Employees' Choices vs. Leadership's Expectations
by Moira Donoghue, a former Partner and Global Strategic Adviser in the M&A practice at Mercer, and Key Presenter at "The Art of People Leadership in M&A: Managing Talent, Culture & Change for Deal Success"
Employers typically believe they understand what motivates employees to feel and behave in certain ways. Sometimes they are right. But during periods of significant change – such as during an acquisition – those beliefs may turn out to be unfounded and the employer is left with some unpleasant surprises and confusion about how to mitigate them.
Some employees step back. Others step up. The first is a risk; the second is an opportunity. Employers must be able to recognize both.
Significant change challenges even the most confident and capable employees. They will ask themselves if what made them successful in the past will still work in the future, and not knowing the answer can weaken their engagement. This can lead to caution in decision-making, a desire to fly below the radar because visibility feels risky, and increased likelihood that they will look outside the organization for opportunities that offer more predictability.
Others, though, will see the change as opportunity. They may anticipate a larger organization with new roles suited to them. With downsizing, they will see vacuums they believe they can fill. They may see working on the deal itself – typically at the Integration Phase – as a way to learn and demonstrate new capabilities, strengthening their knowledge, skills and reputation and expanding their opportunities. Some will simply step up the quality of work in their current roles, others will volunteer for new roles and some will address the opportunities head-on through discussions about their interests with the leaders who can make the difference. Often, leaders will be pleasantly surprised to find talent that had been hidden to them.
Informal networks – often highly productive – are weakened. Organizational charts tell only part of the story about how work gets done in a company. The pension administrator in HR knows the best analyst in Finance to work with on annual reporting. The plant manager knows the most responsive and knowledgeable associate in Legal. The General Manager knows the best and brightest to staff special projects.
But when organizational structures change, new employees join and existing employees leave, these informal networks become less effective and may completely disappear. This creates risks.
- Productivity declines. The loss of relationships that populate these informal networks makes it harder and slower to get the job done. Some employees are new to their roles, trust needs to be built among colleagues new to each other, tensions emerge and new work processes need to develop.
- Intellectual capital and history are lost. Departing employees – whether they leave the organization or move to another role – take with them valuable insights and information that underlay relationships, work processes, and criteria for decision-making.
The best employees are at the greatest risk. Many employees believe they are among the “best” – including those who are truly your “best.” Before the deal, your best employees may have seen a career for themselves in your company – an expectation based on the experience of others and feedback and coaching they have received. But if the organization is modified by the deal in ways that alter those expectations and reduce the likelihood of that career, your best employees will begin to consider their options.
- They will look outside the company for other opportunities, often with competitors or customers.
- Recruiters know this dynamic and follow the deal press, then actively pursue employees at target companies where they expect the greatest number of employees to be at risk.
- They pursue employees at acquirers as well, especially in deals that suggest significant changes in business model or organizational structure.
- Change in control payments and voluntary severance programs will finance this career change for many. While these are typically paid after close, employees often begin their search before close, knowing they will have a cash bridge if they have not found a new job elsewhere. Retention bonuses paid in lump sums at close can have this unexpected result as well, making retention design critical to retaining the right employees.
Acquisitions bring significant and unexpected change that forces employees to adjust assumptions about their futures and sharpen their focus on what is best for them personally. The result is that employees often make choices that do not fit with their history at the organization – or leadership’s expectations about their behaviors. It is critical for leaders who want to retain and re-engage their best talent to understand this dynamic and be prepared to manage the risks it presents and capitalize on the opportunities it creates.
Learn more details about these concepts and many others at our brand new conference, “The Art of People Leadership in M&A: Managing Talent, Culture & Change for Deal Success," to be held May 20-21, 2015, in Cleveland. CLICK HERE for info.
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