The Integrator: Coming to a merger near you.

In the rush to achieve the immediate ends of creating a larger organization, the "deal" itself (and sometimes the shortsightedness of the people who put it together) overshadows the original intent of the deal. The ultimate value of the new entity can be diminished when the two businesses are not fully integrated.

As more and more companies decide to "buy" rather than "build," the need to generate the increased inherent value in the merged entity is critical to success as defined by Wall Street, customers and employees alike. Against this backdrop, a new professional has emerged. Someone who combines financial, marketing and operational savvy with strategic communication expertise -- introducing the Integrator!

An incomplete or ineffective integration of two businesses can lead to reduced productivity, loss of assets and customers, and untenable employee turnover. In a worst-case scenario, the inability to capture and build on the strengths of the two companies can cripple a new organization that has staked its survival on its ability to grow and improve its speed, as intended in the original transaction.

What can be done to assure that the new, larger organization attains the value it is seeking and then is capable of leveraging it for future growth and success?

AVOIDING INTEGRATION RISK

The highest hurdle facing a merger or acquisition is successfully integrating two cultures -- for example, two ways of conducting business -- in a manner that protects the integrity of each entity while providing for a new place with new ideas and new opportunities. In most cases, the chief reason for the shortfall is that these organizations lack an internal, senior-level champion -- one who is empathetic, focused on the business's future and expert at the uses of communication. Though many large corporations have people whose nominal assignments are to integrate the two companies, this depth of integration is a fairly new concept and one that, in most instances, is not yet formalized or completely fleshed out.

More common, however, are the typical merger and acquisition cases where the task of bringing two different companies together is given to senior-level financial people who are charged with reduction of costs. They are adept at identifying overlapping and redundant operations and positions.

Although cost cutting is an expected, necessary and critical part of the merger and acquisition process, it is also important to recognize that that effort provides only onetime savings. The stockholders and boards of directors not only expect an early payback from such cost savings, but they also expect their executives to concentrate on the long term as well.

Frequently internal politics and "palace intrigue" get in the way of smooth transitions from two distinct companies -- with their respective cultures, histories and heritages -- to the creation of a new single company. Failure to properly integrate or assimilate these cultures destroys that value, a destruction that may be hidden until it is too late to fix.

MAKING THE POINT: WHAT DID WE REALLY BUY?

At the time of the 1998 "merger of equals" between Daimler Benz and Chrysler Corporation, the stock market's view was that the merger made sense. The two companies together promised to dominate the automotive world with a remarkable collection of brand names and well-established reputations for quality, engineering and innovation. But this merger of equals didn't turn out as planned. Today, Daimler dominates the marriage and Chrysler's identity and celebrated history are being smothered out of existence. Most of Chrysler's former leaders who gave the firm its identity have left. Some left in frustration, going to competitors. Others exited quietly by taking early retirement. And still others were unceremoniously shown the door.

What is lacking at the outset in most acquisitions and mergers such as that of DaimlerChrysler is senior-level sensitivity to the differences between the two previously independent organizations. This means mutual respect and a sober recognition of the need to bring them together in a manner that retains and builds on the best of each.

DaimlerChrysler's titular president, Thomas Stallkamp, seemed to have the necessary makings for this important role. But the clash of cultures and politics between the two formerly independent components, as well as the indomitable personality of Daimler CEO Jurgen Schrempp, doomed Stallkamp's mission from the start. (By all accounts, former Chrysler CEO Robert Eaton essentially turned over authority to Schrempp early in the marriage.) Today, it is fair to ask, "Did Daimler really buy?"

WHOSE SIDE ARE YOU ON?

Similarly, Jamie Dimon, former president of Citigroup and the man whose assignment had been to integrate Citicorp and The Travelers Group, was caught in the palace intrigue between Sandy Weill and John Reed, the so-called co-chairmen of the company. Dimon had been a longtime protege of Weill's and followed him through various companies. But the relationship began to sour after the Citigroup merger. Weill was displeased by Dimon's doubts about the abilities of Weill's daughter, for whom Weill had great expectations. Weill wanted her put in charge of the company's asset management business. Dimon denied her the post, and she left the organization shortly thereafter.

Subsequently, Weill denied Dimon a much-coveted seat on the new Citigroup board, a position Dimon felt he deserved. Nevertheless, Dimon pursued the integration assignment with loyalty and diligence. He seemed to be gaining broad-based respect among the company's managers and was on the right track toward blending the two distinct cultures into a single financial powerhouse. But Weill and Reed clashed in the penthouse and Dimon suffered for it. In the end, the two leaders together dismissed Dimon, almost as though dismissing one another by proxy. Shortly, Reed was also forced out when Weill pitched a "him-or-me" ultimatum to the board. Dimon now heads BancOne. Reed is cooling his heels in early retirement.

THE NEW "VALUE" PROTECTOR: THE INTEGRATOR

Consider the long-term growth potential for an organization if those same senior-level people, instead of restricting themselves to eliminating unnecessary costs while engaging in Machiavellian machinations, could multiply the organization's long-term value by bringing together the best of the two businesses. This is an assignment for a champion -- someone like Stallkamp or Dimon -- carrying the job title of "Corporate Integrator," which is unarguably the most important assignment in the entire M&A process.

Don't misunderstand the term and its implications. Much needs to be integrated when firms come together: computer, information and technology systems, product lines, pricing structures and market strategies, sales teams and the like. But the Integrator's task goes much deeper and has little to do with that. His or her primary focus is on blending the two cultures -- maintaining and building on the heritages, values and philosophies of merged companies that spawned the merger in the first place -- which are critical to retaining and building shareholder value. Any depreciation of the cultures is a devaluation of the merger or acquisition itself and therefore a negation of the original intent of the move.

WINNING COMBINATIONS

IBM CEO Louis Gerstner showed himself to be an effective integrator with the $3.5 billion acquisition of Lotus Development in 1995. From the very beginning, Gerstner showed respect for Lotus's culture. He made a number of clear public comments on the subject. "We [want to] find ways to work as a team without in any way destroying what's important to you as a group of people and as a culture."

More important, his subsequent actions supported and echoed those words. When Lotus's co-founder Jim Manzi left unexpectedly shortly after the acquisition, IBM could have put one of its own people in charge of the unit. Instead, Gerstner promoted two long-time Lotus managers to run the business. That action alone provided a ringing endorsement of Gerstner's words, and likely gained priceless loyalty from Lotus employees.

GE, Allied Signal and Lucent all now have specialists dedicated to the smooth integration of merged and acquired companies. AT&T recently promoted its head of human resources to "executive vice president in charge of merger and joint venture integration."

As more and more companies merge and acquire one another, the Integrator's job -- or the head of the integration team -- becomes ever more critical to protecting the assets of the new entity. The Integrator rises above the mundane human resources and financial details with an understanding of assimilation issues and the cultures of the two organizations that must be blended, and helps shape the new culture that must rise from their ashes.

Gary F. Grates is president of GCI BoxenbaumGrates, New York City.

RELATED ARTICLEA POTENTIAL JOB DESCRIPTION

The Integrator is someone with a very good understanding for the business, with strong communication skills, who appreciates the importance of the "people" side of the equation as well. The Integrator...

* Understands how to communicate concepts, messages and theories.

* Understands how to integrate strategy into culture.

* Knows how to influence and stimulate productive behaviors.

* Understands how to reach management first so that there is a buy-in at that influential level.

* Is able to articulate through those management bodies the kinds of things the organization, as a whole, must accomplish.

* Is an advisor to the CEO, not a consultant.

This "job description" includes a number of components that are the province of professional corporate communicators. A strong candidate for the position, then, is the senior communication professional within the organization. If the management chooses instead to place its senior-most executive in charge of the integration -- someone with a broader portfolio -- that person would be wise to engage the senior communication person as a right-hand assistant.

There is no reason for this assignment to go to a line or staff executive, at least not when a management-level communication professional has the requisite communication skill set so central to the task at hand.