by McCree Lake

The CEO’s guide to transforming the IT workforce through M&A

Nov 15, 2017
Digital TransformationIT LeadershipMergers and Acquisitions

CEOs should use M&A as an opportunity to reassess and transform the IT organization’s profile, capabilities, and workforce to create sustained competitive advantage.

04 mergers
Credit: Thinkstock

Authors: Seth Van Winkle, McCree Lake

The goal of any company’s merger, acquisition, or divestiture is always value creation. While there may be various levers and underlying motivators, the ultimate goal is to create sustained shareholder value. As leadership calculates whether transactions will achieve this goal and how they will do so, there is a tremendous opportunity for businesses to also reassess and transform the IT organization’s profile, capabilities, and workforce to create sustained competitive advantage. In our previous three articles on optimizing the IT workforce through M&A, we’ve covered 1) due diligence, 2) managing the surge of IT work, and 3) building digital DNA through transactions. This installment is our guide for CEOs and other leaders to make dynamic technology changes through M&A a reality.

Redefine digital leadership & agility

The skills and competencies for the leaders of the future are fundamentally different than they have been in the past. Digital technology has clearly altered the nature of governance and transparency in society at large as well as large enterprises. As a result, leaders must be able to adapt to flatter organizational structures, to an adaptive workforce with team members that rotate frequently based on key skills, and to having less positional authority. During M&A transactions, CEOs should use this understanding to position a strong IT leadership team that brings adventurous thinking and a willingness to challenge traditional assumptions about the nature of IT work and governance. New leadership should be willing to unshackle the IT organization from legacy debt and platforms and shift towards a more integrated, service/product ownership approach.

Change the culture

Business leaders should take accountability during M&A transactions for digging in and defining the right behaviors and mindsets for the new IT organization based on the deal objectives. There are three fundamental characteristics of a new IT culture: 1) a fully integrated and accountable approach to working within the business to drive outcomes, 2) shaping an environment where innovation is rewarded and prioritized, thereby creating a culture of experimentation, and 3) agility to continuously pivot based on changing market and business conditions. Clarity around how the IT organization should operate is crucial for teams to navigate and build the capabilities that drive value. Additionally, defining the mission for the future IT shop should be almost exclusively be the work of the IT team itself. One example of an opportunity to move toward new ways of working is during a divestiture. This is a great time to shift from traditional approaches of delivering technology to more agile, product-based approaches.  This decision to shift methodologies embeds cultural elements of teamwork and innovation into the workforce through a difficult transition period. It also provides the opportunity for IT to quickly pivot to the needs of the business. Using M&A as the catalyst to drive this cultural change can mean the difference between lagging behind the competition and adopting a culture that helps enable the success of the business. 

Build the talent platform for a new generation

Assuming that “IT” people are all focused on achieving only the technology goals and outcomes for the company is a significant risk from an M&A perspective. There is an inextricable link between the success of both the strategic and operational outcomes and technology in M&A deals. These goals are achieved more efficiently when business leaders take an active interest in ensuring that the talent platform of the IT organization is shaped by a forward-looking, business-first approach. There are three actions that can help drive shape this talent platform:

1. Create an adaptive IT workforce

Technology skills and business demand change too often to have a static workforce. Automation and augmentation technologies like RPA and artificial intelligence are fundamentally shifting the demands on human workers. The additional “bubble” of M&A work exponentially complicates who (or what) will be completing which tasks, and what happens once the one-time work effort is complete. Using a build, borrow, buy, bot approach to choosing the right workers for the right work means that activities can be accomplished with more efficiency and set the stage for the future IT organization.

2. Shift the nature of IT work

In addition to having the proper resource mix in the IT workforce, technology leaders need to ensure the right individuals are completing the right work. This “bubble” of activity is a prime opportunity to pivot the existing workforce to more innovative initiatives and solutions while leveraging an agile workforce, both internal and external, to complete the more commoditized workload. An internal talent marketplace concept will allow internal resources with the right skillset to bring specialized expertise to a given role within a very short timeframe. Leveraging external talent through networks such as Pivotal Labs or Upwork will allow for collaborative development while concurrently upskilling the workforce.

3. Invest in workforce analytics

The final question becomes: how do leaders know they’re matching the right workers to the right work? In order to maximize the efficacy of a liquid workforce, it’s absolutely critical to ensure competencies and proficiencies are aligned with the proper roles and responsibilities. Additionally, business and IT leadership will need to identify which roles should be sourced externally and which roles should be brought on full time post-M&A activity. Through analytics-driven skill and talent mapping, technology leaders can match workers with open roles based on a quantitative analysis of skills, KPIs and other metrics to determine the best fit.

Radically transform the IT brand & experience

The current workforce has far different expectations from their organizations than in the past, and many IT shops are left wondering if they are doing enough to attract, retain and engage new talent, especially in the wake of transformational change caused by M&A. Firms, however, can leverage this opportunity to mold a brand far from the traditional IT experience – a brand that the business values and a place where technologists want to work. Many organizations have created opportunities for blended roles, allowing business and technology to work more seamlessly and effectively. At no point will this demand for collaboration be as important as when firms navigate their way through the M&A journey. Additionally, firms have begun to place emphasis on up- and cross-skilling their workforce through digital mediums and social collaboration to develop specialized skills that are relevant in the global marketspace. This development, in addition to the skills learned through collaboration with external talent networks, will instill a new inventory of digital expertise and will embed digital literacy across the organization.

In summary, CEOs and other leaders navigating M&A transactions should considering shifting the fundamental role of technology during the transaction in order to improve the chances of success and longer-term value creation. By focusing on leadership, agility, culture, and the experience IT brings to its employees, organizations can truly reinvent themselves and lay a framework for planning and delivering business-critical technology products with innovative and efficient results.

This article is the fourth and final in a series that explores the IT workforce implications and opportunities of M&A. To read the other topics in the series, please use the links below.