Making a Merger: How to Tell Employees that You’re Merging

by | Sep 4, 2020

A merger is a common step towards achieving long-term success, but without a strategic communication plan, that path can be fraught with disaster.

This article will take about 3 minutes to read

For a company and its owners, a merger can present exciting opportunities for expansion and growth. The merging of client bases, target markets, and talent pools allows both companies to benefit from each other’s strengths. The catch? Mergers, when handled incorrectly, can do great damage to your company culture and worker motivation. 

Mergers raise questions about the future of the company and its workers. These can be substantial, such as a change in office location, operating processes, or worker redundancies. Or they can be small: new expense policies, logo, or desk arrangement. In either case, they are significant within the employee’s day-to-day schedule. At the end of the day, it’s the workers who fuel the growth and development of a business. 

In McKinsey’s survey of over 3,000 business leaders, only 33% labeled their merger as a success. Furthermore, surveys conducted over the last decade have shown that issues in cultural differences between companies. Added to changes in operational processes, these challenges account for almost 50% of failed mergers. 

Merger Management: The Dos and Don’ts

A common mistake is to focus on only big picture changes. Attending to the merger’s potential and roadmap is definitely important. But business leaders also need to ensure that the general health of the company is being maintained and enhanced as well. 

Make sure that you lay out a clear plan for the integration and accommodation of the two cultures and working styles. Then, open the floor to employees so they can voice their concerns and raise potential problems within the proposed design. No one knows the day-to-day operations of a business better than its workers, so don’t exclude their valuable insight. This also lets your workers know that their role in the company is, and will continue to be, valued. The last thing you want to do is send your top talent running. 

By anticipating these changes, as well as the toll they take on employees, executives can work to be on the other side of these statistics. McKinsey laid out a process of 4 practical actions that help to ensure a smooth transition and successful merger.

1. Lead From the Top

The CEOs and executives on both sides of the merger need to align on key factors and work together to drive operational change. From managers assuming new roles to shifted supply chains, the leadership team is in charge of the organization and transparency of the entire process. 

Expect these accommodations to take up space in your schedule for at least 6 months. Mergers are not done the day the deal is signed. Months of preparation, process testing, change management, and adaptation need to be factored in as part of the cost. And while laying the groundwork might seem labour-intensive now, think of it as an investment in the future success of the organization. Those who don’t prepare are setting themselves up for failure.

2. Tell Your Story

The greatest sales tool you will ever have is a well-delivered story. Mergers are never quick or easy decisions. There’s a journey that has ultimately landed both companies at this crossroads. Make sure that the story is communicated to your workforce. This not only helps them to understand the circumstances under which the company is entering the merger, but it helps them find their own role within the narrative. 

While data and revenue potential are important parts of the decision, executives can get lost in the numbers and forget to provide context. Leaders should present a compelling case for the merger. A reason why the extra time, effort, and stress will pay off in the long run. Focusing on the direction, strategic priorities, operational structure, and cultural values which will center the future business, while adding personal anecdotes and goals which apply to the specific group they’re talking to, is a great place to start. 

One CEO in the McKinsey study invested significant time into creating a merger story to present to his employees. He focused on how the deal would make the company a market-leader in their industry but expanding its product offering and global reach. After presenting and refining the story with his executive team, he made it central to all future communications. Team leaders and managers were encouraged to add their own take on the story, tailoring it to the specific needs and interests of their teams. The result was a smooth transition, where the employees felt comfortable with the necessary changes.

3. Be a Role Model

Employees of merging companies can feel a loss of ownership within the company. Although the details of a merger are often necessarily withheld until a deal is signed, it can make employees feel blindsided.

Company leaders role-modelling the new processes and guidelines, as well as a positive attitude regarding the changes, will help to ease this tension. It not only paves the way for employees, but also creates a sense of community across seniority levels. Employees can see that the executive team is undergoing change as well, and is putting in the extra work to adapt to the new way of doing things. 

4. Set Yourself Up for Continued Success

Like any business deal, a merger requires investment before producing return. Ensure that you’re taking the time to think through structural and cultural changes. Hardwire in feedback processes, schedule assessment periods, and prepare to make adjustments to things that aren’t working. 

From high to low-level operations, make these goals and changes tangible by creating learning materials and KPIs. When establishing guidelines orally, for example in a presentation, details get lost and misinformation can easily overshadow the desired message. By creating accessible materials, such as a recording of the announcement and pdf documents pertaining to reasoning, goals, projections, and structures, can help. Establishing KPIs for management and employees takes this one step further. By creating a roadmap to success and defining achievable goals along the way, you not only motivate your employees but can also measure the progress and success of the transition. 

As with all big changes, it will take time for you to see results. Allow for an extended and supported transition period where employees are given leeway to acclimatize to the new system. 

A merger is a substantial undertaking and its success or failure is hard to measure until it’s all said and done. When managed correctly however, mergers can present the company with an opportunity to redefine and streamline its culture and structure, creating wide-reaching and lasting improvement. The key lies in communication.

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