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When 1 + 1 < 2: How to Beat the Odds When Merging Sales Organizations
By Bob Welch, Principal, Sales Strategies, Inc.

When the deal closes and the merger is completed, the investment bankers, the lawyers, the acquisition personnel all congratulate themselves and move on to the next assignment. Somebody has to run the resultant business. Easier said than done! How do you merge the sales organizations together to create a `win-win' scenario for employees and for customers?

When the deal closes and the merger is completed, the investment bankers, the lawyers, the acquisition personnel all congratulate themselves and move on to the next assignment. Somebody has to run the resultant business. Easier said than done! How do you merge the sales organizations together to create a `win-win' scenario for employees and for customers?

Much to our collective dismay, the technology bubble burst early in 2000. Customers now are very cautious about capital spending. There are too many suppliers chasing too few customers; this cuts across many industries. We are undergoing a long period of industry consolidation, perhaps as long as a decade. If history is an indicator, the majority of the mergers and consolidations will be less successful 24 months after the merger than if they had remained as separate companies. There must be a better way of improving the odds of success!

A key management responsibility is planning and execution of the post-merger organization. There are predictable barriers caused by uncertainty, behavioral maladjustments, and organizational development. The prime focus should be to quickly rationalize the merged organizations and to shift the focus externally across the new organization.

Nowhere is this truer than managing customers, revenue, and field sales and support personnel. The planned merger of the two field organization has to be quick, decisive, and transparent---starting during the due diligence phase, before the merger is formalized. Day 1 of the merged company should be spent executing, not getting ready to plan!

Need for action

The more time passes with organizational insecurity, the more damage is done to the customer base, the sales force, and the field support people. Too frequently, valued personnel leave because they think they're on the losing end, politically. Sadly, the best people seem to leave quickly and the worst hang in there forever.

Tactically, it should be apparent that customers, key field personnel, and short-term revenue are all at risk -- the more uncertainty, the greater the risk. Too much inward focus and distractions, organizational uncertainty, and a distracted failure to maximize pending revenue of the merged companies--all these contribute to the field's questioning of managements' competence. Ironic jokes about "mushroom management" seem to proliferate during this period.

There are many details that can't be known yet, but this is no excuse to withhold communications. Strategically, there was an original rationale that drove the merger. Why shouldn't this be the initial basis of communication to both internal and external organizations?

You can't not communicate!

Senior line managers are under pressure, especially if the merger is a significant expansion of the total organization. Communicating the "vision thing" to customers and employees is difficult, because the "vision" hasn't solidified and the details are still being worked. There's usually a great reluctance to make definitive statements until the internal details are ironed out.

In reality, it's best to say nothing unless you have something to say. However, there has to be communication to dispel the uncertainty.

There are phases in the merger and appropriate management actions must be executed in each phase:

A timeline, showing both corporate steps and sales/ marketing steps, outlines the major tasks.



Recommended steps

Let's assume that the acquisition results in new products, new sales/ support personnel, and new customers. What actions are most appropriate for the sales and marketing groups to smoothly integrate personnel, grow and deepen customer relationships, and protect short-term revenue opportunities?

  1. Communicate a broad vision message immediately following the acquisition. There was a list of supposed synergies governing the acquisition. Polish that up and get it out ASAP to internal folks affected and to customers. The key task here: making senior managers available for internal and external meetings to explain the rationale and to project leadership during the transition. Appoint a dedicated manager as the point person to oversee transition issues during the initial 12-18 months. This is a difficult role and should not be treated as a part-time task, regardless of the seniority of the appointed manager. This is a specialty area and outside experts exist- use them.
  2. The VP Sales & VP Marketing (assuming there are separate individuals handling each function) should immediately form a field transition team. This team, no more than 4-6 members, is responsible for transitioning to the new field structure. Key tasks here: matching customers with field sales teams, quantify realistic short-term forecasts and revenue management of both existing opportunities and the new opportunities that will emerge as a result of the combination. Pick team members from the acquired organization and try to avoid packing the team from only one organization.
  3. Identify and make management calls on the top 10 customers in each region. Pick a sales team leader (even on a temporary basis), and make the calls ASAP. Consider that the acquired company also has their list of top accounts. Don't neglect! The key task here: assess timing of revenue from top customers amid the changed situation. Pay special attention to the new customers obtained from the merged organization. Do not neglect the existing customers. The 80/20 rule is still likely: most of your revenue will come from a small number of customers. Make sure they are on board.
    Revenue derailed by the changed situation is probably lost forever!

  4. Don't be pennywise and pound foolish regarding commissions and incentives. Salespeople are incentive-driven and won't implement changes that cost them money or force them to expend lots of effort for little tangible return. Double commissions and short-term incentives to retain and grow key revenue sources should be liberally used. Such incentives can and should be short-lived, but they do reinforce management's desire for continuity and teamwork during the transition. The key task here: focus on desired behavior, not cost-containment. Another key task is to capture and retain the organizational memory before it scatters.
  5. In addition to optimizing revenue, the twin customer objectives are to quickly appoint permanent field roles and responsibilities (reduce uncertainty) and to measure the customer impact (both positive and negative--and there are always both!). The key task in this phase: work the issues and resolve the field and customer uncertainty issues. It may not be possible to come up with a definitive solution, but management must be perceived as dedicated to resolving problems, not postponing them.
  6. There is going to be redundancy and excess personnel as a result of the merger. This has to be dealt with, either by transfers or force reductions, immediately after deciding upon the final organization. Do this humanely and do it once! The entire organization is anxious, knowing this will happen. Everybody understands the lifeboat analogy! But how management handles the reduction telegraphs a message to the remaining personnel. If they sense that more cuts are coming or if good people are treated shabbily, it will be difficult to shift the focus externally. Plus, the truly top performing people will be more motivated to bolt if they come to believe that their career is in jeopardy. The key task here: handle the transitions with class and enlist the people remaining in the lifeboat to focus on making the new organization a success. Be committed to making the new groups succeed.

Summary

The overriding goal is to make the transition decisively and to create both an internal and external perception that this is a `win-win' scenario-- the customers will be the ultimate beneficiaries. It is vital to stabilize the field organizations and to shift the focus outward. It is equally vital to protect short- and medium-term revenue opportunities.

Do this and you will beat the odds; do it superbly well and you will expand market share and create a winning spirit in the field sales organization.



Bob Welch is a successful consultant and keynote speaker who excels in sales organization restructuring, sales and marketing planning, major account management, and streamlining distribution channels. He was formerly a great peddler in NYC, opened international subsidiaries and overseas markets, and moved up to VP sales and marketing positions at several public companies. He has an MBA in Finance from New York University and a BS in Engineering from the University of Massachusetts. Bob is a principal with Sales Strategies, Inc. and may be reached at bob.welch@ssinh.com

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