Proper planning for merger integration is critical to retaining IT talent. Companies must take the time to establish the roles and responsibilities for IT staffers who are to be acquired, Klees says. And if cuts are dragged out, the result can be low morale and even bad publicity.
And the problem can grow worse if six months or a year later, the economy takes a turn for the worse and the need for cuts becomes more acute. Putting off the hard work of achieving operational efficiency is tempting, but it's a mistake. "If the business is moving in a direction that requires the addition of XML programming talent, and you've just acquired a company with a team of Cobol programmers, the cuts needed are obvious," Klees adds.
Experts say that even before the merger -- during the process of due diligence -- the companies involved should answer specific questions pertaining to the IT department:
- What IT operations should be combined?
- Where are the opportunities to create new business units?
- What will be the company's systems architecture moving forward?
- And where will corporate and data center operations be consolidated?
Trust in Me
Avoid the mistake of splitting key management jobs. "The concept of a co-VP of IT, or marketing, is bogus," Klees says. "Job-splitting creates work at cross-purposes, competition instead of cooperation, and can really mess up accountability."
But even in the face of layoffs, building a basic sense of trust can be accomplished, and key IT talent will tend to stay if top managers are as honest and forthcoming as possible about the changes to take place, she says.
Formalizing the post-merger integration process helps. "Select an integration manager from the current top management team, and create a team of post-merger integrators to retain valuable IT employees," says Barry Calogero, executive vice president, business development for Robbins-Gioia, a management consulting firm in Alexandria, Va.
Merger-integration planning involves examining the IT staffs in place, including the talent, experience and jobs needed as the newly merged company moves forward. This process usually takes at least 12 weeks, Klees says. During this time, sensitivity is crucial. "If executives close doors or walk swiftly away rather than discussing the company's evolving direction, talented IT personnel may think their jobs are likely to be cut, and they will leave."
Experts say it's critical to eliminate the "us versus them" mentality that naturally takes hold when one company's IT staff is melded into another. It's one of the biggest problems Klees encounters following acquisitions: IT employees in the acquired company aren't made to feel valuable to the acquiring company. Take the proposed acquisition of Price Waterhouse Coopers by Hewlett-Packard Co., which fell through in November 2000 despite HP's hopes of beefing up its in-house consulting expertise. Publicly, the companies blamed "market conditions" for the termination of the agreement. But behind the scenes, there was more to it, Klees recalls. "The PWC consultants didn't want to be part of a Fortune 50 product-manufacturing organization," she says. As a result, the value of the acquisition eroded, and the deal failed.
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