Focus on People to Get the Most out of Mergers and Acquisitions

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Focus on People to Get the Most out of Mergers and Acquisitions

  1. 1. Ignite! Newsletter—April 2009 Article FOCUS ON PEOPLE TO GET THE MOST OUT OF MERGERS AND ACQUISITIONS Mergers and acquisitions offer both challenges and opportunities. The key to success is making sure that your people strategy is as strong as your business plan. It’s a one-two combination that makes sure the results anticipated from the merger or acquisition materializes. When leaders take the time to think through the people side of the process as carefully as the financial process, they can leverage all of the strengths, assets, and goodwill of the old business by making the most of the existing employee and customer relationships. Leaders play a pivotal role in determining the success—or failure—of a merger or acquisition. Everything that a leader does has the potential to increase commitment, passion, and accountability—or to decrease it, according to Chris Edmonds, a senior consulting partner with The Ken Blanchard Companies. That’s why leaders have to recognize that they are not just managing productivity. They are managing human beings. As Edmonds explains, “You want to have leaders proactively managing more than just people's hands, and what those hands can deliver for the organization. You also want to engage people’s heads, and their hearts, and their spirits. If you focus on those three things—head, heart, and hands—you’re probably going to be having different conversations with the people who report to you, including those that allow employees to pose questions and to express their concerns and fears—or even to express their enthusiasm and optimism about some of the new things that can be coming down the line. “Employees are really smart. They don’t miss much and they often have a better handle on what’s going on in an organization than senior leadership, who may be more removed from what is happening day- to-day within the organization. Yet organizations don’t take advantage of this resource the way that they could.” People thrive on involvement and communication During times of change such as a merger or acquisition, when people from two very different cultures have to learn to work together, leaders need to address some of the typical concerns that employees have. For example: Is my job safe? Who will I end up reporting to? Who will become the new power
  2. 2. centers in the organization? How will we mesh teams together from two different cultures? Will these cultures work well together? If leaders don’t help their people get beyond these concerns, they can create a culture of active disengagement that can poison the organization at a critical time when they most need their people. This loss in employee involvement can block, and can even jeopardize, the integration required to make a merger work. That’s why it is so important for senior leaders to address concerns and include all employees in the process. When people are involved in these types of conversations, they bring their creativity and discretionary energy to the integration effort. “When you look at organizations that are acquired or merged, there is a period of grief and mourning that occurs because the old ways are gone,” explains Edmonds. “The old customers are gone; the old products and services mix is gone. You have to give the people who are being asked to shift to a different way of working, the time they need to mourn the loss of the old ways.” A case in point As an example, Edmonds points to his recent experience working with a small office that had been merged into a larger company. The larger company asked The Ken Blanchard Companies to come in and lead a training and development initiative for this group. As Edmonds walked into the building he noticed that all of the employees of the acquired company were wearing their new company name tags—which was required for security purposes—but that they were attaching them to their old company’s neck lanyards. Not a single person in the room had one of the new lanyards that Edmonds had seen in other offices. “That’s when I realized that these people were still not over the acquisition yet,” Edmonds explains. “Because these people had not been given the time to talk through how the acquisition was going to work, find out who the new players were, and because they had not been involved in the process, they were holding on to the past.”
  3. 3. In a case like this, Edmonds recommends that executives, instead of announcing, “Congratulations, you are a part of this company now, and all decisions that were previously made in your local office are now going to be made in another state,” allow people to air their concerns. “We coach senior leaders to be very proactive about explaining their decisions in times of change: Here is the decision, here is what we have decided, here's why, and here is how you have helped us. “You want people to feel comfortable talking with their peers and their bosses about their fears, about the opportunities that exist, and about some of the challenges that the organization is facing.” Help people engage with the change Successfully harnessing people’s energy at critical moments of change is essential to the long-term success of the organization. Creating new high-performing teams from people accustomed to very different work cultures can be a challenge. Leaders can accelerate this process by putting into practice the key elements of team formation including chartering and making sure that everyone is heard. Programs specifically designed to lead people through change can be especially helpful in a post-merger situation. When people are given a chance to influence decisions and make suggestions they respond with greater buy-in, passion, and connection to the change. When that change is a merger or acquisition, the business objectives may be the economies of scale, improved productivity, and increased shareholder value that the merger was intended to create. But the key means to achieving those ends are keeping your employees involved, respected, and feeling part of something growing and meaningful.

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