A quintessential element of any successful acquisition integration is establishing and maintaining a relentless focus on delivering outstanding and seamless customer experience (“CX”). One essential element of superior integration-related CX is a similarly vigilant focus on delivering an outstanding company-wide approach to Employee Experience (“EX”). EX is all about the connection an employee feels with the company. In M&A specifically, it is about helping employees have a positive experience during the transition by ensuring their needs are met and their voices heard.
The undeniable linkage between effective CX and EX is both clear and compelling. Consider the following data points recently published in Forbes:
- Companies with highly engaged employees outperform their competition by 147%;
- Companies that invest in employee experience are four times more profitable than those that don’t;
- Companies with a highly engaged workforce experienced a 19.2% growth in operating income over a twelve-month period.
Driving effective CX during integration is even more daunting than during steady-state operations, and without a strong commitment and process surrounding EX, most acquirers program themselves to fail. In fact, some could argue EX is often a ‘make or break’ attribute of every deal. Your effectiveness at managing EX often links directly to key deal metrics such as both customer and employee retention, employee engagement, business growth, etc.
Although most EX efforts and activities take place during the integration phase of a project, waiting until this point to consider EX will be too late. A thoughtful and planful approach and incorporating the employee voice into deal activities should be front and center at every stage of the deal life cycle from strategy through to optimization and beyond. It is never too early to start.
EX is often viewed as an HR responsibility; however, this is a paradigm that is out of date. Today, successful acquirers often make EX an explicit workstream with oversight directly at the Steering Committee or IMO level.
The objectives of the EX workstream are to:
- Proactively identify and address employee impacts across all stakeholder groups
- Prepare, involve and lead employees through significant changes that have a substantial impact on their work or on their customers
- Partner across functions (e.g. communications, training, culture, talent, etc.) and business units (customer experience) to ensure a consistent, holistic experience for employees
- Measure EX and adjust change management and communication plans as required
It is everyone’s responsibility to keep EX in mind; however, establishing a core EX team headed by an EX workstream lead as suggested above is recommended. In a recent large acquisition as an example, the core EX team was comprised of experts in Change Management, Culture, Learning and Development, Corporate Communications and Human Resources Functions (HR Business Partners, Talent Management). The core team was then replicated at the Business and Function level thus allowing for a coordinated approach necessary to execute change activities designed to address the impacts on different employee groups.
Now that we have established what EX is, when and how it should be part of the deal process, and who should be involved in EX activities, the next two questions are ‘What are EX Critical Success Factors’ and ‘How Do You Measure EX’? As with all M&A activities, the first key to success is to ensure EX decisions, plans, communications, and activities are aligned to the business strategy and deal value drivers. This goes without saying.
The second success factor is having clear roles and responsibilities for the EX team lead and sub-team members. It is important at the onset that EX also has the appropriate level of support and buy-in from all leadership as the team must work across multiple workstreams to be successful. Engagement and support early on help to inform strategy, facilitate deeper understanding, increase commitment and embeds accountability. In addition, it provides assurances that sharing of information across groups and the identification of cross-workstream impacts are initiated early in the process.
Having a clear understanding of the target’s culture, leadership’s desired future state, the impending changes resulting from the new operating model and how the different employee groups will be impacted by the changes are critical. Having an in-depth stakeholder analysis will put in place the foundation for all EX activities. This includes the creation of a comprehensive change and communication plan at both the organization and business/function level as well as a training plan and other significant plans (i.e. culture) as required.
An organization’s ability to measure how well their EX efforts are and to be agile and flexible to make quick changes in direction and activities when required is a key success factor in of itself. There are several different metrics the EX workstream can use to guide their actions and decisions. These include but are not limited to:
- Retention and Turnover
- Absenteeism • Employee Engagement Scores
- Training Completion Rates
- Communication Effectiveness • Employee Help Desk Inquiry Volumes
- Change Champion Feedback
- Social Media Feedback – Glassdoor, etc.
Best practice would have EX metrics as part of the Integration scorecard thus ensuring the right level of attention is given early in the life cycle. As they say, what gets measured, gets done. Or in the case of EX, what gets measured, gets attention and accountability.
Finally, what does EX success look like? It has many facets. Leaders are equipped to lead and inspire confidence. Employees are aware of the changes and feel supported. They are trained and prepared to perform effectively in the new environment. Employees feel involved and have input into the process. Resources and processes are in place to respond quickly and with agility to issues that are bound to come up. And finally, the organization has employees who continue to be engaged and have the information, knowledge and skills to support business success. Bottom line – whether you are preparing for a potential deal or currently engaged in one, having an unrelenting focus on EX will be crucial for overall deal success.
Reference:
Forbes Online. (February 23, 2018) The Un-Ignorable Link Between Employee Experience and Customer Experience. Retrieved from www.BlakeMichelleMorgan.com
Wendy Parkes is a Senior Partner at M&A Partners and has over 30-years’ experience as an HR Professional in the U.S., Canada, Europe and Asia in the financial services industry. Don’t miss your chance to see Wendy present at the M&A Leadership Council’s The Art of M&A for HR Leaders in Scottsdale, AZ in January 2020! This workshop-styled program includes case studies, breakout sessions and panel discussions, along with ample time for networking with presenters and colleagues.