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Leading Through Mergers and Organizational Change

By Joane Ramsey

Leading Through Mergers and Organizational Change

Have you started to consider the strategy of a merger within your organization? If so, you are not alone. According to Deloitte LLP’s M&A Trends report 2014, “Our survey findings indicate that 84 percent of corporate executives anticipate a sustained, if not accelerated, pace of M&A activity in the next 24 months. Forty percent of the total corporate respondents forecast an increase in deal flow. Similarly, the vast majority of private equity executives (89 percent) are expecting average to high deal activity going forward.” The top 3 Corporate strategies for a merger are:

  1. Expanding customer bases in existing markets
  2. Cost synergies or scale efficiencies
  3. Entering new geographic markets

However, Deloitte noted that according to Corporate respondents, the most challenging factor in terms of achieving a successful integration was ‘achieving cultural fit’ at 30.1% followed by ‘workforce transition’ at 26.2%.

How do you achieve cultural fit and a successful workforce transition?

A few years ago we worked with Fujifilm Graphics Systems Inc., USA as they were working through the challenge of merging several large, independently-owned distributors into a single, cohesive technical service unit. They were confident that team building was crucial to a successful integration.

We recommended a comprehensive discovery process that covered a variety of topics including goals of the new organization, the history and cultures of all of the companies involved and the ideal culture that Fuji was hoping to create. We also asked how employees were reacting to the changes. Based on the information, We recommended a completely different solution reflecting one of their most critical needs - helping employees accept and embrace change. We weren't surprised. This need is inherent in every merger or acquisition we have worked with.

Challenge of Change

Dealing with the emotional side of change is crucial to the success of any merger or major organizational change. Unfortunately, many companies focus exclusively on the operational side of a merger or reorganization and neglect the emotional impact on employees.

This isn’t particularly surprising since business managers are more comfortable dealing with concrete, definable action steps such as identifying efficient reporting relationships, establishing long-term goals and determining productivity standards. Getting a handle on the emotional commitment of hundreds of employees who are affected by the change is less concrete and can be much more difficult.

Employees in a changing environment are typically less concerned about “the big picture” for the new organization than they are about how the change will affect them personally. It comes down to the central question: what’s in it for me? If employees are left to struggle with that question on their own, productivity drops. Research shows that employees who are dealing with major changes will typically spend about 80% of their time trying to figure out what’s happening, leaving just 20% of their time for work.

Short-Circuiting the Rumor Mill

It is important to recognize that accepting change and creating a shared culture begins at the highest levels of an organization. Helping managers understand change and its impact, giving them tools and techniques for dealing with change and training them to bring the messages to their employees goes a long way in ensuring a successful merger. A new shared vision and mission will guide the new group through the upcoming transition, providing a road map for everyone to follow. By communicating the plans and sharing the process for transition, the rumors lose their power to disrupt productivity, and in fact help to boost enthusiasm for the new direction.

It is essential during the time of transition to let your employees know you care about them and they are not just pawns in a business transaction. Managers who work to allay their employees’ fears and help them to embrace the change will reap the benefits of a more focused and productive work group.

Supporting Your Managers

It is so easy to get so caught up in the mechanics of a merger that you lose sight of the people and their issues. Teaming managers up to mentor each other can help ensure that employees’ concerns are being addressed and the vision is being communicated. Managers feeled supported by each other. Another way to support the managers is to hold weekly meetings (or conference calls) to share best practices, common concerns and how to deal with them and reinforce the key messages to be shared.

If your organization is exploring the option of merging or acquiring another company, remember to provide your managers the tools to work with employees on the emotional side of change so that you beat the odds of successfully achieving a cultural fit and a successful workforce transition.

Published: November 24, 2014

MEET THE AUTHOR

Joane Ramsey

Senior Performance Improvement Consultant

A native of Brazil, Joane first came to the U.S. as a foreign exchange student with AFS. She returned to Brazil where she successfully ran and sold two different businesses. Returning to the US in 1992, Joane put her business ownership experience to work with a small manufacturing company running the day-to-day operations and facilitating sales with South American companies. She joined SEG in 1999, where her experience has helped her clients get the results they desired. Joane has a B.S. degree in business management from North Central College, where she majored in international business and Spanish.

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