Acquisitions don't have to be a human resource nightmare. The top job creator in America pulls them off seamlessly. Here's how.
Company: Universal Services of America
Headquarters: Santa Ana, CA
Revenues: $600 million
Universal Services of America's strategy is to grow through acquisitions.
The company, which provides security guard and janitorial services to government and corporate clients, has bought five companies this year alone. Between 2008 and 2011, Universal Services added 17,330 employees to its payroll. And unlike many acquisitions, which can result in widespread job loss and breed paranoid employees, Universal says it has managed to add jobs to every company it has acquired.
Making acquisitions go this smoothly takes effort. Here, Universal's co-CEOs Brian Cescolini and Steve Jones offer their tips on how to make the process as seamless as possible.
1. Don't waste time on a fixer-upper.
If you want to keep employees from panicking about potential changes, Jones recommends setting your sights on an acquisition target that doesn't need a makeover.
Jones and Cescolini as well as Universal's CFO, director of acquisitions, and vice president of human resources, all personally visit every acquisition target. In addition to conducting due diligence about the company's finances, they spend the majority of their time focusing on the culture of the company, watching out for red flags like high employee turnover rates and low customer retention rates. During that time, the Universal team also tries to assess whether or not the seller could be overwhelmed by the volume of work an acquisition requires.
"As you go through this process, the seller is going to work significantly harder for at least the first 90 to 120 days. They're trying to run the business, provide information for us, and do the day to day jobs," Jones says. "Our business isn't going to slow down for them, so we need to make sure they can handle it."
2. Focus on middle managers.
Before finalizing an acquisition, Jones and Cescolini also meet with every middle manager at the selling company. These interviews are not just an assessment of the new management team, but they also give those managers a chance to assess Jones and Cescolini. For a company like Universal, whose employees are out in the field everyday, it's especially important to gain the managers' trust. They are, after all, the security guards' and janitors' only frequent point of contact, and the people best positioned to ease employees' minds about changes.
"If the managers all bolt because they got sold, it's not going to be a good acquisition," Cescolini says. "We need to make sure they all buy into the change. If we feel comfortable that management stays intact, then the company will transition well and problem-free."
3. Encourage mentorship.
When Universal buys a company in an area of the country where it already has a large presence, each manager is matched up with a nearby "mentor," one who already works at Universal. This mentor typically has a parallel job and will help train the new employee for several months. "After that, they always have a mentor to reach out to," Jones says.
In cases when Universal doesn't have a nearby office, the company will often temporarily relocate a manager from out of town to be a mentor.
4. Be transparent.
Though Universal adds jobs at each company it acquires, Jones and Cescolini do have to cut jobs from time to time. Typically, these are positions that overlap with existing positions. The key to handling this less-than-pleasant part of the job is to be completely transparent with the people whose jobs are in jeopardy. The next step is to find other available positions within the company and determine whether or not the employee in question has the skills to fill another job. That is, of course, a luxury of being a fairly large company, Cescolini admits.
"We always have opportunities and will try to fill them from within before we go outside the organization," he says. "A good 25% of the people that would normally be eliminated, we can move into other roles."
5. Be patient.
Universal has an intense training program that all employees have to go through. Rather than thrusting new employees into the program immediately after an acquisition, however, Universal waits a solid 90 days before entering them into training. The goal, Jones says, is to allow new employees to feel comfortable with the transition before feeding them new information.
"The first 30 to 60 days is all about the employees feeling confident that things are staying the same. It's about making sure that we've got everything from the core of the business taken care of before we implement new programs," Jones says.
"Merging these businesses, if it's not done right, can be chaos. Our job is to ensure it's not."
Issie Lapowsky is a reporter at Inc. magazine. She has covered lifestyle and entertainment for the New York Daily News, and her work has been published in BlackBook magazine and The Brooklyn Rail. She lives in Brooklyn, New York.