Acquisitions – The Information Badger

A youngster about to join a large enterprise after completing a degree at University asked an interesting question last weekend. ‘Does an enterprise that acquires another company use the purchase as a smokescreen to shed older, long-serving, higher-paid employees?’ That’s an interesting and unusual question from someone at the very start of their career. So why did they ask it? Well, firstly their new employer has acquired another substantial company and restructuring activities are underway. Secondly, they knew the Badger had some experience in navigating a number of mergers and acquisitions. Lastly, the tech-savvy youngster had come across online chatter that his new employer’s older staff with long service were being disproportionately targeted during restructuring. The youngster, with no experience within large enterprises, anticipates a long career with their new company, but they were a little perturbed that their new employer might possibly be engaging in age discrimination, something that’s prohibited under the UK Equality Act 2010.

Answering required words that were balanced, honest, and rooted in personal experience of post-acquisition integrations. So, what did the Badger say? Firstly, that acquisitions often lead to reorganisations which can legally justify redundancies based on performance or role duplication at any age or level of seniority. Loyalty and long-service counts for nothing in such a scenario, and older employees may be more vulnerable because they typically have higher salaries and benefits, which means shedding them can significantly reduce payroll costs. Secondly, an acquisition can be a vehicle to change an enterprise’s culture, especially in fast moving industries subject to rapid innovation pressures. This always favours the retention of younger, tech-savvy staff and those with in-demand skills. Thirdly, not every acquisition is a smokescreen for eliminating older, higher-paid employees, but, in reality, some acquirers do quietly use their purchase to shed older, higher-paid employees because they know that it’s normally difficult in these circumstances for individuals to prove age discrimination for their redundancy. Do acquisitions disproportionately shed older staff? Some do, some don’t.

The youngster nodded, reaffirmed their intent on a long career with their new employer, and asked if the Badger had any advice for the long term. Yes. Maintain skills that are current and valuable outside your company, as mergers and acquisitions rarely reward loyalty or long service. As you get older and more experienced, watch out during acquisition integration activities for a) silence about future roles for you or your peers, b) performance reviews, and c) role redefinitions. These often signal something is afoot that affects you personally. Also, never forget that HR works in your employer’s interest, not in yours.

The youngster grinned and said they obviously had lots to learn! The Badger smiled too, pleased that he’d sown a few seeds of awareness in a youngster who will soon learn that things are never quite what they seem inside organisations when it comes to workforce matters.

The Badger’s following the legal battle relating to HP’s acquisition of Autonomy in 2011 with interest. It’s providing a fascinating insight into many facets of the acquisition process and the dynamics once the spotlight moved from deal closure to integration. The Badger’s interest stems from having had some involvement integrating three or four acquisitions during his career, and one experience of being ‘acquired’.

The failure rate for acquisitions apparently sits well above 50%. That’s unsurprising given the diverse factors involved. Bringing large groups of people together with different personalities, ambitions, behaviours, cultures, working practices, and IT and financial systems across multiple offices and geographies is always risky! Doing the deal is one thing, but it’s the subsequent integration where the rubber hits the road, workforce hearts and minds are won or lost, and success or failure is determined. One point the Badger learned early in his acquisition-related experience was that people in the acquiring company always unwittingly radiate ‘the arrogance of acquisition’ which conveys that they know best! This can quickly alienate ‘acquired’ people and make the road to success bumpy.

The Badger’s first post-acquisition integration experience involved presenting to a group of ‘acquired’ business leaders on how to manage risk on their delivery contracts. The body language of those present and absence of questions suggested something had not gone down well. After the meeting ended, the Badger approached the most senior attendee for feedback and was told ‘you were trying to teach grandmothers to suck eggs and they felt like second class citizens, which they are not – they are mature and very experienced professionals’. The Badger quickly realised they were right! Talking ‘to’ them rather than communicating ‘with’ them was unwittingly arrogant and never going to win hearts and minds. The Badger adjusted his approach to be inclusive, to listen and be respectful, and everything subsequently went smoothly and successfully. The Badger learned to avoid ‘the arrogance of acquisition’ when dealing with people during integration activities post-acquisition!

Which brings us back to HP and Autonomy where the likelihood of a successful integration looks to have been low from the outset. In this case ‘the arrogance of acquisition’ mixed with post-acquisition leadership disagreements will have created a particularly challenging, polarising and uncomfortable environment for the workforce. Shame, because winning people’s hearts, minds and allegiances is central to the success of an acquisition, and it’s also people that bear the brunt when an acquisition is a failure. So, does the Badger have any view about what individuals should do in the integration post-acquisition? Yes. Watch for the ‘the arrogance of acquisition’ and call it out. What happens in response will provide an insight to the future ethos of the fully integrated company and the next career decisions you should make…

Category: Acquisitions

Do acquisitions disproportionately shed older staff?

‘The arrogance of acquisition’…