photo credit: Alex E. Proimos
 

All startups, at some point have to confront certain questions relating to their existence – about their current situation and the future. “Is our startup heading in the right direction? Will we reach where we wanted to, in the given time? Should we be acquired? Or shall we acquire and progress”? – Some of the dilemmas every startup has.

In several situations, mergers and acquisitions seem just ideal for a startup. But despite favorable conditions, many startups actually decide opting out of a merger or an acquisition decision. And the most common reason behind this is the ‘people issues’ involved in the process.

Mergers and acquisitions involve real people with emotions, egos and aspirations. Deals between companies (legal entities with a separate existence) are just on paper, in reality deals take place between people with emotions and feelings. For example: As a startup founder you are ready to be acquired by another company on a lucrative deal but the position they are offering you in the company is way below what you expect. In that case, you may decide against the acquisition. Your emotion and ego gets involved here.

The top four significant ‘people issues’ in mergers and acquisitions are:
• M&A culture issues
• Human capital Integration issues
• Lack of employee engagement
• Leadership/management retention issues

The discussions did not make much progress as there was no agreement on the pricing and more importantly on the roles and responsibilities of acquired company CEO in the new merged entity.

It is extremely important to understand ‘the people’ in a startup/company and tailoring the deal according to them rather than forcefully placing people in artificial positions and roles.

And yes, ‘people issues’ matter to the success of mergers and acquisitions.

For more information on the issue click here
 

Gone are the days when human resource was just considered to be back end work. Today human resource at a startup is considered as more of a business partner, advisor and mentor to the management. If a startup has to reach the peak of success, it is possible only through out of box and innovative thinking and through a well placed human resource and best practices.

But a problem many startups fail to realize is the one highlighted by ‘The Peter Principle’. It means that employees, who are a part of the hierarchical organization, are eventually promoted to the highest level of competence, after which further promotion raises them to incompetence. The employee’s incompetence is not necessarily exposed as a result of the higher-ranking position being more difficult – simply, that job is different from the job in which the employee previous excelled, and requires different work skills, which the employee may not possess. This is exactly the reason why most employees in a startup fail to deliver excellent results.

The move to incompetence in most startup occurs when ‘technical people’ try to step into management or executive roles, for which they have no aptitude, training or interest. And needless to mention but many technologists have tried to run startups and failed for this reason.

Some ways of solving the problem are, concentrating more on communication skills of employees, mentoring or training or probably keeping a check on the spectrum of responsibilities the employees have. The keys to avoiding ‘the Peter Principle’ are further explained in the article below:
http://blog.startupprofessionals.com/2009/12/peter-principle-thrives-within-startups.html

Recognize and deal immediately with the occurrences of Peter Principle because a good HR team is an asset to any startup, as mentioned earlier. 

The Peter Principle is something that we all have to deal with, in our own career, and with other team members. In a small startup, everyone has to carry a maximum load for survival, and everyone sees the non-performers. If you are the last to see the problem, or the last to react, maybe it’s time to look in the mirror.