Mergers and acquisitions (M&As) are becoming more commonplace, driven largely by financing and strategy shifts. According to Deloitte’s M&A trends 2018 report, new M&A technology for reporting and integration is helping to reduce conflicts, costs, and time – key factors in the likely success of a deal. While the number one factor driving mergers and acquisitions is to obtain technology, talent acquisition has more than doubled in importance since Spring of 2016. Today, 9% of businesses cite talent acquisition as the rationale behind the purchase of another company.
While technological advancements and talent acquisition are vital to business success, M&As don’t always achieve desired business goals. In fact, SHRM reports an estimated between 70 and 90 percent of all mergers and acquisitions fail to achieve their anticipated strategic and financial objectives. The same research leads us to believe that various HR and executive-led factors, such as management styles, lack of motivation, loss of key talent, incompatible cultures, diminished trust, lack of communication, and uncertainty of long-term goals, contribute to the diminished returns on an otherwise promising consolidation. When organizations fail to consider the human element, they risk lower productivity, loss of revenue and damage to the employer brand.
Corporate take-overs generate a range of emotions among the employees of both entities, including fear, uncertainty, excitement, and resistance to change. Although there is little an organization can do to avoid the emotional reactions of employees, there are ways to mitigate the impact of a takeover by implementing best practices before, during, and after the merger or acquisition.
Understand both sides of the story
Every corporate unification is unique. Sometimes, two companies will come together to formulate a new brand and new company. Depending on the situation, employees might report to a new manager, or be employed by a new company altogether. In the case of technology acquisition, a few select employees will join an already-existing brand.
As part of a successful merger or acquisition, take the time to plan for the human side of the deal. Create a plan that considers all employees equally. During due diligence, explore the differences and similarities in company culture and the employer brand image of each entity. Take the time to examine both cultures separately and create a plan to merge the two cultures or transition employees from the smaller organization into the larger company culture.
Salary and compensation, benefit packages, and the specific ways in which teams from each organization work toward their goals might seem like small details in the midst of the larger M&A deal. For the employees, they are the only details that matter since these are the types of changes that will have the greatest impact on the daily lives of individual employees. Try to understand why people chose to work at each company, and continue to foster positive workplace attitudes and behaviors following the M&A.
Keep your finger on the pulse of employee sentiment
Create a transition plan that takes all employees into consideration and provides ample time for individuals entering into an organization to adjust to the new setting, management team, and company culture. Base your plan on actual employee needs and reactions.
Create a timeline of regularly scheduled surveys to take the temperature of employee sentiment and identify areas of improvement. Begin by taking a baseline pulse on the status of your workforce right away, and then gather survey results again at the 90-day mark to track improvements and setbacks. Whether you leverage quick pulse technology, or get input from managers and team leads, it’s important to check in frequently.
Don’t stop there. It’s important to continue to check in for at least a year. and up to a year and a half. After 90 days, consider moving to a 6-month pulse schedule for at least two consecutive terms. The number of items you are seeking feedback on may diminish over time, and that’s okay.
Simply getting feedback without taking action can do more harm than good. When you give employees the opportunity to share feedback through surveys and communication with managers, be prepared and committed to respond to and follow-through on their feedback.
Use employee sentiment as a basis on which to create a plan to improve the workplace environment and to ensure the talent you’ve acquired is satisfied in their current roles. While many organizations focus on matching compensation and benefits packages, the intangibles are often the things that make the difference between dedicated employees and those actively looking for a new job.
Get department leaders involved
It’s important to have a good mix of folks dedicated to keeping a pulse on company culture and employer brand throughout the entire M&A process. It’s natural for executives and top HR personnel to get involved—but what about the leaders across other departments? Consider establishing an internal transition committee to pull in ideas from a wider audience. This committee will ideally represent each department company-wide, making dissemination of important information easier and more uniform.
When considering who should join the internal transition committee, it’s often easy to appoint those who are already committed to the company culture. When forming an internal committee, avoid the temptation to just choose the cheerleaders, or the most outspoken promotors. Seek out individuals from both organizations and invite their opinions. Diverse ideas will add value to discussions, and you’ll want individuals who are willing to speak up on behalf of the less satisfied employees. Your transition committee should be assembled to share a balanced and unbiased view of employee reactions and sentiment, which serve as strong indicators of employer brand.
Build resiliency through change management
While some change may occur on a daily basis, major changes affect individuals differently, depending on personality and level of personal resilience. Some employees thrive on change; they’d get bored without it. Others are a little more resistant to change in reporting structure, schedule, and routine. When facing a merger or acquisition, prepare your entire workforce to face it with resilience and help them remain productive and engaged.
Change management is the key to resilience. Resiliency training before, during, and after a major change event helps teams prosper despite disruption to their normal routines, whether due to a layoff or a consolidation. Even if you’re not changing the company name or rebranding following an acquisition, allow employees to embrace change by clearly communicating your company mission and values.
Think about outside perception
Employer brand stems from what’s happening inside your walls and communicated outside your company via word of mouth, social media channels, and company review sites, such as Glassdoor. Get ahead of the message by creating and carrying out a plan to communicate a branded narrative that expresses the company values and image across all social and owned channels immediately following the M&A. While a newly established brand might take a while to stick, be sure to build outside branding and perception into the change management plan. Think about your candidate experience—what does a prospective employee think when they check out your LinkedIn and other social sites? Your employer brand should shine through.
“Social media plays an instrumental role in personifying and bringing a company brand to life,” said Kristen Broyles, Director of Social Media at SSPR “In the case of a merger or acquisition event, current and future employees perceive their new employer brand based on what’s available and searchable online. By building up your social channels with positive messages that reflect the new, shared mission, these channels actually become an asset—they instill a positive brand image even during a time of major transition.”
Social media presence and employer brand are great items to review in your pulse survey. Find out if your employees feel the messaging you’re delivering on social media is consistent with their experiences within the company. Identify the gaps the find ways to fill the holes.
Communicate honestly and often
Beyond marketing, social media, and public relations, proactive internal communications ensure the transition following a merger or acquisition goes smoothly. Communication doesn’t stop after the initial M&A announcement, although what you say and how you act in the first few days is crucial. HR and team leaders should be openly and regularly reviewing and acting on survey results that showcase brand perception. Proactively communicating how the company is using survey results and the importance of employee feedback will encourage people to continue participating in surveys and assure employees that their opinions matter.
Frequent and proactive communication is the first step to retention and employee satisfaction following a huge transition event like a merger or acquisition. When employees feel like they’re in the loop, and fully understanding the shared mission and values, their perception shifts, and employer brand stays positive. The news of the M&A becomes less relevant because they believe their work is meaningful, regardless of the employer.
Many of the typical hurdles organizations face when they’re experiencing a merger or acquisition, from diminished trust to uncertainty of long-term goals, quickly fade when teams partner to create a better experience for employees. Authentic initiatives keep employees excited about their work, and saying positive things about their employers—and this is the secret to maintaining a positive employer brand.