Avoid Merger Minefields: Strategies for Addressing Employee
Issues
"One in three mergers will fail;
one in three will succeed;
one in three will just struggle."
-Joseph Krallinger, Mergers & Acquisitions
Much business growth occurs through mergers and acquisitions,
which have become increasingly popular despite the fact that
many fail to achieve their full benefits. Why do so many mergers
fail? Many business leaders are aware of the three keys to
a successful merger or acquisition: pre-merger activities,
post-merger activities, and methods to measure success. The
single most important-and most often overlooked-factor, however,
is the people who are impacted by the merger.
Many companies follow a proven path and prepare for the standard
s of a corporate merger:
Smart company leaders are likely to ask key questions:
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The one critical question even very successful business leaders
may not ask is, "Where are the minefields, and
how can we avoid them?"
One of the biggest minefields is personnel. The whole transaction
can fall apart if employees of two organizations can't work
together to achieve the objectives that initially made the
merger attractive. How employees are informed and involved
during the first 100 days has proven critically important
to a merger's success. This chaotic and uncertain period is
when both firms' best employees-and perhaps their best customers-are
most vulnerable to offers from competitors.
Employee reactions to a merger announcement can range from
fear, confusion, and anger to enthusiasm and excitement. Negative
reactions generally result in lower productivity, decreased
morale, alienation, and turnover. The resulting loss of key
personnel can all too easily lead to lost customers and reduced
profits.
In order to prevent this bleak outcome, one can address the
"human issues" with some proven strategies:
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Communicate early and often. Share your vision of the
combined company with employees of both organizations,
and explain what it will take to realize this vision.
Identify key constituencies, and communicate with them
at every of the merger process using a full range of methods:
personal conversations, printed materials, phone calls,
e-mails, and a special site on the company intranet.
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Examine both cultures and discover the best aspects of
each. Enlist the aid of as many people as possible to
define a new, shared culture. An organization's cultural
traits tend to be deeply embedded, but when employees
work together to create something new, their buy-in can
help bridge the gap.
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Carefully examine your leadership requirements. A merged
company often requires a completely new leadership structure,
and redundancies will nearly always need to be addressed.
Define leadership roles well and early, and identify the
right people for each position. Strong leaders can help
employees feel reassured about their situation and stay
focused on customers, productivity, and profitability.
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Identify key players and explain their importance to
the merged organization. In any merger, the most knowledgeable
and experienced people tend to be the most likely to leave.
Contact key employees as early as possible to articulate
a compelling vision of the future and map out attractive
career opportunities.
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Get middle managers involved in the process, as they
have close contact with most employees. How and what they
communicate can greatly impact the success of the merger.
Their actions can help reduce turnover, maintain or improve
productivity, and promote a positive attitude about the
future.
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Get the sales team on board early. They play a powerful
role in introducing the new company to clients, and without
the right information, their efforts can do more harm
than good. Provide clear, positive messages they can share
with customers to communicate real advantages of the merger.
Strategic Enhancement Group offers consulting, assessments,
training and processes to help you avoid the minefields and
achieve a successful merger. We offer a wide array of services,
from the development of communication strategy to creation
of a new sales structure to helping employees deal with the
emotional aspects of the change.
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Avoiding Merger Minefields:
Strategies for Addressing Employee Issues
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Typical Reactions & Results
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Desired Reactions & Results
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Initial discussions;
Rumors begin circulating
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Merger decision is made
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Increased anxiety and fear
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Widespread speculation (water cooler discussions)
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Lower productivity
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High-performers prepare résumés,
while low-performers become lethargic
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Anger
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Possibly excitement
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Extend your Communication Strategy to cover new
developments.
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Create a team to plan for culture and leadership
issues.
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Encourage employee commitment to the new organization.
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Help managers and employees deal with emotional
aspects of the change.
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Cultures begin to merge;
Clashes are common
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Leadership issues arise
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Employees feel they're treated fairly
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Retention of high-performers
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Focus on productivity, profitability
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Attention to client relationships
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Combine the best of both companies to create a
new vision of leadership.
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Define new leadership roles and identify the right
person for each position.
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Help departments align with the new organization.
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Sales staff communicates with customers;
Some questions difficult to answer
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Happy clients excited about working with the new
company
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Loyal, productive sales people
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Retention of key sales people
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Supply clear messages salespeople can use to "educate"
customers.
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Define the new sales structure and employees' roles
and functions.
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Gain commitment and alignment from sales teams.
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Middle managers adjust to changes;
Some may feel out of the loop.
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Negative messages sent to line personnel
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Low morale and high turnover
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Loss of productivity leading to increased operating
costs
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Involve middle managers in planning and executing
strategies.
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Gain commitment and alignment on actions to be
taken.
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Prepare managers for dealing with the emotional
fallout of change.
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Successful integration achieved;
Full benefits of merger realized
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Strong loyalty to new company
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Employees have a renewed sense of security, comfort
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Enthusiasm for the future
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Increased revenue and a clear growth path
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Customers, employees, and management "on the
same page"
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Continue to involve employees, give a sense of
ownership
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Adapt customer messages to build on new identity
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Plan for further growth and success
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