Topics—Actions
Mergers and Acquisitions
Mergers and acquisitions are often like a crapshoot—you don't always get what you buy. You can sweeten the odds.
Most CEOs agree that retaining certain employees is the key to a successful merger or major acquisition. But with the merger's demands in financial, legal, logistical, structural and personal areas, leaders may not notice how the climate of uncertainty affects lower levels. When it prompts key employees to leave, the buyer doesn't get the winning team they paid for.
1. Manage uncertainty. Uncertainty during the merger is unavoidable
so plan for it. The process for managing the uncertainty should be clear,
even if much of what will happen cannot be known in advance. The process might
include scheduling regular update meetings, a process for answering questions,
a way to accommodate those who want to be involved in decisions, etc. Post
the process and invite comments and improvements.
2. Communicate and inform. Employees should have regular
updates and meetings, newsletters, on developments, questions and answers,
and who to talk with about concerns. Frequent and open communication reduces
water-cooler talk, that is often misinformed, reinforcing fears. Explain simply
and clearly the acquisition’s purpose and goals. Make sure that people
can personally identify with the combined company’s vision and mission.
3. Manage the culture merge. Pay great attention to understanding and merging the two cultures. This is particularly true when the cultures are quite different, for example in such areas as size, centralization, openness, and formality. Six out of ten acquisitions fail to meet their financial goals. Usually the operational and financial plans were realistic, but not enough resources were applied to managing the cultural integration.
4. Manage people. With a process that keeps everyone informed
and involved, leaders will keep most high potential and key employees.
5. Involve people. Whether in reality, or in people’s imagination, acquisitions do affect everyone. Involving those affected in the acquisition decision process—without slowing or complicating it—takes some skill, but is not as difficult as it might first seem. People want to know how they will fit into the new structure. Too often the merger team rushes to define the new structure, rather than involving key employees in setting the new structure and direction. Involvement ensures a stronger plan, with people committed to their new role, and to the merger’s success.
Include a People and Culture Expert on the Merger Team
Ideally you have one (or more) people on the acquisition team focused on people and cultural questions—not consumed by the financial, legal, and logistical issues. This person provides feedback to the technical experts on the implications of their plans to people, and watches over the areas discussed above.