Wednesday, August 19, 2009

How to Regain the Commitment of Your Employees After a Merger or Acquisition

More and more we see companies using mergers and acquisitions as their primary growth strategy. This is a fast and effective way to boost sales volume or gain market share. Difficulties can arise, however, as the parent company tries to bring the newly acquired business into the corporate family.

Many books and articles have been written offering insight into how to mesh divergent cultures of merging companies. These literary works often provide very precise transition plans that outline the steps a company can take to achieve the synergistic goals sought in the acquisition.

Often overlooked in these comprehensive plans is the criticality of the first communication the parent company has with the employees of the acquired business. This initial contact is crucial to getting employees to transfer their commitment from the previous owner to the new parent company. Wise companies plan their employee communication strategies very carefully. They know how important these messages are to the ultimate success of the acquisition.

Once a takeover has been announced at the acquired company, the employees immediately start looking for subtle signals that will alert them to what the parent company is all about. Sensory acuity is greatly enhanced in the early months of a takeover. Everyone raises their antenna to pick up whatever message one can. Employees are hyper-sensitive to every nuance and change. The imaginations of some workers go into overdrive. Everything the parent company does communicates. Every action and comment has meaning. Employees pay close attention to what is being said and, perhaps more importantly, what is not being said.

During the initial stage of an acquisition the employees are watching you carefully. How you come across and what you say in these early moments establishes almost irreversible impressions in the minds of the employees. The first interaction you have with these new employees sets the stage for future interactions. This meeting establishes who you are, how you will operate, and how people should deal with you and your company on an on-going basis. It sets a precedent for the future.

Takeover companies typically are hesitant to share certain information with newly acquired employees, particularly if the information is of a negative nature. But people expect you to bring up all relevant issues in a straightforward manner, especially any negatives that might impact the employees directly. Avoiding these issues sends a message that either the issues are not important or, worse yet, the employees themselves are not important enough for you to share information with them. The absolute worst thing you can do in the early stage of an acquisition is to send a message to new employees they are not important.

One critical thing to remember throughout the acquisition is that when people lack real data, they make up their own. Usually what people make up is far worse than reality. You can stop the rumor-mills that typically run rampant during mergers by being up front with the employees.

There are three crucial objectives you should have for your initial communication with employees of an acquired company.

First, you should do everything you can to mitigate the usual fears employees have when an organization is in transition.

Second, you should view this initial contact as one of your best opportunities to build rapport with your new workers.

Finally, your message should be formulated and presented so well it focuses the energy and effort of the employees where you want it – on the customers -- rather than on the company. What you say must eliminate from the employees all doubt, worry, gossip, wondering, and hesitancy. At the conclusion of your message you want the workers worrying about their work, not worrying about their jobs or their employer. To do this you must understand the psyche of the employees and address the concerns they worry about the most during a takeover.

Invariably there are four predictable questions employees will have during an acquisition or merger. Although the specific verbiage of the questions highlighted here may not be exactly how the employees would articulate their concerns, the answers to these questions will address most of the issues the employees will be wondering about. When you know these questions in advance you can target your communication to address the employees’ concerns before they come up. This in turn shows the workers you are empathetic to their needs, thereby building rapport between you and them.


The first concern employees have after an acquisition is: What Does the Future Look Like?

In a takeover the future is unknown. People generally are afraid of the unknown. To alleviate their own fears, the acquired employees will latch on to any information they can about the parent company’s future plans for the acquired business. This is why rumors run rampant during a takeover. It is the natural human need for information – any information – even if it is false. Acquired employees will remain fearful about the future until they have information that will assuage their fears.

The primary objective for your initial communication at an acquired business is to instill within the employees confidence in the future viability of the business, particularly their business as currently constituted.

Before addressing the employees you should have a clear vision of where you want to take the acquired company. Leaders who possess and can communicate a confident view of the future can infuse confidence within the new employees by sharing their vision. Employees are more apt to follow those leaders who have a clear view of what the future entails.

Tell people your vision for the company. Help them to clearly see the future themselves. Let employees know what they can expect to see and experience in the months ahead. Explain what changes or non-changes the company anticipates over the next one, three, six or twelve months. Share your plans. Be as open, specific and precise as possible. Any hesitancy or waffling from you will damage the confidence and commitment you will receive from the employees.

Some of the topics you should address in your communication are outlined below. You specifically should highlight any changes or alterations to what the employees are currently used to. This includes such things as the following:

• The current product mix and how these products are offered or delivered. Employees are very protective of products they perceive to be linked to their job security. They normally will be receptive to renovations, improvements or upgrades to the organization, but less enthralled by talk of eliminating a product or a particular business line. Downsizing or significantly altering the company’s product mix often translates to the employees as a downsizing of the organization.

• The current customer mix and who currently is viewed as targeted customers. Changes in the type of customer the company is targeting may signal to employees possible changes in the quality or quantity of the performance required of them.

• The current competitive strategies and who currently is viewed as primary competitors. A shift in competitive focus may indicate either an upgrading or down-grading of the products the company offers. This in turn may signal either a raising or lowering of performance standards.

• The current marketing strategies and tactics. Employees on the front-line are very interested in the acquiring company’s marketing philosophy. They want to know how committed the parent company is to growing and expanding the current enterprise. Perhaps this, more than anything else, tells the employees whether or not there will be future job security at the company.

• The current economic expectations for the business. Employees want to know what economic pressure the new company will put on the enterprise and how it will affect current production and cost containment strategies. This, of course, will signal what pressure will be placed on the employees themselves.

• The current manner in which the business is being run. This includes the operating style and business practices within the parent company. Workers usually are comfortable with their daily routine. They want to know what policy, procedure or process changes the parent company will implement after the takeover. This will tell them the degree to which their worklife will change in the future.

Employees also have a lot of questions about the management philosophies and practices of the parent company. They may not feel comfortable expressing their concerns about these issues, but you can be assured they are wondering what it will be like to work within the new company.

The items mentioned in the bullets above can be categorized as “we” issues. They deal with what “we” as a company are going to do to ensure the future success of the business. However, the concerns expressed in the next series of bullets revolve around the “me” issues employees typically have in an acquisition. They deal with how the new company will treat “me” or what the company expects from “me” as an employee. Wise leaders will be well-prepared with their answers to all of these questions. They will answer them before the employees bring them up.

Workers at an acquired company want to know:

• The history of the parent company and what growth opportunities this offers for the acquired employees. They are particularly interested in any career opportunities that are now opened to them because of their association with the parent company.

• The vision, values and guiding principles by which the parent company operates. These qualities explain a great deal of what might be expected of the employees by the parent company. They also give an indication of the quality of worklife in the new organization.

• The overarching emphasis or driving focus of the company (i.e., emphasis on profits, emphasis on customers, emphasis on employees, etc.) This may or may not indicate a significant shift in focus or change in culture for the employees.

• The cultural norms and mores of the company. These are the subtle, and sometimes not so subtle, tangible and intangible things that express most to employees what it is like to work for the acquiring company.

• The management style of the company and how management typically interacts with the employees. Again, this is a great indicator of whether or not a person would want to work for the parent company.


After you have shown the employees what the future looks like, the next thing people want to know is: Is there a place for me in the new company? In other words, now that you’ve explained what the future looks like, employees want to know if they are in that future.

Your answers to the issues outlined in the bullets above will help the employees decide whether or not they want to work for the new company. Your answer to this second question tells the workers whether or not there will be a position for them in the new company.

People need to know if their position is secure or if they should start looking for another job. They also want to know if the new company is the type of company that looks out for the interests of its employees.

No doubt these are the most important concerns to the employees. They want to know about your human resource and labor relation philosophies. They are very interested in your compensation practices and your benefit packages, particularly how your benefits compare to what they have had in the past. They want to know what orientation, training, and developmental opportunities you will provide them. They seek information concerning how they will be recognized and rewarded for their work and whether there will be career development opportunities for them in the future.

Even more important, however, they want to know if they will have a job in the future. They listen for clues that express what your attitude is toward the current employees of the company. Will you bring in your own leadership team? Will you get rid of any of the current management? (This could either be viewed negatively or positively depending on the employees’ perspective of the current managers in the organization.) Will you alter the mix of employees or do anything that might jeopardize a person’s job.

Employees want to know whether or not there will be any downsizing or elimination of jobs in the organization. Does the company anticipate combining or eliminating any functions? Will the company reduce any positions to part-time that are currently full-time? Are there any parts of the business that the company is thinking of bundling, unbundling, selling or closing?

The worse thing you can do at this early stage of the transition is lie, deceive, mislead, or remain silent on these extremely important and very personal issues. If you anticipate any cuts or changes in the organizational structure, tell people the truth. Tell them quickly. People need to know. Knowing gives people control over their situation. It allows them to take appropriate action to find a new position either within or outside the company. Not knowing causes people to wonder. When workers wonder they spend their energy trying to mitigate their fears rather than serve the customers.

If you don’t know whether or not there will be reductions in staff, you cannot respond by saying you don’t know. “I don’t know” is a horrible answer to important questions. It is never believable. Rather it almost always appears as if management is hiding something. It is highly doubtful you really don’t know what organizational changes are needed at the acquired enterprise. Even given the benefit of doubt, you certainly must have some informed assumptions based upon your assessment of the business during your due diligence before the takeover. Logic or basic intuition already will have given you some inkling of changes needed in the acquired organization. Consequently, more than likely you will have some preliminary assumptions about the business.

Employees can sense, or logically deduce, that you have already made some assumptions about the business. This is why “I don’t know” is an unacceptable answer. If you really don’t know, employees still expect you to tell them about your assumptions. Again, to avoid causing people to draw their own false or distorted conclusions and lose their commitment, it is imperative you share what you know, assume, hope, wish or desire for the acquired enterprise.

Most managers have a hard time accepting the notion they should share their assumptions, because their assumptions may be wrong. But when a person’s job security is on the line, employees expect you to be “honest” and share any negative consequences that are being contemplated. People have a tendency to assume the worst. Many of your assumptions will be far better than the worse assumptions the employees have already drawn. Therefore sharing the assumptions might be a positive instead of a negative.

One of the greatest ways to build rapport and express your trust in the new employees is to freely share information with them. Take people into your confidence. People may not want to hear that their position is being eliminated, but they will appreciate the fact you respected them enough to tell them the truth upfront.

Again, people expect you to share all information, particularly negative information, in a straightforward manner. This also is the most humane thing to do. It is analogous to receiving bad news about the health of a family member. When a person is infected with a terminal illness, most people want to know the truth as soon as possible so they can get their affairs in order. Nothing is more frustrating, disheartening, or demoralizing than to learn too late about something for which one could have been prepared had they been forewarned. People who have advance notice of an extremely negative situation may momentarily be taken aback by the information, but they soon refocus. They turn their attention away from the things that are out of their control and channel their energy toward the things that matter most.

If there are staff reductions anticipated in your takeover plans and you immediately inform the employees, as you should, then the next question becomes very important.


In an acquisition that includes a reduction in staff the surviving employees wonder: Will the new company treat fairly those employees who are let go?

Employees pay close attention to the way you treat departing workers. It cannot be over-emphasized how important this is to gaining the commitment of the employees who remain with the company. Your actions toward displaced workers declare very loudly the value you place on your employees. Your actions strongly signal how employees will be treated in the future. They indicate how you feel about people and whether or not, when making decisions, you take into consideration the impact those decisions will have on your employees.

Employees are concerned about your treatment of displaced workers for two reasons.

First, surviving employees may have considered many of those displaced workers to be their friends. They are saddened that their friends are leaving and expect you to treat their friends in a kind and considerate manner.

Second, and perhaps more important, the perception that you have treated the downsized workers in a fair an equitable manner will give the remaining employees confidence that, should their position be eliminated in the future, they too will be treated well. This will allow them to stop worrying about their own job security and refocus on the customers.

Prior to announcing a takeover you must develop well-thought-out policies and procedures regarding how you will eliminate staff if displacement is necessary. These policies should be favorable toward the employees. This is not a time to be miserly. Company generosity exhibited in the initial stage of a takeover will reap huge returns later in employee commitment. Good displacement practices can keep your company from experiencing the typical decline in production that usually follows a takeover.


Finally, although employees may not know they have this last need, and therefore generally may never articulate it, workers who stay with the company have an inherent desire to know: What is my charge?

Once employees have decided they want to stay with the company after a takeover, they need clarity on what the company expects of them. What do you want them to do? Should they carry on as they have been doing in the past, or should they do something different? What are their new marching orders? If you expect employees to change, you must tell them so. If you expect employees to continue doing what they have been doing in the past, you must tell them this also. Never assume the employees will conclude what you want them to conclude. You must tell them.

Your initial communication with the employees must close by giving the employees their charge. You should end by stating very clearly to the employees the things that matter most to both the company and to them. Tell them:

• What it takes to win in the new company.

• What they can do to contribute to the success of the company, as well as to their own success.

• What is in it for them if they do contribute to this success.

People need hope in the future. Employees need to know their future is brighter with the new company than what they have experienced in the past. Everything you do during a merger or acquisition must be designed to build hope, not destroy it. When you answer point-by-point every question outlined in this article, you mitigate the fears of the employees, you build tremendous rapport with them, and you refocus their energy and effort on the future success of the business. You get people thinking about the customers, instead of worrying about themselves.

No comments:

Post a Comment