Managing your merger
Corporate marriages have the potential to devastate employees
SOMETIMES I compare organizational change to those shifting tectonic plates found in the Earth’s crust. While tectonic plates usually move slowly and quietly, they often create a “big bang” accompanied by that feared tsunami that creates such a devastating aftermath.
In my view, undertaking major organizational change of any kind is no different.
Now, I’m not a soothsayer, but I envision a significant increase in corporate mergers and acquisitions this year and beyond. Not only that, I expect major corporate changes resulting from forced closings, location transfer, government legislation and/or general succession issues. This has already been played out in the Winnipeg market with a large national bank purchasing one of our prized local firms.
Yet, change is a natural force in the business world. Corporations and organizations alike need to continually adjust and adapt to circumstances. Companies need to grow to survive. Others know that focusing on their core competencies and putting other elements of their business on the proverbial auction block is the only way they will survive.
No matter what strategy businesses and organizations use to grow, the change this creates greatly affects employees in the organization. Not only that, we know that an examination and planning for human resource issues during mergers is often neglected while leaders focus on the financial and legal fronts. As a result, the business world is littered with examples of mergers and acquisitions that have failed to create the synergies first envisioned. These businesses have learned the hard lesson that employee power can make or break management success.
So, let’s examine how a merger and acquisition can be more effectively managed from a human resource perspective. First, keep in mind that there are two phases a) a pre-merger phase and b) a post-merger phase.
Pre-merger phase — In this phase, pay close attention to assessing the culture of the organization being acquired or merged in. Discover how work is accomplished and how employees relate to one another and to their leaders. Examine the formality or informality of the organizational structure and the workflow, the human-resource policies and philosophy, the management styles and the general business processes used in the organization. Examine the talent within the organization and determine how these skills can be of benefit. Summarize how all of these elements will fit into your organization, identify the gaps and develop a plan for dealing with them.
Post-merger phase — The post-merger phase is the foundation building phase, yet a failure to understand and plan for employee transition is a frequent error during this phase. No matter what, a merger is a traumatic experience. At the first inkling of a merger, employees automatically go into career survival. They will immediately want to know what will happen to them. Employee behaviour can range from erratic anger to quiet depression. Those who can’t envision a future with the new firm will quickly apply for jobs elsewhere, thus creating unwanted turnover. Overall, you can expect increased employee stress leading to a decline in productivity for a period of time.
As a result, managing the post-merger phase is extremely important and creates many challenges for human resource managers. There are unexpected policy issues, conflicts with respect to aligning compensation, job titles and performance appraisal systems. Typically in larger organizations, employee relations are more formal and the merging employees from a smaller organization will tend to feel alienated as they lose the more personal approach to problem solving. The following guidelines will help to overcome most of the challenges you will experience.
Clear the confusion — Confusion is natural in a merger. While you may think you have communicated to employees, you need to communicate again and again and again. Most people under stress can’t absorb all of the messages they receive and become confused as they listen to rumours and other misinterpretations. Make sure you communicate to employees prior to the formal press release. Include the management team from the organization being merged in because these are the managers the employees trust.