When publicly-listed company, Peoplebank, swallowed privately-owned, Ambit Recruitment, it faced a major people challenge to merge two very different cultures. By Sue Bushell

Background

Mergers and acquisitions shake companies to the core. Anxious staff fret over their future and demand instant answers; meanwhile, management struggle to maintain necessary confidentiality. It's never easy and the outcomes aren't always as positive as planned.

In February 2008, IT contracting and recruitment company, Peoplebank, acquired Ambit Recruitment - a company twice its own size and with a different culture - creating Australia's largest IT&T recruitment company.

As merger plans became apparent during December 2007, easing the concerns of anxious employees of both organisations became critical.

Challenge

"The two companies had different cultures," Peoplebank's Managing Director, Leon Lau, explains. "Ambit was a private and aggressive sales and marketing organisation that had enjoyed very strong growth leading up to the acquisition. Their focus was organic growth and market share, and they were very good at it. Peoplebank's history was different; it was publicly-listed, had a repeated pattern of growth followed by consolidation, and was more efficient in converting sales into operating profit.

"The other differences were that Ambit people were a lot younger than the Peoplebank people, perhaps 5-10 years on average, and that while Peoplebank was the acquirer, Ambit was twice our size; there were a lot of people issues that we had to be very cognisant of."

Goals

With acquisition announced in December 2007, but ownership not completed until February 2008, a key goal was to be able to hit the ground running with an integration implementation plan as soon as the purchase went through. To this end, Peoplebank brought in people-focused business-strategist firm Mastertek, to help with the human side of the merger.

"Research clearly shows that it is people issues, not operational or financial factors, that are keys to the success of merger and acquisition activity," says Mastertek Director, Graham Childs.

"Speed of action is critical. It is vital that leaders within the business actively manage the integration process and seek to get the new organisation firing on all cylinders as soon as possible. This during what is, typically, an extremely anxious time for staff."

Solution

Peoplebank asked Mastertek to interview senior personnel and senior leadership teams of both companies.

"This gave us a feel for the cultures, what people were expecting, their concerns, and what they regarded as the positives and negatives of the deal," Lau says.

"That information was used by an integration steering committee as the basis for an implementation plan.

"It doesn't matter which side of the acquisition you are on, everyone asks: ‘What does it mean to me?', ‘Will I still have a job?', ‘Is my commission going to change?', ‘Who will be my boss?', ‘Who else will be on the team?'.

"So before we even owned the company, we made it clear to everyone that there would be very minimal changes to people. We made the decision quickly on the management team and structure, how we would eliminate duplication of middle managers, and we announced the few redundancies straightaway. The pain was over quickly and decisions communicated widely."

All integration planning was completed in the December-January time frame. The newly merged organisation hit the road running with its integration implementation plan, which was led by a steering committee with eight sub-streams. A decision on branding was taken immediately, and the week Peoplebank took ownership of Ambit, the entire company went away to Terrigal, on the New South Wales central coast, for a conference, complete with a '70s-style disco that would prove a major icebreaker.

Outcome

"The integration has been very successful," Lau says. "We did the front-office integration - achieving common sales teams - within six months, and that was our target. It involved eliminating the duplication in the state offices; moving people from one office to another, and bringing the teams together.

"We brought the management teams in and all our contractors and candidates and clients were well maintained. We didn't lose any clients through the process, and all the Ambit clients were smoothly ported across to Peoplebank. In fact, the whole thing, from a front-office point of view, went very well indeed."

Lessons

The main lesson to be taken from the merger is that the need to be open and upfront with staff, from both target and acquiring companies, is critical. Talking face to face as much as possible is a key behaviour.

"You also must promote, and make the decisions on who gets the roles, and who goes, on merit," Lau says. "It was also vitally important that we had the Ambit CEO, Peter Acheson, on board with us; he was totally supportive of the acquisition. We sold the positives of what the acquisition would bring to both companies, and to the individuals, and people got on the bus with that.

"You've got to have a very open and good communication plan and it's got to be structured. You've got to have a very good integration plan that goes down to the fine detail. And those implementations must not only be done, but also monitored and reported on."