Mergers and acquisitions are peculiar events. Unfortunately, unlike other major organizational transitions, for many companies most planning for M&A occurs after the initial announcement. For example, when announcing an internal reorganization or new product launch, leadership is equipped with all the details and has a lot to communicate to employees—who will be affected, when changes will occur, and how they will be implemented. In some instances of M&A, by contrast, the due diligence, transition planning, and integration decision making have yet to occur—so leadership finds itself having to communicate to employees without much to say. This is not optimum, but often the case and why the M&A Leadership Council is so committed to its “Game-Day” training.
An Insatiable Appetite for Information
In most combinations, people down the line are hungry for purpose and direction…immediately upon announcement, even before the deal receives legal approval. They want to contribute to the building of something special. Getting people focused on the new organization does not happen, however, until people deal with their concerns and insecurity. Leaders need to prepare people for these realities of the journey ahead. M&A planning and implementation take more time and energy than people may want to commit, answers to questions do not come quickly enough, initial decisions are second-guessed, and uncertainty and anxiety persist.
The natural tendency for many executives and managers is to tell employees, “it's business as usual.” Of course, for employees, it is anything but business as usual. I think what leaders are attempting to say is “no integration decisions have been made yet, so keep doing your job.” In addition to this, however, executives and managers need to convey to employees that leadership is aware of their situation. My experience is that expressing empathy for having to live through M&A is more effective in getting people focused on the right things than a message to tough things out.
Empathy means the ability to comprehend with accuracy the precise thoughts and motivation of employees in such a way that they would say, “Yes, that is exactly where I’m coming from.” I find that employees have some common questions and concerns no matter what the context of a deal. Thus, effective combination leadership includes ensuring that everyone in the organization can answer, in their own way, five questions:
- Why is our organization changing?
- Why is it changing in this particular way?
- Will my contribution to the old organization be recognized and valued in the new organization?
- Will I have the skills to survive in the new organization?
- Will the structures, systems, etc. to which I am accustomed adequately support the changes we are making?
Naturally, CEOs and senior executives having the ability and style to talk about these issues in a combination with evocative language and high energy generate more enthusiasm among staff than those who rely on written messages or who treat communications as more or less matter of fact. Nowadays, people expect both steak and sizzle in communications, and want to participate in two-way dialogue. Two examples of how executives address human purpose in a combination illustrate follow.
The CEO Address
An address by the CEO to multiple layers of management during a merge has elements of a command performance. At a banquet of over 200 executives launching the merger of two firms, the CEO first gave a concise account of current year results for the businesses, pro forma combined, and then detailed the next year’s business plan and challenges ahead. This included both firm and stretch targets to achieve for orders and profits and must-hit cost reductions. He reviewed current customer commitments and whose responsibility it was to deliver on them, and he enumerated what synergies were expected and from whom. This detailing served two purposes. First, the CEO demonstrated his understanding of his partner’s business and showed how the parties could achieve more by working together than on their own. Second, he grounded the vision of the combination in short-term targets and deliverables. Yes he spoke eloquently about his vision of the combination, but he also emphasized the critical need to keep the business going during the integration period.
Importantly, this CEO also spoke to the human side of the combination. Working with data I collected from employee focus groups regarding their hopes and fears regarding the acquisition, he fashioned guidelines for the months ahead:
● Use each other’s strengths
● Help each other
● Share everything—no secrets
● Include everyone—share the excitement
● Enjoy the journey and each other
● Operate with highest integrity
Getting Managers Ready for Their Speech
In another case, the leader of a to-be-combined Sales function called together her team of sales managers to meet and develop an “elevator speech” about the combination—a brief synopsis that could be conveyed in the time of an elevator ride. The sales managers and reps from both sides prepared a pitch on the strategic intent of the combination, its upside, and their own concerns. All 40 in attendance then made videos of these speeches and critiqued them in the company of peers. This gave them practice in and feedback on relating their story of the combination. In teams, they then highlighted hopes, fears, and unanswered questions and reviewed them with senior leadership from the partners. There was an open and candid discussion of these matters. As a result, the leaders got a clearer picture of what was on the minds of the sales managers, who in turn learned answers to questions that had not been addressed. The sales managers subsequently held sessions with their teams featuring their speech plus in-depth Q&A.
By all accounts, communications sessions were well attended and generated a surprising and welcome degree of buy-in from frontline staff on both sides. In large part, the success stems from the efforts senior leadership took to promote human purpose and understanding in building the combined organization: modeling effective communication, listening to upward input, sanctioning and participating in programs to address both business and interpersonal issues, and, in general, raising and keeping in front of people the requirements for a successful combination.
To learn more about effective change management strategies and managing people issues, please join us for The Art of M&A for HR Leaders this May. This unique executive training program brings together industry experts from firms like Willis Towers Watson and M&A Parters, who share their real-world M&A expertise.
Photo: en.wikipedia.org
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About the Author: Mitchell Lee Marks is a member of the faculty of the College of Business at San Francisco State University and leads the change management consulting firm JoiningForces.org. Over the past 25 years, he has been involved in over 100 mergers and acquisitions as a researcher or advisor. He is the author of six books on organizational change; most recently “Joining Forces: Making One Plus One Equal Three in Mergers, Acquisitions and Alliances” with Philip H. Mirvis. Dr. Marks is a member of the Advisory Board of the M&A Leadership Council. He can be reached at [email protected]