Sustain organizational performance by making Day 2 change a Day 0 priority

Posted by Ami Louise Rich, Ketiwe Zipperer, and Erica Kleven on April 30, 2019.

2019 is anticipated to be another year of record M&A activity.1 For leaders, this brings opportunity to build a bright future and an impetus for evolving the approach to getting there.

Historically, many transactions have followed a sequential path to value. Pre-Day 1, with industry, investors, and internal stakeholders closely observing, the C-suite is laser-focused on getting the deal done and preparing for close. Too often, true transformation activities—those that will drive long-term deal success and sustain organization performance—are considered challenges to be wrestled with post-Day 1. However, as deal volume and size continue to grow,2 markets are demanding an accelerated approach: one that enables initial business benefits and the desired future state to be realized faster.

This appetite for rapid results not only requires leadership to begin functional and enterprise transformation activities sooner, but also necessitates a marked shift in how change management is planned and executed. The traditional approach—treating Day 1 and Day 2 change as separate phases—can slow momentum and increase the likelihood of change fatigue. Instead, a more holistic, transformative approach is required, with planning for Day 2 change beginning long before legal close.

So, how should this alternative approach be tackled? Here are 5 tips for leaders to use Day 2 change management as a driver for accelerated value realization:

1. Demonstrate the importance of the long-term vision.
Integrating end-state vision and building buy-in for the transformation cannot begin soon enough. From the allure of acquiring attractive technological assets to geographic expansion, companies embark on M&A transactions with a clear picture of the value they expect the deal to deliver. But, they often fail to show a coordinated effort to work towards that vision, in fact, 73 percent of respondents to the 2018 Deloitte Human Capital trends survey told us that their C-suite leaders rarely, if ever, work together on projects or strategic initiatives.3 Executive teams must clearly tie deal goals both to the activities related to the transaction and to a compelling vision for Day 2 and beyond. As soon as possible, start “walking the talk” and demonstrate commitment to this vision with words, actions, and visible collaboration.

2. Use data as the underpin to a coordinated plan.
A coordinated plan requires both a centralized management of coming changes and an informed understanding of who is best equipped to positively, or negatively, influence a successful transition.

Functional teams begin identifying transaction-triggered changes from the time they start planning, but much of this information gets lost in the detail of workplans and is never surfaced to a centralized change team for resolution. Empower your functional leads to note these Day 1 and end-state change impacts, risks, and anticipated reactions from the very beginning. A Deloitte accelerator like ChangeScout can help to centrally capture and assess changes, associate them with impacted stakeholders, surface when groups are most heavily impacted, and allow for an enhanced and tailored change management plan.

For executives looking to better understand how work gets done, Adaptable Organization Network Analysis (AONA) leverages passive data sources (e.g., email frequency and volume) and active data sources (e.g., short surveys, interviews) to make patterns of information flow and collaboration visible. In the context of a transaction, AONA can be quickly performed with metadata from both organizations during the planning stages. The insights garnered allow leadership to build a data-driven change plan that considers their organization’s unique influencers, methods of decision-making, and points of highest collaboration and connectivity.

3. Take an employee-centered lens to all change planning.
Eighty percent of executives rated employee experience very important, but only 22 percent reported that their companies were excellent at building a differentiated employee experience.4 In order to create that differentiated employee experience, understand that employee needs evolve and that your change plan must address the things that are important to them at a given time. Leading up to Day 1, employees are most concerned with the fundamentals of job security and continuity of their rewards. From Day 2, with these basic needs met, employees begin examining their place in the new company, questioning its values and culture, and assessing how these align with their own beliefs. They also begin to reflect upon their aspirations and evaluate opportunities for personal growth. A change plan that anticipates and tackles these phases of employee need promotes a successful Day 1 while also fostering improved engagement over time.

4. Keep communication targeted, tactical, and two-way.
Post-Day 1 many employees will feel exhausted, relieved the deal is “over,” anxious about how “normal” work will resume, or all three. There is a chance they are also experiencing change fatigue and as a result, be reluctant to continue to engage in further transformation efforts. To combat this, create targeted communications rather than company-wide email blasts. Make it personal and focus on the value-add, without losing sight of the end-state vision that was communicated before close. Keep change champions engaged; as your eyes and ears on the ground their role becomes even more important post-Day 1. Empower them to not only cascade key messages but also feed reactions and concerns upward so you can pivot as necessary.

5. Reflect honestly upon internal appetite and capability.
Any major change can cause anxiety and stress, not just for employees but also for those driving the transformation. Leaders who need to be focused on the long-term vision may be weighed down by their responsibilities leading up to Day 1. The internal change team may feel unprepared, or ill-equipped with expertise and resources, to steer a company through such a large and complex sequence of changes. Look inward. Take stock. Remember, what got you here may not be what gets you there. Consider where outside guidance could help you stay focused on priorities; fresh perspectives with a track record of supporting major transformations may be exactly the voice you need.

Value Delivered
Our experience at Deloitte has shown time and again that rewards are reaped when Day 2 change becomes a Day 0 priority. Disruption across the organization is minimized. Synergies tied to retention and transformation are realized. The employee experience is improved, and critical talent secured. Moreover, companies that put people first lead in the marketplace, with 2x increase in customer satisfaction, 25 percent increase in profitability, and 2.3 x increase in revenue growth.5,6 In short, by building a change management plan for the long-term vision of your company—not just Day 1— you create an environment for true transformation and sustained organizational performance.

Ami Louise Rich is a principal in the Human Capital practice of Deloitte Consulting LLP with experience in strategic change, workforce transition, organization design, and training development and delivery.

Ketiwe Zipperer is a manager in the Human Capital practice of Deloitte Consulting LLP with cross-industry experience in organization design, organization change management, and M&A HR integration.

Erica Kleven is a manager in the Deloitte Human Capital M&A practice with a focus on the technology and media space. She has worked with clients through integrations, separations and divestitures.

5 Building Business Value with Employee Experience, MIT Cisr Research Briefing, Vol. 17, No. 6 (2017)

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