of its parts. However, even if the potential is there, achieving that synergy is difficult in most cases.
Most studies on M&A highlight that the critical factor to a positive outcome is the successful management of integrating people and their organizational cultures.
Be careful though, a successful integration is more than just getting along. It is the creation of something new.
In the same way that clashes of personality and misunderstanding lead to difficulties in personal relationships, differences in organizational cultures, communication problems, and mistaken assumptions lead to conflicts in organizational partnerships.¹
Researchers have identified five critical human-related factors for successful M&A implementation and execution: communication, leadership and trust, organizational culture, change and stress.
A 2011 study³ shows that mentoring is the secret ingredient to successfully addressing all these factors.
MENTORING IS AN INCLUSIVE TWO-WAY PARTNERSHIP FOR MUTUAL LEARNING AND GROWTH.
Mentoring plays a vital role in improving communication, particularly during the first or limbo phase, in which there’s plenty of unclarity and uncertainty due to many formalities. Mentoring helps to share information clearly, understand the different challenges during the process, and reduce rumours and miscommunication. All these elements support the creation of trust, help to overcome stress and nourish the ability to open up to a new culture.
Most importantly, mentoring allows differences to be valued. In fact, while it might seem easier to integrate similar organisational cultures, the true potential of the integration between cultures lies in leveraging their differences. As mentoring teaches us, similarities unite us, but it is in the differences that we find growth.
How should organizations integrate mentoring into an M&A process?
Here are a few ideas inspired by David Clutterbuck⁴, a pioneer in developmental mentoring and co-founder of the European Mentoring and Coaching Council (EMCC), and our experience in diverse industries.
- Be structured. An effective Mentoring Programme is a structured one. It must have a clear scope, well-defined principles and rules of engagement, supporting tools and frameworks and metrics that allow steering and monitoring the programme towards success.
- The sooner, the better. For practical and legal reasons, it may be impossible to initiate cross-company mentoring at the very first stages of the M&A process. However, the first phase of the process is one of the most critical, where lack of clarity can create tensions and fractures that may be hard to solve later. So, at least the programme’s design should start as soon as possible.
- The more, the better. Ideally, you would want to engage everyone in the Mentoring Programme. The more Mentoring is pervasive within the two organizations, the more significant the impact will be. In particular, it will prove immensely beneficial in retaining the talents within the new organization.
- Create a unique blend. There are many types of mentoring, each one serving a different purpose. Every organization’s culture is unique, and so is every M&A. An effective Mentoring Programme should combine internal and external mentoring; individual and group mentoring; and senior, reverse and peer mentoring to respond to the different needs of both the organizations and their people.
- Provide training. The impact of Mentoring becomes exponential when both mentors and mentees receive basic training on the methodology. As we experienced in our project with the University of Trento involving over 500 mentors and mentees, by providing adequate training about the structure, mindset, skills and tools of mentoring to both mentors and mentees, over 80% of the participants have experienced an impact going from positive to transformative.
- Guarantee constant support. Mentors and mentees both need continued support. This is true of all mentoring programmes, but even more during an M&A where uncertainty and stress are higher. An active mentoring programme manager is essential, and so is creating a community of mentors and mentees where they can receive mutual support.
- Why Mergers Fail and How to Prevent It by Susan Cartwright
- Mergers 101 (part one): training managers for communications and leadership challenges, 2007
- Efficacy of Coaching-Mentoring for Communications and Leadership: To Overcome HR Challenges in Mergers and Acquisitions by Shyamasundar Tripathy & Sanjay Kumar Satapathy, 2011
- Mentoring in acquisitions and mergers by David Clutterbuck