Key Elements of Leadership Integration in a Merger-Acquisition

A merger-acquisition is such a delicate process, a majority of businesses don’t do it effectively. According to several studies, a staggering percentage of merger-acquisitions fail to meet their goals. One KPMG study reported that mergers fail 83 percent of the time, and a study by the Harvard Business Review showed the figure could be up to 90 percent. There can be many factors that play into this, but many times failure is due to culture incompatibility—which should be examined and evaluated beforehand and proactively managed and developed post-merger—and poor leadership execution.

This high failure rate was on the minds of KeyBank Chairman and CEO Beth Mooney, President Chris Gorman, who was charged with leading the overall merger-integration process, the entire executive team, and the Board of Directors of Key from the moment they contemplated its merger-acquisition of First Niagara Financial Group in 2015. Very early on they asked Brian Fishel, Senior Vice President and Chief Talent Officer of KeyBank in Cleveland, Ohio, to lay out a plan for bringing the cultures and leadership of the two companies together most efficiently and effectively. Right away, Fishel knew he needed to address his 4 E’s of success in leading individuals and teams: explicit, engrained, energizing, and enduring.
Not long after they posed the question, Fishel, with input from many of Key’s top executives, developed a robust game plan that complimented already planned line of business and market- specific integration, onboarding and training activities with an enterprise-driven series of education sessions for leaders from both organizations to attend so they could learn how to quickly and effectively work together. With support from Beth Mooney and senior leadership, the sessions were well attended and well received and paved the way for success.
Here are the key elements as to how it happened and what can be learned from their experience:
1. Assess Current Culture of Each Organization
The idea here is that elegance is in simplicity. Assess where the employees of each
organization are currently, and then use that information as a jumping off point for culture and integration training. Ask simple questions of both sides and then ask them to rate how everyone is doing. This is when you see what has been engrained in each side, so that you can see what leadership has carried through. This can help you lead going forward.
Right after the merger, Fishel and his team conducted interviews of 50 executives from First Niagara and KeyBank. They asked First Niagara executives to describe its company culture. How does work get done? What are the written and unwritten rules? How do decisions get made? What is your perception of KeyBank people and their company’s culture? Then, the same was asked of KeyBank executives about Key and First Niagara. This produced responses Fishel and his team could learn from. Then, the team used those same 50 people and a handful of additional leaders and conducted an organizational assessment survey asking them to rate their company and the other company on several dimensions, including: how is information shared? Is information held more at the top or is it dispersed? Is info shared freely?
The good news in what Fishel learned is that the two companies shared a lot of the same foundational elements or “enterprise DNA” — which, research would suggest, is rarely the case in merger-acquisitions. These core elements, most specifically included the two company’s core values, are hard-wired and hard to change. With this strong base of similarities shared between First Niagara and KeyBank, they had the confidence that they could deliver as a group and be successful as one entity.
2. Offer Multiple Open-ended Education Sessions
The next step is to take that information from the assessment and create education
forums/workshops that help everyone be on the same page and succeed in the new company going forward. One critical element is to not mandate participation in education workshops, but to allow people to attend by choice, a critical early step in helping individuals self assess and truly determine whether they wanted to be part of something new and be committed to helping the new company come together. This may seem counter-intuitive, but offering the freedom to choose will actually energize your people. They come because they want to, and that creates
an excitement they would otherwise not posses. Another component is to make the meetings easily accessible—rather than hold them at company headquarters, bring the meetings to field offices or local regions.
Typically in times of a merger-acquisition, employees’ emotions are all over the map. Some
embrace the change very early on, others are hopeful but unsure, and others are flat-out
skeptical and resistant. Many are usually a mixture of hope and skepticism. So it’s important to meet people where they are and allow them freedom of choice and to move through their skepticism at their own pace. You can’t push it or force it, especially if your own company’s values encompass respect. You have to model that by respecting the employees’ freedom of choice. It’s also important that senior leadership believes in the sessions and what the talent management team is trying to accomplish, and then in turn that the employees believe their leader has their best interest at heart.
Fishel didn’t want to force people to attend a session who didn’t want to be there. So he offered 10 sessions and people from both companies were invited to sign up for one of them that would best work their schedules. He believed that word of mouth would ultimately become the best marketing—and in fact, those who attended the first sessions told others how much they learned and how valuable they found the experience to be; that got others interested fast. By the final sessions, attendance had grown quite a bit. In the end, Fishel and his team had invited 600 key members of KeyBank and First Niagara to attend one of the sessions, and 500 total had attended over a period of four weeks.
Rather than the traditional approach of holding the meetings at headquarters, they did things a little differently. Organizers purposely delivered the sessions in the field in markets where there were significant overlap in businesses of First Niagra and Key. This made attendance more convenient for participants, but it also helped raise confidence. Having the sessions delivered in markets at the local level and having execs who were part of faculty travel to the participants sends a message that senior leadership is focused on the value of individuals and teams.
3. Equal Representation
Attendees need to be able to trust who is offering the information within the education session. That’s why companies involved in merger-acquisitions must offer instruction in a strategic way. They must utilize an equal number of leadership from each legacy company.
When Fishel and his team set up the education sessions, they made sure that there were about half KeyBank and half First Niagra in each session and there was strong representation of leaders from both companies serving as speakers and “faculty.” This helped attendees feel comfortable and have confidence in the content they were learning. It also made the point that this is a joint effort and that there is no winner or loser.
4. Keep the Sessions Short and Personal
Key to the attendance success is structure and content of the education session. Many
organizations go with the two full days (or more) rule, but it’s better to keep it short and focused. Another component is to not just offer speeches to attendees, but offer a chance for them to interact on a personal level. They will leave with more connections and a deeper sense of where they fit into the company as a whole. This is what is meant by being explicit. You don’t cover everything—you cover exactly what they need to hear and learn in a clear and direct way. Fishel was dead-set on conducting a full education session in just 10 hours. This kept things focused and also made it easier for participants to attend and stay fully engaged and attentive in the discussions and activities. So the schedule launched at noon on day one, ran through dinner with a “fireside chat” in the evening with the CEO or one of her direct reports, and then ran from 8 a.m. to noon the next day. The result was a tremendous amount of employee interaction and connection, solving issues in the moment, together, and a lot of real content being covered and leadership development.
5. Showcase Accountability and Problem Solving
It’s important for executives and managers to feel a sense of responsibility in the merger-
acquisition process. During an education session, this can be showcased in break-out role
playing sessions so managers get a chance to put their newfound strategies into practice. This allows what is being taught to be enduring long after the session is complete.
One focus of the new KeyBank-First Niagra entity was not to tell employees what to do and
what not to do. Fishel made teaching tools and problem solving skills an integral part of the
education sessions. To gain buy-in and accountability for change, he brought leaders together and helped them figure out how to go to market and deliver to the client, and how best and most practically they will bring their teammates along with them on the journey. Teach and reinforce in managers that if they are not accountable, then the people they manage won’t be, and how that translates to customer experience.
In the end, there is no cookie cutter answer for what protocol to follow. You can’t tell your
employees to do this and expect the merger-acquisition to go perfectly. Your job is to assess where your employees are currently, then teach them the skills to be accountable and take ownership of the new company and its culture; and help guide them with you on the journey

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Louis Carter
Louis Carter is CEO and founder of Best Practice Institute, social/organizational psychologist, executive coach and author of more than 11 books on leadership and management including his newest book just released by McGraw Hill: In Great Company: How to Spark Peak Performance by Creating an Emotionally Connected Workplace. He has lectured globally in the U.S., Middle East, and Asia on his work and research in organization and leadership development and is an executive coach and advisor to CEOs and C-levels of mid-sized to Fortune 500 organizations. He was named one of Global Gurus Top Organizational Culture Gurus in the world and was chosen to be one of 100 coaches to be in the MG100 (Marshall Goldsmith) out of 14,000 people as one of the top 100 coaches in the world .