Kathy Floam-Greenspan is the President of Pomerantz Marketing, a full-service B2B agency supporting regional, national and global SMBs.
Mergers and acquisitions (M&As) can be a significant business opportunity, but they can also be corrosive to company culture, causing people to leave when expertise and stability matter most.
Before the recent pandemic and the accompanying “great resignation,” an EY report found that nearly half of a company’s key employees depart within a year of a merger or acquisition, and 75% leave within three years of a transaction. This reality is even more prevalent today as employees are increasingly willing to quit their jobs in search of better opportunities.
Since M&As can create significant organizational anxiety and swift cultural change, it’s unsurprising that turnover often accompanies the process. While employees change jobs for many reasons, company culture is often one of the most common reasons.
That’s why businesses need a “we first” mindset when combining teams post-merger and acquisition. Here are four ways leaders can begin creating that dynamic now.
1. Explain the move by operating transparently to help people accept and support change.
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Mergers and acquisitions happen for many reasons, and employees want to understand the purpose. Unfortunately, companies often can’t publicly announce M&A details as the process plays out, supporting speculation and creating internal confusion.
In response, leaders need an upfront strategy for proactively communicating with employees and internal stakeholders, ensuring that everyone understands the process, timeline and any relevant information that can be shared. These communications should prioritize fundamental aspects, like how decisions will be made and the expected outcomes from a deal.
When combining teams post-M&A, uncertainty is the enemy of progress. By proactively communicating with their teams, leaders can bring clarity to an otherwise chaotic situation.
2. Prioritize communication by proactively addressing the wide range of changes employees will experience.
Mergers and acquisitions are destabilizing for employees and customers. The Harvard Business Review succinctly explains, “For individual managers and employees, a merger or acquisition is not just a corporate strategy; it’s a personally disruptive—often traumatic—event.”
Their fears are often warranted. The post-merger integration period is frequently fraught, filled with tension and uncertainty. Post-merger, organizations may have new priorities, employees may report to new managers and budgets may be adjusted. Perhaps most alarmingly, some employees are typically deemed redundant when companies in the same industry merge, raising fears of layoffs or job reassignments.
Leaders can get ahead of these trends by explaining the M&A purpose and plan. When accompanied by a change story that outlines the collective goals and expected outcomes, transparent communication can help reduce people’s fear and anxiety while helping them accept and support change.
3. Involve employees in the transition through stakeholder engagement, listening sessions and other opportunities.
A “we first” company culture is built through cooperation, communication and engagement. That’s why leaders should strive to involve employees in the transition, leveraging their experience and expertise to help build a better company moving forward.
When the consumer electronics retailer Best Buy struggled to keep up with stiff competition from Amazon and other online stores, the company’s new leaders were encouraged to, as the company’s then-CEO Hubert Joly told The New York Times, “cut, cut, cut. Close stores. Fire everybody.” Instead, the company went in the opposite direction. As Joly recently explained to The Wall Street Journal, he spent his first days with the company “in retail stores observing customer behavior and holding pizza meetings with staffers.” While holding these stakeholder engagements and listening sessions, Joly consistently asked three questions:
• What’s working?
• What’s not working?
• What do you need?
His approach stands in stark contrast to Elon Musk’s recent acquisition of Twitter, where swift action, dramatic reduction in staff and rapid changes to employee expectations have badly damaged employee morale and operational capacity.
To help teams succeed and thrive post-M&A, companies need a “we first” mentality, something that is best achieved when employees are viewed as assets in the transition process.
4. Execute messaging effectively with internal and external marketing.
Internal and external marketing can help set the tone and empower collective, collaborative direction for new teams. Specifically, this includes:
• Reframing the brand’s ethos and value proposition to accommodate new realities.
• Reviewing and refreshing your team’s understanding of market segments and their impact on operations.
• Reconsidering the elements that drive customer satisfaction and promote long-term sustainability, helping teams grasp the intricacies of the new arrangement and their role in promoting brand salience.
A “we first” mentality empowers all people to contribute and participate in the company’s next steps, reminding teams that they are valued and important while positioning them to succeed in a new operational environment.
Bringing companies together can add tremendous value and enhance opportunities for business growth. It can also erode company culture, making it less likely that a merger or acquisition will achieve its most ambitious goals.
However, by embracing a “we first” mindset from day one, companies can merge teams more effectively, proving that two can truly be better than one when they are unified, informed and empowered.
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Author: Kathy Floam-Greenspan, Forbes Councils Member