“Cream will rise” – how not to manage a merger

The old adage that ‘Cream rises to the top’ is absolutely correct but some organisations stretch this too far and expect this natural biological process to work as a metaphor within their business whilst providing no catalyst or enabling framework.

We were asked recently to engage with a fairly large City organisation that had recognised the changing world and sought to establish competitive advantage through the acquisition of an aligned but very different business.  The parent business was typified as “solid, dependable, mature, and risk averse” and was operating within the tail-end of its growth curve, leveraging long-held relationships to seek to extend what had been an extended period of profitability.  The acquisition was a maverick new entrant with a high focus on challenge, change and service.  It could be typified as “dynamic, aggressive, competitive, risk-taking.”

As a pairing they had a fantastic opportunity to maintain and capture market share through a diversified service offering and segmented approach and that indeed was the case for a few years until the leadership team decided that the commercial opportunities could be leveraged more effectively through a comprehensive merger.

Everything about the two businesses was different – their culture, their working practices, their strategies, their people, even their offices; so we were asked to help create an alignment strategy that would build on the best of each and propel the combined entity into a commercial and reputational position that neither could achieve independently.

Part way through this the CEO decided that managing the alignment was too complex and proposed an ‘organic merger strategy’ which in essence meant – “put the two together and the cream will rise”.  By this he meant that the best leaders would emerge and take control of the situation, driving performance and thereby saving the need for a complex change strategy.

He went ahead with this plan and lo and behold it failed magnificently with the commercial value of the combined enterprise failing to get even close to the previous individual positions and indeed significant loss of talent and revenue.

This was not the first time we had heard the tactic of “let’s just do it and I’m sure it will work out” and indeed, it was not the first time that we had seen a subsequent failure.  But why does it not work?

There are a number of reasons why the “cream rises” metaphor is unhelpful and unproductive:

  1. Organisations are not biological systems with easily definable processes and outputs – they are dynamic systems that require close attention, clear focus and catalytic leadership.
  2. People are creatures of habit and left to their own devices will do as they have done before – performance needs to be strategically aligned and operationally managed by effective leaders otherwise behaviours do not change
  3. Change needs to be carefully designed and managed otherwise people reject the change proposition and perpetuate the status quo for therein lie their comfort zones
  4. Change is difficult and leaders need to grasp this nettle and make tough decisions that provide direction, focus and opportunity for people
  5. Cultures either emerge or are created – if we allow cultures to emerge then we have to hope they are aligned to the strategy whereas if we purposefully create the culture we want the alignment is embedded and performance will flow.
  6. People need to hear from their leaders – you are there for very sound reasons and people need to hear your voice and see that your behaviours are aligned – leaving it to chance is an abrogation of your leadership responsibilities

In summary, taking a simplistic metaphor and using this to drive a complex process like organisational change is lacking in thought, in leadership and in focus.  Your people deserve better so take the time to decide what you want the future to be and then work with them to co-create it in a purposeful manner.

Be insistent about what you want, be consistent in your behaviours and be persistent until you achieve your goal.

Executive coaching at Rio Tinto

We coached leaders in one of the world’s biggest mining companies to achieve their personal and business goals.

Involving a team of coaches working closely together and across the world, this was one of our biggest and most challenging assignments.

The results were fantastic, and Sam Walsh, former Chief Executive attributes part of his success to his use of coaching with us.  In his own words:

“I was extremely fortunate to have Paul Victor of Vmax Consulting, a Doctor of Psychology with a manufacturing background, so we understood each other well. Paul assisted me particularly as I entered new territory in restructuring, and maintaining the focus on getting the balance right between the present and future business.”

Read more about our work with Rio Tinto here.

Reducing the cost of executive coaching

Let’s not beat around the bush – executive coaching isn’t cheap.  In fact if you measure your learning and development interventions in terms of per-person contact time, it’s probably the most expensive development activity you will undertake.

The returns that executive coaching can deliver back to your business are the subject of much examination.  You don’t have to search for long to find both philosophical and pragmatic calculations of what you might expect to get back in terms of business value.  If you’re struggling, try this 2009 ICF study that estimates returns of 344% on executive coaching investment, but balance it with this 2012 ICF study that states that better understanding of the benefits of coaching and credible ROI measures represent the two biggest challenges facing the industry.

Regardless of the magnitude of the returns possible and how credible the returns are, one thing is certainly true – we want all more for less!

There are many ways in which you can reduce the cost of your executive coaching interventions without reducing the quality of provision.  Here are 5 questions to ask of your business, and your provider:

1. Is choice important?

One of the expectations of executive coaching is that the coachee will be able to choose their own coach.  Whilst choice CAN be an important factor, it is by no means essential for everybody.  We have provided one-person-shortlists for many coachees for many years, with no reduction in quality and impact.

Reduced choice for the coachee opens up the opportunity to significantly rationalise the size of your coach portfolio and the associated cost of management.

2. Can we use days instead of sessions

Coaching is typically charged on a per-session basis, representing the time it takes for the coach to conduct a session, including their travel time, preparation and expenses.

If you have multiple coachees within your business, consider tighter scheduling of your coaching, allowing multiple sessions to take place on a single day.  This change allows for the consolidation of expenses and pricing to be negotiated on a per-day rather than per-session basis. 

3. Do we need to be in the same room?

Coaching using the telephone and web conferencing works.  In fact for most people it works as well as face-to-face coaching (for some, even better).  

It isn’t always appropriate to have ALL coaching sessions conducted virtually, and the method doesn’t work for everyone, but consider what options you have for virtual and blended modes of coaching delivery.

4. Could more cost less?

Economies of scale work in coaching too, so consider the marginal cost of increasing the number of people having coaching in your business.

When combined with some of the previous questions, there is significant scope to increase the number of assignments per coach, reduce the per-session cost and secure better rates for your business.

5. What do your coachees do next?

Experiencing coaching is an important element in the development of the coach.  In fact there aren’t many coaches who didn’t enter the world of coaching after being initially coached themselves by somebody else.

Start thinking about the coachees in your business as a potential talent pool. Could these leaders coach others in your business and reduce your reliance on external coaching providers?

A ‘race to the bottom’ cost approach to executive coaching procurement helps no-one and can severely impact the quality of provision you receive, but that doesn’t mean savings aren’t possible with a little pragmatism.