Organisations are under-utilising front-line managers during the integration process in corporate transactions, warns global consultancy Towers Watson following the findings of its latest study.
While it is widely acknowledged that managers are a crucial element in bringing employees successfully through a deal, the Towers Watson M&A Manager Study, a survey of more than 700 managers worldwide which examined the role of managers in an acquisition, merger or other corporate transaction, revealed that companies are missing an opportunity to engage and mobilise front-line managers. When managers are insufficiently prepared and equipped to help employees this can lead to ambiguity and confusion resulting in disengagement, a high turnover of key talent and reduced productivity.
Despite experience showing that a strong employee-manager relationship helps keep employees engaged and productive, the study shows that front-line managers are not sufficiently involved in integration planning during a transaction. Barely a third (36 percent) of respondents in the UK indicated they were a member of any integration team and 34 percent indicated they had any formal communication role with their employee group. More than a quarter (27 percent) said they were not involved at all in any of the integration activities highlighted in the study. Further – and perhaps most significantly – a full 82 percent of respondents in the UK indicated that employee engagement was not even measured as part of the integration process.
Steve Allan, M&A practice leader for Europe at Towers Watson says: “Maintaining the engagement of employees – their energy, focus and commitment, that is the engagement, of employees during the time of change and distraction that corporate transactions promote is a challenge for many employers. Amongst the most cited reasons for acquisition failures are the challenges around bringing workforces together as the businesses integrate to form one combined organisation. Front-line managers are a key driver in connecting with the workforce during these transactions. Although companies realise the importance of front-line managers, more could be done to utilise them in connecting with and engaging employees at such times.”
Related research in the 2010 Global Workforce Study, supports this point with results showing that the employee-manager relationship is an important component of engagement1. Positive and sustained engagement in turn has a measurable impact on a company’s financial performance2, which is particularly critical during a transaction when dips in productivity become the norm and results are under greater scrutiny. Stephen Harding, senior talent and rewards practitioner at Towers Watson and author of the newly published book “Manager Redefined” said: “Bottom-line, even with good support, a transaction weakens ties to the company and makes people more open to leaving. Without a clear understanding of what people need from different levels of management during a change process, companies risk putting money, time and energy into the wrong things, with less than optimal results.”
This M&A Manager survey shows that the leading reason for employees to leave the company during or after a transaction is that they were uncomfortable with the new organisational culture with over 70 percent of UK respondents citing this as a reason for other employees’ departures. Steve Allan said: “Line-managers are the route to clearing the obstacles in the way of employees doing their jobs. They will provide basic direction on how to work with new colleagues, clients and customers in a new environment and they will serve as the key communication channel for messages and direction from upper levels of management.”
According to the study, fewer than half of UK managers had access to various support tools from their companies to assist in their role during the transition. While access was greater at more senior levels of management, only half (50 percent) of mid-level managers indicated that they had access to change management workshops, which was the more prevalent support tactic among the array tested by the study.
There are five steps to success for companies going through a transaction: Make key talent selections early. Senior leadership should identify which front-line managers they want to lead in the new organisation as quickly as possible. These decisions should be made as efficiently and effectively as possible so these individuals can come into the process early.
1: Onboard the new management team quickly. Ensure managers understand their roles in the new environment and that they are engaged and understand the transaction rationale. Give management the opportunity to “kick the tyres” on the integration details.
2: Arm and mobilise management. Equip management with the tools and support needed to effectively communicate about the transaction: FAQs, messaging, decision-making flow charts, organisational plans, toolkits and training. They will be the first point of contact for employees.
3: Ensure management is effectively communicating.
4: Ensure there is consistency in messaging across the organisation, that the processes are clear and that the lines of communication between managers and employees are open.
5: Establish rewards and recognition. Reinforce the value of contribution to integration success through a set of customised incentives aligned to key integration targets and metrics.