The business
BT Global Services (BTGS) provides IT services to corporate customers in about 170 countries. It has more than 160,000 customer sites and aimed to be connecting more than 6,000 new customer sites to its network every month by the end of 2005. It employs 33,000 people and has an HR team of about 280.
The challenge
Towards the beginning of 2000, BTGS had acquired a number of companies around the world, including Esat and Telfort. BTGS’s strategy at this stage was to bring together the many disparate parts into one focused organisation.
But by 2004, it became clear that this strategy needed to change. The company was losing around 1m euros (£692,000) a year, according to Stephen Kelly, chief HR officer at BTGS. “We needed to learn from our acquisitions. They all had different markets, strategies, cultures and so on, and most crucially, we needed to use the local managers to their full potential,” he says.
The solution
In late 2004, Kelly laid out five key points that BTGS would follow with all its future acquisitions:
- Both sides must adapt, and the cultures of values of the acquired company must be incorporated into those of BTGS.
- Respect is paramount. Treat the acquired business as an individual business within a bigger family.
- One glove does not fit all. Treat each business differently.
- Use existing assets. Do not quash newly acquired brands.
- Take a step back. Invest time and money in assessing a company and its workforce.
“During 2005, we learned just how much new acquisitions could offer us,” says Kelly. “For each one we set out an integration framework, outlining our measures of success and a plan for achieving it. We made sure that we involved local management in drawing these up, interviewing them and finding out their view of the risks and opportunities facing the company in its market.”
While the management were the focus of the mergers, BTGS also took care to consider the impact of the moves on the rest of the staff. For example, it devised an online induction tool for employees of the acquired company to find out about BT in their own time and space.
The outcome
In 2005, Kelly oversaw the smooth integration into BTGS of four new companies: Albacom, Radianz, Infonet and SkyNet.
He believes that the new approach has yielded real benefits.
“Until this point, we have not lost any critical members of any local management team, while several local executives have been promoted elsewhere through BT. The results of our staff surveys show that employees at all levels are integrating well,” Kelly explains.
However, perhaps the clearest proof of success is that in 2005 – for the first time in its history – BT Global Services delivered a clear profit.
Employee perspective
Bob Passaretti is the vice-president of HR at BT Infonet, a California-based company acquired by BTGS in February 2005. He says: “The people from BTGS have tried hard to understand our culture, and by and large they’ve succeeded.
“We have a two-year plan so that we’ll be fully integrated by 2008, but until then our mandate is primarily to tend our business. We’re looking at the synergies between the two companies, working out how we can use them to increase sales.”
Passaretti says BTGS took steps to help the 1,100 employees of Infonet feel part of a larger company.
“We did an employee survey to find out how they felt about the merger, and we’ll be measuring it regularly at intervals in the future. An hour-long video on what BT is and what it stands for really helped our people orientate themselves, and many of them have told me how much it inspired them,” he adds.
Guide to managing teams through a merger in 10 steps
1 Assess the cultural identity – cultural differences are ingrained in a company and not just a matter of geography. Management must recognise, respect and value cultural differences.
2 Target the search – look to acquire companies that fit your own cultural identity, and involve HR in this process.
3 Conduct a cultural audit – measure and analyse employee engagement, management structures, leadership profiles, company mission, strategic development goals, measurement systems, performance management, succession planning and reward systems.
4 Create a framework for cultural integration – plan the actions that will retain, integrate, and motivate the employees from the acquired company.
5 Redefine the values and mission of the newly combined organisation.
6 Formulate an integration plan – HR must help to integrate and harmonise the infrastructures of the two organisations.
7 Align the organisations across areas such as headcount, employee redeployment, succession planning and performance management.
8 Harmonise employee contracts and compensation such as stock options and bonus schemes.
9 Optimise HR – decide how the newly combined HR function will operate most effectively.
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10 Engage the organisation – focus on employee engagement during the post-merger integration phase to ensure continued staff buy-in.
Christian Hasenoehrl, partner for Europe at performance management consultancy, Gallup
If I could do it again…
“Looking back, there are two things I would do differently,” says Stephen Kelly, chief HR officer. “I would do even more pre-planning before each merger, working with the executive teams in the acquisition. I would also encourage greater engagement at all levels. Basically, you can’t communicate enough when you’re trying to bring two companies together.”
