Computerworld - Face it: If you're a CIO whose company is going into a merger, you can do everything right and still lose your job. It's simple merger math, says merger veteran Jean Holley, CIO at USG Corp. in Chicago. "There are two sets of senior executives going in, and at the end, there will be one," she says. A thousand factors can influence that outcome, and many of them are beyond your control. So why not try to affect the things you can control? Focus on achieving the best outcome for the people in your department. It won't guarantee your job – nothing will. But it will safeguard your self-respect. Here's how: Run an Excellent Organization If you want to be a player during a merger, run a great IT organization now, says Richard Fishburn, vice president and CIO at Corning Inc. in Corning, N.Y. Fishburn was CIO at Digital Equipment Corp. when it was acquired by Compaq Computer Corp. in 1998. "The lesson it reinforced for me is that your goal has to be excellence," he says. "If you come into [a merger] explaining why you're not competitive and making excuses, you're not only preordaining your own outcome but also making it more difficult for the people in your organization."
CIOs Beware!
In a recent report, "Managing Culture in Mergers and Acquisitions," by Lawrence Schein, The Conference Board Inc. in New York looks at cultural tsunamis that can swamp mergers. It highlights the following juxtapositions between merging companies as particularly dangerous:
Large hierarchical organizations vs. small, informal, entrepreneurial firms
Fast decision-making vs. consensus management
Guarded vs. open communications
Tacit understandings vs. explicit rules
Collegial interaction vs. competition
Formal vs. informal dress code
Pay Attention Watch and listen, says Holley. She was IT director (there was no CIO) at Chicago-based Waste Management Inc. during its 1998 merger with Houston-based USA Waste Services Inc. "I could see it coming," she says. Paying attention may not enable you to change what happens, but at least you won't be blindsided. "I know CIOs whose jobs didn't last in mergers, and they say looking back there were lots of signals; they just weren't looking for them," she says. Equality? Forget About It! "There are no mergers of equals," and pretending otherwise is a waste of time, says Holley. In fact, says Fishburn, it's inefficient. During Compaq's acquisition of Digital, there was never any doubt that Compaq CIO John White was in charge, and that was a good thing, he says. "You need one person to make the decisions, and that was John," says Fishburn. Assume Nothing At first glance, $10 billion Waste Management would be expected to take the lead in the merger with $2 billion USA Waste, but it didn't happen that way. Waste Management's senior ranks were riddled with interim and acting officers, so USA Waste took the lead, and the new company was located in Houston, not Chicago. Surprises can crop up anywhere from the executive suite down to the application level. Don't assume your people are safe or sunk – it may not be so. Promote Your Vision Don't just hope for the best. Share your vision for the new, combined entity and show how your people and systems can help achieve it. "That places your people in the best light," Fishburn says. Negotiate Everything Giving up the lead doesn't mean giving up. Fishburn negotiated with Compaq's White over every piece of technology that would power the new, merged organization. For his part, White considered everything Digital had to offer and ultimately selected the best of both companies, Fishburn says. For example, although Compaq was using SAP, Fishburn made such a good case for Digital's PeopleSoft human resources system that White chose it. Be Professional Resist getting sucked into intrigue and back-stabbing. "I saw really ugly competition, mud-flinging and bad-mouthing. People think they won't do it, but it's like a political race: It can get very personal," says Holley. "Stay out of that. It's unbecoming and unprofessional." Don't Buy Into Winners and Losers The lead company and its systems and processes aren't superior, nor is the trailing company inferior. A winner/loser mentality can poison attitudes and negotiations. When Corning recently acquired a company, Fishburn scrupulously avoided winner/loser labels. Rather than talk about "integrating" the company, which he sees as demeaning, Fishburn explained that both organizations were "optimized around excellence" and the goal was to "cross-pollinate" the best of both. Stay Engaged Fishburn decided very early in the Compaq/Digital process that he would ultimately leave the merged organization because his family didn't want to move to Houston. But he felt that keeping that information to himself would make him a more effective player. "I wasn't going to tell anyone [that I would be leaving] because I didn't want to have less ability to take care of my people," he recalls. Holley also decided not to move, but she announced it, along with her determination to stay engaged for the duration. "I said, 'I will work and support you, but I will not go,'" she recalls. Holley says that in her case, being a lame duck wasn't damaging and, in fact, positioned her as an honest broker with no ax to grind. "People knew they'd get the straight scoop from me," she says. Take Care of Your People Fishburn says that all his energy was directed toward getting the best deal for his people, and he feels he succeeded. "The most important thing for me was that ultimately, many, many of my people were offered positions in the Compaq organization," he says. For Holley, the challenge was different. Waste Management had been in the early stages of a massive SAP implementation to replace outdated systems when the merger began. The companies decided to drop the SAP initiative as too risky to attempt during a merger and moved to the existing USA Waste systems. This decision wasn't negotiable, and it meant that eventually, most of Holley's IT people would be laid off. Holley had to balance the need to take care of her staffers with the need to keep systems up and running until the changeover. She told them that eventually, their jobs would disappear, but she offered "stay/pay" packages – monetary incentives, paid quarterly – to stay on the job, with a bonus to be paid at the end. Then, she outsourced most of the operational and support areas such as the data center and help desk with a guarantee of 12 months' work and the stay/pay packages intact. "People were financially so well taken care of, they didn't want to leave," she says. Communicate Most of Holley's people stayed until the end, even though they knew they'd be laid off, because they clearly understood their position, she says. "You can stamp out so many rumors if you just communicate," she explains. "If you make yourself extremely available and share what you're planning to do, people will feel as comfortable as they can." Be Honest "Your people want you to talk straight," says Fishburn. "They know all the answers haven't been determined, but they want to know you are going to tell them everything you know when you know it. If they believe that, they can work through the uncertainty." Don't Take It All Personally Decisions about which systems to keep and which to scrap are no reflection on you, the CIOs say. "Realize these are business decisions based on business risks and not on people," Holley says. For example, she adds, Waste Management's decision to drop SAP during the merger was a savvy business move. "It was just too risky," she says. Do Your Best; Accept the Rest No matter how hard you try, you can't save every system and every person, so don't beat yourself up over it. "These decisions have nothing to do with the quality of your people," Fishburn says. Be Proud Don't feel you've failed if the outcomes aren't what you would have chosen. "If you run an organization that you are proud about before a merger, there's no reason not to be proud after the merger," Fishburn says. "Nothing can take that away unless you allow it to be taken away."
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