Mergers and acquisitions were a hot topic in 2016.
The largest acquisition of the year, according to Fortune.com, was AT&T’s purchase of Time Warner for $85.4 billion. For the hospitality industry, Marriott generated buzz when it bought Starwood for $13 billion, making it the largest hotel chain in the world with 30 different brands and over a million hotel rooms. The landscape will change even further in 2017 with deals like Wyndham Hotel Group acquiring Fën Hotels, Accor’s purchase of Banyan Tree and the merger between Benchmark Hospitality International and Gemstone Hotels & Resorts.
These times of transition are challenging for employees and fragile for business. One of our Incentive Specialists recalls the advice he gave to a friend tasked with putting together an incentive and reward program during an acquisition:
Over time, the three companies would become one. The CEO wanted sales – and he wanted a gross margin. And he wanted it immediately.
As my friend discussed the plan, I stopped him and asked “Why are you running an incentive program to drive sales/gross margin immediately after a merger/acquisition? Sales are the least of your worries now.”
His answer – “That’s what the CEO wants.”
What You Want May Not Be What You Need
I’ve been part of an organization that has been through mergers and acquisitions. I can tell you for a fact – sales should be the last thing on your mind at the time of the “great coalescing.” While the concept of the merger made a lot of sense in the spreadsheet and on the PowerPoint slide – it probably doesn’t make sense to the sales and support teams from the various companies involved.
For example:
As a salesperson with accounts that pay your mortgage, you’re pretty protective of them. You want to make sure you’re providing top-notch service, appropriate solutions and keeping mistakes from creeping into the relationship. You’ve worked hard at managing your relationships and are a trusted advisor to your clients.
But now you are informed you’re part of a new incentive program from corporate. It rewards all sorts of new people, in new companies (some you’ve never heard of) with unproven track records for selling stuff you’re not familiar with to YOUR clients. Sure, it rewards you as well for cross-selling and presenting the new company’s services; but in your mind, the reward isn’t worth the risk. The marginal value of greater income is much lower than the downside risk of NO income.
Here’s what will happen if they run this program…
- A salesperson will get numerous calls from people they don’t know, requesting audiences with “their” clients.
- A salesperson will get pressure from management to allow these folks access.
- A salesperson will create roadblocks for these folks so they don’t get access to “their” client.
- The program will create animosity between all parties.
- Sales will slow down in all areas.
- Clients who could benefit (and are probably looking) for the services the combined company offers, will find them somewhere else.
- All business in the new corporate entity will drop.
- Incentive program fails, friend gets fired, CEO will launch newly designed incentive program.
Incentives Weren’t the Solution
The solution, in this case, is to “create a company” first then drive sales. Just because the financials are now combined and connected doesn’t mean the people are.
My recommendation to my friend…
Don’t run an incentive program for sales.
- Work with the new management teams to create the vision/mission/proposition for the combined client base.
- Create reward and recognition programs that reinforce meeting and learning about the new company position, values, offerings, etc. Reward behaviors like visiting the offices of the new company, or designing new presentation materials through bi-partisan teams. Work on anything and everything that helps bring together the groups to talk/meet/explore/create.
Whenever you’re pulling disparate groups together remember that creating incentives for outcomes comes AFTER you’ve found a way to reinforce behaviors that bring the group together. Focusing on sales or other outcomes will simply pit each of the team members against each other immediately.
