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Rapid Organization Design

One of the most critical challenges in any PMI is choosing the design of the new organization. This decision has powerful implications for the operating model and culture of the combined entity. It’s also critical to maintaining high morale and confidence during the integration effort.

Organization design must happen quickly. The time period in which the merging organizations can function in parallel is limited, and many potential synergies won’t be realized until the businesses are functioning as a single entity. The longer a company puts off design decisions, the more it will foster ambiguity about lines of authority and uncertainty about people’s futures. The result is often low morale and engagement, at best, and attrition and loss of talent, at worst.

To move the process along quickly and effectively, BCG has developed an approach called Rapid Organization Design. It has four components:

  1. Define the operating model. The operating model should reflect the strategic objectives of the new company and the primary value drivers of the deal. Key questions include: Which design makes the most sense given our objectives? What do the differences between the two organizations tell us about their businesses? Can we move to the new model immediately? How will we design the organization and select the best people? What will be the impact on how decisions are made?
  2. Start early—before close. When companies wait until after close to address such questions, they make themselves vulnerable to unnecessary risks, such as poor morale, a leadership vacuum, talent attrition, and poor accountability for realizing post-close synergy targets. BCG experts work with companies to select—at a minimum—the CEO and the top two or three management layers of the new company before the deal is closed.
  3. Cascade staff selection. To staff the entire organization, BCG recommends a cascading process based on clear objectives and design principles. This allows newly appointed senior managers, supported by the HR department, to select their own teams, and so on down through the organization.
  4. Balance speed, objectivity, and anxiety. The cascading process needs to be perceived as fair, with clear roles and responsibilities and explicit criteria for selection. PMIs typically cause high organizational anxiety, so it is critical to communicate the staffing process and rationale as soon as it is designed and to make that process as transparent as possible. This openness and perception of fairness will lead far more employees to stay on during integration planning and accept the final results—even when those results turn out to be personally disappointing.
Postmerger Integration
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