afaqs!

Living with Mergers

By Ashwini Gangal , afaqs!, Mumbai | In Marketing | August 01, 2013
In the wake of the Publicis-Omnicom merger, we look at the potential personnel-level repercussions of such deals.

When popular American medical drama Grey's Anatomy showed the merger of two hospitals, it used an interesting analogy: Foreign antigens invading one's system little by little. Of course, eventually, it's in the body's best interest to work with, and not against, these elements.

Living with Mergers

While this may be a bit extreme, the point to be noted is: there's no denying the initial human-level discomfort accompanying mergers. When two networks merge, the first issue that comes to mind is conflicting accounts. But how often do parent companies stop to ask: How are employees dealing with the merger?

According to industry professionals who've been through mergers, communication is crucial. Samrat Bedi, head, Soho Square, Mumbai, says, "Terms like 'holding company' are highly 'corporatised'. Bold moves like mergers need to be followed by bold statements that clearly explain what it means for everyone. Transparent communication will reduce ambiguity and help people feel less anxious and more secure."

Training and development workshops, expectation charts and the formation of task forces focused on helping people work better in the new system - all come highly recommended. And, in the interest of avoiding anticipatory conjecture, speed is of the essence.

Samrat Bedi

Rajiv Agarwal

Shiv Sethuraman

In recent times, the India market has seen its share of buyouts and acquisitions. Omnicom acquired majority stake in Mudra, Publicis gained complete control of BBH, globally Dentsu acquired Aegis and locally, it acquired majority stake in Webchutney. Historically too, Indian agencies have been familiar with buyouts: Trikaya-Grey, Clarion-Bates, Lintas-IPG, Ambience-Publicis and Zen-Publicis. Not to mention international agency brands that entered this market through associations with local agencies, like FCB-Ulka and RK Swamy-BBDO.

Of course, in the case of buy outs, the smaller player faces the issue of retaining autonomy to the extent possible. A quick poll done by afaqs! after the Omnicom acquisition revealed that Mudra, somehow, was rendered no less Indian than it was before the acquisition. However, with mergers, especially 'mergers of equals', each party consensually gives up part of its individuality, leaving nowhere to go complaining to, should one feel like it's being overpowered!

Another concern that mergers evoke is job redundancy. Besides juggling senior level egos, an equally important issue is dealing with mass-scale concerns regarding layoffs. As Rajiv Agarwal, director, Nexus Equity, puts it, "Everyone's scared as hell about losing their jobs. Management has to bite the bullet and get it out of the way. You can't have 'legacy people' hanging around. If they need to go, it has to be done," he suggests -- be it through separation packages or available openings in affiliated agencies.

Also, the merged entity needs to quickly devise talent-specific policies. Say, will there be a 'no-poach' policy within the group? Will moves within the group be fluid or restricted? A related concept is that of 'agency redundancy'; what will become of the relatively smaller shops within each of the now-merged holding companies - will they be fused into the larger agencies? Picture a scenario in which Saatchi is fused into, say, DDB Mudra.

Speaking of policies pertaining to talent, a lot depends on how much power the country head of the network is given. In the words of a rival network executive, "The head of WPP in India doesn't really have any powers. His office is more of a grievance redressal zone."

In the case of identity crises and changing parent philosophies, layering one's sense of belonging is another option. Shiv Sethuraman, CEO, TBWA India (originally an Omnicom company), says, "We all belong to our respective agencies first and then to the holding company."

Also, some mid-rung employees could face a so-called higher order, philosophical conflict, and wonder which parent culture to follow. They could also feel dwarfed by the sense of being a small cog in a very large system. One of two tacks could work: consciously reinforcing existing beliefs for those who take comfort in familiarity or instilling a general sense of 'bigger and better' for everyone.

Moreover, the impact of mergers varies depending on the function in question. For example, while media buying agencies may find themselves basking in their newfound bargaining powers, creative departments may not feel so lucky. That the beliefs of creative leaders influence the working style of their creative teams is a known fact. A leadership change or even a change in the existing leader's outlook (in keeping with the new entity's philosophy) affects the entire creative contingent. What would happen to Burnett's creative folk if Pops were to suddenly revise every creative template out there?

Well, some believe ownership level mergers don't directly impact the 'man on the street', as it were. Sure, Omnicom follows a more 'stock market driven' capitalism while Publicis is more 'colonially capitalist' in its approach but will the stronger of these two ways actually percolate down to the agency level? Is there really a 'John Wren way' that will influence every agency head in this new network?

On both counts, maybe not. But it's an argument, alright. Even if it's a losing argument, ignore the human aspect and it won't take long for 'business as usual' to change to 'business as unusual'.

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