Going through a merger or acquisition is a delicate affair, impacting employees, processes, and systems at every level of the businesses. Employees will have personal and professional concerns, and leaders need to balance short-term challenges against long-term goals. The companies involved must develop a new vision and communicate their shared direction. Although decisions are being made at senior level, it can’t all be a top-down communication process. Employees should have opportunities to voice concerns and ask questions without fear. Yet, leaders at every level may be resistant and uncomfortable communicating at a time when details can change.
Despite the discomfort, transparency and two-way interaction is essential, concludes Geraldine Osman (pictured below), VP of Marketing at StaffConnect, the mobile employee engagement platform. Their research report, ‘Mergers & Acquisitions: A critical time to engage employees’ includes up-to-date findings from respected analysts, practical tips for HR and communication practitioners, and guidance to create successful engagement strategies.
MARGINALIA spoke with Osman to explore the employee and communication ramifications that surround mergers and acquisitions. In this interview, she stresses the criticality of good internal communication throughout the process, highlights the challenges and pitfalls, clarifies the use of technology to include the entire workforce, and offers real-life examples from businesses undergoing this challenging transformation.
Gloria Lombardi: While it can be said that change is constant, employee engagement is difficult to achieve during ‘normal’ business times; what’s necessary to sustain engagement during such critical change periods like a merger?
Geraldine Osman: Typically, merger activities are conducted under a cloud of secrecy due to the confidential nature of everything in the early stages. But all of that secrecy can lead to misinterpretations, and the grapevine can light up with gossip and misinformation.
Involving a communication leader early on in the process is absolutely critical. The vision needs laying out and communicating in a well-planned manner. HR, Business Development, senior managers, and internal communicators need to shift their focus from business as usual and managing talent to facilitating the employee experience.
Companies need to define the goals, objectives, and the desired outcomes of the merger activities. Then, proactively take control and devise an internal communications strategy to manage employee expectations, and create a change management roadmap.
Functional leaders need preparing and training to directly answer questions from their teams. Finally, suitable tools, systems, and associated processes need implementing to support and deliver the communication strategy.
GL: You mentioned the importance of involving the communications lead from the start; what will a full internal communication strategy achieve?
GO: Companies that are about to undertake any M&A activities need to be proactive with their IC strategy. They have to include the entire workforce – reaching every employee regardless of where they are located. IC must incorporate all the front-line, non-desk workers who may not have access to the intranet or email.
During any business transformation, communication must be easy and seamless. Managers need the tools and authority to manage communications up, down, and across the hierarchy, and team members need to be able to interact and ask direct questions.
Internal communications need to be aligned with the merger roadmap, and external announcements. Employees want to know about potential and planned restructures, and frankly, about their job security. The communication strategy should include a mix of scheduled communications and reactive updates, to respond to questions and feedback.
With the right technology in place, employee concerns, cultural complications, and emerging issues can be seen in real time. Such awareness allows leadership to react in a timely manner; the communication strategy must allow for real-time response-focused dialogue, and empower the right representatives to respond to employees’ queries.
The communication strategy should adapt in response to the M&A activities and relevant employee feedback. The impact of change and communications should be measured, and so analytical capabilities need to be in place to assess employees’ understanding and engagement.
Every audience must be considered. Right at the top, you’ve got two different companies and their workforces. Each company culture will be different, and the communication teams will be separate and independent to begin. The strategy needs to encompass this independence, and a possible gradual or set-date integration (of responsibilities, if not teams).
As with any major communication theme, audience segmentation is hugely useful. Staff within the Marketing department may not be affected in the same way as people in HR. Employees in Asia may be affected in a different way to colleagues in Europe.
GL: What are the biggest challenges when undertaking a merger?
GO: Productivity is one aspect many businesses struggle with during a merger. It’s probably one of the biggest and most common symptoms of a loss of engagement – a consequence of a poorly managed M&A integration. Again, it all goes back to communication. To reduce the impact of disengagement and low productivity, organisations have to be transparent upfront.
Attracting and retaining talent during a merger is a challenge too. This has always been the case, but it is even more amplified in today’s world where dissatisfaction is echoed out through social media channels and platforms like Glassdoor, which does impact retention and attrition. Once more, managing communication effectively throughout this period is the key. Organisations must be alert to the potential power of rumours, which could go out to external parties, if they are not clear with their internal audiences. When employees are not involved, they will naturally come to their own conclusions about why things are happening and what might happen in the future. Worries and rumours can become fake news that reaches customers, partners, investors, clients, and competitors.
Culture has been identified as one of the top factors in whether a merger / acquisition is successful or not. A McKinsey’s study found that around 92 per cent of employees said the process would have gone a lot better if they were given a clear understanding of the likely cultural issues from the start. So it’s clear that the different cultures must be understood – the many different divisions or groups within each company need to be assessed to discover what’s important to people, the commonalities, and the differences between groups. The journey towards an amalgamated culture will be a long one, but it should start before the merger happens.
GL: What is the biggest pitfall to avoid when undertaking a merger?
GO: One of the biggest pitfalls is having a small task force within the organisation whose primary purpose is to do the deal – finding out what to buy, negotiating the various aspects of the merger, and conducting the hugely complicated transactions. There’s a risk, once the deal is done, that people will think the hard part is done. That’s not the case, the hard work is only now starting.
Once the negotiation approaches completion, an integration strategy must be in place. A carefully considered vision and roadmap is needed, to express how all the pieces will come together. All leaders must understand and support the plan, they must be engaged and involved.
GL: You touched on the need for the right tools; what kind of tech is required?
GO: Various tools on the market can help make M&A activities easier. Of course, technology does not solve all the organisational issues, but it does facilitate how a company deals with them.
I think it’s well worth considering the digital platforms that can support the implementation of your communication strategy – from the planning phase through to the restructuring. The platform needs to encourage or support employee engagement, give people a space to talk, and be a trusted source of up-to-date information. Employee interactions need to be measurable, so that the success of the communication plan can be monitored, and tweaked in response to change.
Mobile technology, in particular, offers a single point solution that encompasses all of those needs. A mobile connection to employees transforms how businesses involve and engage everyone during a corporate integration; it’s the only technology that can reach everybody, non-desk employees included.
When companies merge, they merge technology infrastructure too, which can be extremely disruptive. Trying to use an intranet or an internal communication channel that exists in one part of the enlarged company but not in the other can risk the success of your communication plan. It is often better to roll out a new, fresh solution, which has the necessary capabilities and reach.
GL: What have you seen companies go through when merging? How have they tackled communication and engagement?
GO: The proportion of enterprises approaching StaffConnect because of an M&A, has noticeably increased in the last year.
In one case, a company was fighting a hostile takeover. A different business wanted to conduct a merger with them that was more in line with their strategy and wishes. They chose our mobile platform to transparently communicate the reasons why they preferred to merge, rather than be taken over.
Another example comes from a demerger of two big construction companies. They are in the process of returning to be independent entities. One of those organisations rolled out our solution to communicate the reasons and the strategy for becoming independent. While they started doing that, the other company saw the benefits of a mobile approach that could reach everyone. It, too, decided to follow the same process. So StaffConnect has ended up working with both sides to help them demerge their businesses and keep staff informed and engaged throughout the transformation.
StaffConnect has been named finalist for the 2017 SVC Awards in the “Cloud Innovation of the Year” category. The winners will be chosen via public vote. You are invited to submit your vote by 3rd November 2017.