Managing Multiple Integrations:
In Conversation with Sunil Goyal, COO of Sopra Steria
COO, Sopra Steria
How was your experience of having been an entrepreneur whose company got acquired by an MNC?
Newell and Budge’s (N&B) acquisition of Momentum was a strategic acquisition. N&B’s customers were asking for off shore services at that time, which N&B was fulfilling through partners. However, later they wanted to set up a center of their own and started looking for midsized companies. For Momentum, this deal would help them expand to the UK market and become part of a bigger organization. There were clauses in the deal to retain the founders, though the employees had not vested their ESOPs until they got paid for their options. We as founders actually went on to become part of the N&B Board. Momentum, on its end, realized the importance of engaging directly with the N&B deal team and made itself fully available for deal execution and did not leave everything for the lawyers.
What worked well for the merger?
Some aspects clearly stood out. First, before deal closure, we as Momentum gave opportunities to people at N&B projects (for example traveling to the UK), organized cross-team get togethers and interactions for people to get familiar with each other, etc. Secondly, we ensured that there were no anxieties during the merger, and employees treated it as a positive event resulting in greater career growth potential, and we walked the talk with new projects and staffing opportunities with N&B that drove new clients and capability opportunities. Third, N&B also gave Momentum the flexibility to do things that are right in the Indian operating environment & culture. For instance, they allowed for relatively large salary increases at junior levels; this type of independence is rarely extended to local management in cross-border transactions. Fourth, there was on-the- ground transparency, openness and active communication by the N&B Management with Momentum India Management, with a one firm approach rather than an ‘us vs. them’ view. Usually such success factors are listed on paper but are never actually practiced and implemented.
Soon after this, Sopra acquired N&B. How different was the experience?
We were the first such off shore center for Sopra, and the push from the large tier 1 customers enabled Sopra to focus on the off shore unit. Employee expectations went up further in the anticipation of better career opportunities and work capability development opportunities. Sopra heavily invested in infrastructure to scale up the organization in India, and this served to strengthen and build on the positive ‘growth’ message to the employees in India. Sopra chose not to place an expat CEO and instead fully to empower the local leaders, beginning with including Indian leaders in monthly operational reviews. A very senior person from France was deputed to India; however, his role was actually to support the India operations, bridge the gap and guide India in bring in the mother ship and the India organization closer together. He played an important role in process and cultural integration.
What are some of the aspects in post-merger integration that do not usually happen but are very critical to ensure deal success?
First and foremost, the budget allocated to people integration is typically either not utilized or cost save attempts are made. Secondly, culture alignment is neither given sufficient attention nor planned for. Culture is not something that you can write on a piece of paper; it is what is reflected through decisions and operating mechanisms of the company. Sopra allowed for us to run the business the way IT organizations in India are run and on the culture tenets of how Momentum had built a strong franchise in India while at the same time, France remained as a sounding board. There was no unnecessary movement or shift in the culture that was driven purely by global alignment considerations. Lastly, I would say that the cost alignments/ synergies that are expected with a merger are not driven or tracked hard and hence, not realized. Sometimes they actually take a back seat during integration.
What were the key success factors from the recent merger between Sopra and Steria?
There were some specific factors.
First, the integration committees do not usually have any decision-making power. However, in this case, the executive committee along with the chairman were helping with making quick decisions.
Second, the focus was on identifying good local leads to make local decisions and start managing operations, and retaining good people from both organizations instead of over rotating on cost optimization.
Third, adequate systems for ‘feedforward’ and ‘feedback’ facilitated better decision-making.
Fourth, culture and people were in the forefront of the integration efforts and were placed on an equal footing with business & financial objectives.
Fifth, genuine friction did arise during integration, but it was overcome based on trust and with the help of the leadership and not through top-down unilateral decisions.
Sixth, throughout the process, we were trying to be fair, and we encouraged questions. For example, after making the first set of changes in the HR policies, the business heads decided to own the changes instead of the HR heads. The business heads took the town hall, described HR policy changes in detail and took all questions from the employees. This helped build trust with the employees and reinforced the point that changes are not an HR decision but indeed a business decision. All communications need to be led by the top – why is this the right change? Why is this necessary? What was the rationale? How is this fair treatment? For example, while changing certain policies, we collated data from similar sized companies to present to managers.
Lastly, in India, the local team was highly empowered to suggest their own set of changes based on their understanding of local context. Out of all the changes the Integration Management office (IMO) in India suggested to the global team, 95% of the changes have been agreed to and are being implemented. We are progressing in a step-by-step manner in India, and this is giving trust to people that structured and thought through decisions are being taken.
What will be the key challenges going forward for Sopra Steria?
We need to define clearly the culture of the combined entity, ‘Sopra Steria’ globally, and rebuild the same. This would include identifying the top 5 things that will become part of the DNA, identifying common principles around people and systems and anchoring that to the organization vision. It is also important to set a budget for integration efforts and actually to ensure that the money is spent for the right purpose and is tracked properly. In order to remove emotionality and irrationality from decision-making, it is a good idea to utilize external expert advisors to help the management to make the right decisions for the combined business wherever necessary. Ensuring no productivity disruption is also a target for the future. We would need a laser sharp focus on the right structure and talent retention and engagement practices to ensure productivity and retaining key talent.