Why is behavioral assessment necessary?
A real case study performed by consulting firm KPMG International on 700 most expensive international mergers and acquisitions between 1996 and 1998 reflected that only 17% of the deals actually added value to the combined company. While 30% of the mergers and acquisitions had no impact on the new entity, the remaining 53% actually destroyed shareholder value. Similar results were found by Harvard Business School, in a survey conducted during 1995-1996. The following charts reveal studies done by CGE&Y and Merrill Lynch, which convey very low success rate of mergers and acquisitions. The studies also showed that larger deals tended to underperform smaller ones in terms of share price after the announcement of mergers and acquisitions.
Among the various causes of the failed M&A is the failure of employees at the merged company to perform to the expected level. The primary reason for this disappointing employee performance in the new company is the cultural mismatch and differences in behavior and values of the employees of both the companies.
An organization benefits from implementing behavioral assessment and values assessments, since these tools allow an in-depth study of the employees. They also help assess the various factors that affect the employees' ability to work towards the new firm's goals.
How does value and behavioral assessment assist a merged entity?
A good start for any employee assessment is to define the desired work behaviors of the employees in the newly formed entity. Behavior assessment should then be conducted for all employees, whether from the acquiring company or from the acquired firm, to ascertain how well the employees will fit into the new organization. Similarly, values assessments can be conducted to check if the values of the employees of the acquired firm coincide with those of the acquiring organization.
Behavior assessment tools also allow the effective communication of the gap in behavior and values in order to build awareness among employees about major changes and limit feelings of discontent and deprivation among the employees of both companies. Employees who have been found to be major misfits during the behavior and values assessments can be asked to resign for the benefit of both the employee and the organization.
A good way to ascertain employee perceptions across both companies is to provide a needs assessment. From the employee responses, it becomes easier to ascertain misperceptions about the ongoing merger and clear them. This helps remove hurdles to the successful culmination of the merger.
Your Ultimate Success is a market leader in implementing behavioral assessment and values assessments. The experienced and qualified team of professional corporate consultants at Your Ultimate Success ensures the success of employee assessment interviews, while helping organizations identify employees that best fit in with the company culture.
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