It seems to be a common occurrence that few organisations can pull off a successful merger, acquisition or general coming together without causing disruption and trauma for employees and sometimes other stakeholders too. Such issues then often detract from the integration activities that are required, and leaders and HR can then get sucked into reactionary fire fighting and time consuming employee relations issues.
What causes this? Is it leaders being over eager to get the merger (etc) done? Not enough care at the due diligence phase? Or a lack of guidance and involvement from HR?
Possibly it’s all three.
In this post I’ll look at why, and offer some thoughts on how to avoid it. I’ll use the word merger to describe that plus a wider group of integration activities including group structures, acquisitions and others.
In research compiled by ONS, and drawing on thinking from CIPD and Aon Hewitt, it is said that 50% of employees who have been through a merger think about leaving the new organisation sooner than they would have done if the merger hadn’t happened. In some ways this is an understandable statistic, as a merger often brings new leaders into the organisation, and certainly shakes up the existing culture and makes people work in different ways, so it’s bound to be unsettling for a great many employees. What the report doesn’t go on to show though is how many vote with their feet and do move on? It’s only suggesting the employees think about leaving, not saying that turnover increases.
But even employees thinking about leaving can’t be a great state of affairs as it means they’re not wholly engaged with the new organisation. Staff engagement needs to be a very high priority for the newly merged organisation and, what’s more, it isn’t down to HR to do it either. It’s for the executives and senior leaders, with support from HR.
The report also states that only 5% of staff are highly engaged 3-6 months after a merger, with the majority of staff taking 2-3 years before being highly engaged with the new company. I’d suggest this is true. My experiences have been that executives and other senior leaders have been preparing for the merger for a year or more by the time it happens. They’ve been through the change curve and processed the emotion that surrounds it, and by Day One they are, or should be, highly engaged and ready to go. Not so for the staff who haven’t been affected until Day One and for those whose change curve is only just beginning. If senior leaders push too hard or too fast they will not achieve success in their transformation efforts, despite an understandable frustration that things are not progressing the way they had spent the last year planning. People need time to go through the change curve at their own pace.
Another worrying statistic from the report is that 32% of employees think a merger changes a company’s culture for the worse. I don’t dispute the views of the employees, but I do wonder what they mean by worse. Any merged organisation will have a different culture to the two or more originals. In an ideal world these cultures will be almost identical but even some slight discrepancies can lead to employees feeling the new culture is “worse” than their old one.
This I most definitely agree with and I think a full cultural audit should be performed at the due diligence phase, if not at the very outset of merger talks. Simply asking those leading the merger activity to describe the culture gives a very blinkered view and may lead to assumptions being made that cultures are similar enough to merge without any difficulty. Go beyond the labels attached to values and behaviours and look at things like how decisions are made, how important news is communicated, how employees are involved in the organisation, how authority is given and discharged, whether managers are expected to work in silos or collaboratively and much, much more. Even look at how car parking is organised, what the dress codes are, attitudes towards flexible working, and the overall approach to things like employee wellbeing and reward. Looking at these will give further insight into potential cultural alignment and prevent difficulties further down the line.
I often allude to working relationships being treated like actual relationships and in that sense one could view a merger as a marriage, or at the very least moving in together. Successful couples only marry or move in together when they fully understand how the other works, and are already beginning to operate as one socially and culturally. Those couples who struggle when married or living together I often find have not invested the time upfront to go beyond the initial physical attraction and spending limited time together.
Key to all of this is the importance of a strong relationship between the respective HR leads in the merging organisations. Whilst it may be true that eventually they’ll end up competing for one role, at the start the HR leads should be totally and completely honest with each other about absolutely everything that goes on in the merging organisations. Spending time fully briefing each other over an extended period of time, challenging each other’s assumptions and behaviours and helping each other through the change curve will have a major positive impact on the later stages of the merger, and particularly on post merger activity.
It’s also worth planning out, in as much detail as you’re able, the different post merger scenarios that could unfold in terms of integration activity. There will be plenty of people who will advocate the least amount of change in order to minimise disruption, and an equal number of people who advocate fast paced change to maximise the economies of scale available post merger. There’s no right way here, and it could be that an organisation starts down one path then has to jump onto the other quickly. So plan for both from an HR perspective. Know what you’d do as quick wins if quick wins are all that the organisation will tolerate, and know what you’d do if you had to make drastic changes fast.
I suppose my key points from experience and observation would be:
– understand your starting points thoroughly and build a very strong HR relationship
– be balanced, favouring neither organisation if the merger is a partnership of equals and being careful to consider how each communication, assigned responsibility and more could be viewed by the majority of staff in one or both organisations
– help people to understand the Why, but at their own pace. Don’t underestimate the emotional impact of mergers on staff, and be mindful that many won’t share the dream and will be actively working to get out. Let them, or some of them at least. You don’t need those types of people.
– don’t bite off more than you can chew in the first few post merger months, but be prepared for the possibility of having to increase the pace at which you eat
– most importantly, don’t lose sight of the day job and keep as many people focused on “business as usual” as possible
I feel I’ve only scratched the surface of mergers and getting them right here. I will be covering many of these points and more at the HR Directors Summit, 2-4 February 2016 in Birmingham in a talk with Penny Aspden (OD Director at Torus) called Bracing for Change.
I also touch on some of these issues in my own blog, which you can find at http://hrtriathlete.blogspot.co.uk