Mergers and acquisitions have always been a normal business practice as industry sectors go through economic restructuring as dictated by their growth or decline cycles. Mergers also occur in the public sector, as is the case of the recently announced mergers of the regional health boards and two Crown corporations, the Manitoba Liquor Control Commission and Manitoba Lotteries.
While it may not be apparent, there are always good reasons for mergers and acquisitions. Corporate objectives typically include diversifying risk, diversifying product or service lines, and/or attaining competitive advantage. In others, the corporate objective is a consolidation of resources and the opportunity to create organizational efficiencies by merging functional departments.
However, it's also well known that many of these mergers and acquisitions fail to meet their objectives and simply end up being high-cost ventures that have a significantly negative impact on employees and fail to improve either customer service or that all important financial bottom line.
In addition, research has shown that if radical changes to an organization's management structure and reductions in the workforce occur too quickly during the merger process, then the risk of failure dramatically increases.
Managing a merger or acquisition is complicated because it involves a high level of uncertainty. Employees at all levels are anxious and often feel they have no one to turn to for answers.
They feel powerless and quickly move into career survival mode with some being able to weather the storm, hoping for an opportunity, while others will suffer from chronic stress and worry about their job security. Fear and anger can soon infiltrate employee morale. Then, when work reductions do occur, employees also suffer from grief and loss as their colleagues leave the organization.
One of the key reasons for this failure is that senior leaders often do not include their human resource professionals in the initial strategic planning of such a massive change.
Instead, many senior leaders falsely believe the technical aspects of assessing and arranging the merger/acquisition are more important and they discount the importance of human resources. Yet, we know that stabilizing the new organization and integrating organizational cultures, systems and processes while sustaining employee trust and morale is a delicate and difficult task.
Applying some of the following tips will help your integration go more smoothly and hopefully avoid the many pitfalls that occur during change and transition.
Prepare your management team -- Management will be leading the front lines of change and therefore you need to help this group to be good leaders in times of great uncertainty and change. Help your leaders to understand their own reactions to change and transition and identify what signs to look for among their employees. Provide training and support and encourage these managers to focus on personal self care during this trying time.
Provide immediate employee support -- In spite of the fact managers may also be feeling insecure, they must reach out to their employees and provide emotional support. As a management team, prepare a set of questions and answers that can be shared with employees. This helps to create consistency and prevents one manager from over-communicating and/or providing misleading information. Remind all employees about counselling services that may be available through your employee assistance plan.
Pay attention to organization culture -- Conduct an examination of the organization culture of each of the merging entities. This will give you good guidance on the challenges you'll experience as well as how to handle them. For instance, if one culture is more formal and the other informal, then you will need to determine what type of organization culture you wish to have in the new organization. Develop plans to make this happen and to help people embrace the change and adopt the new organizational identity.
Confirm your organization structure -- Organizational change causes employees to feel a sense of loss, uncertainty and a lack of control over their lives. One way to create stability in the new organization and minimize uncertainty is to quickly announce the structure of your management team. The structure is more effective if leaders from both organizations are included; however, this will depend on the new mission and mandate and if each leader sees the opportunity as advancement rather than displacement.
Foster realistic expectations -- There are no two ways about it, creating efficiencies means that functional departments will be streamlined, job functions will be consolidated and individuals will be displaced. If possible, explain to employees how these selections will be made as well as how and when the restructuring will occur. Be as open and honest with employees as you can.
Provide training assistance -- If employees will be required to apply for the various new jobs, then provide coaching and training on how to write a resumé. Provide workshops on managing stress, staying in control of your career, resume and interview skills and managing change personally and professionally.
Look for options -- While it's anticipated that workforce reductions will result from a merger/acquisition, leaders need to first determine if there are any alternatives to layoffs. Explore the possibility of early retirement, work-sharing programs, modified work weeks, or permanent part-time employment.
Ensure dignity in workforce reductions -- The whole world will be watching how you handle any workforce reductions. If people are not treated with dignity, then morale will continue to plunge and employee trust will decline even further. Provide support services both prior to and after your reduction.
Communicate, communicate, communicate -- Employees know and can accept that organizations must change and adapt to survive; however, they want to be given honest information about what is going on. They will often be starved for information and may ask the same questions over and over again. Update employees frequently, provide factual feedback on the change process as it comes available. Engage in face-to-face communication as much as possible and ensure that all communication media are giving the same message.
Stay visible -- Visibility creates a sense of comfort for employees and therefore managers must be as visible as possible and also be accessible to their employees. Hold meetings more frequently and be open to employees making an unexpected visit to your office. Make frequent visits to your employee locations, observe and notice any potential challenges.
Pay attention to employee safety -- Stress in situations of massive change can cause strange and unexpected behaviour. People lose their concentration, don't pay attention to what is going on around them and fall prey to unfortunate accidents. This is the time when employees can be injured in a car accident or a nasty fall.
Identify and deal with resistance -- Resistance more frequently occurs due to the change in people relationships rather than the technical aspect of a job. Watch for sullenness, verbal hostility, or arguments. Be sure to step in and deal with the issue immediately, as avoiding conflict can lead to greater and more complex problems.
Source: Mergers and Acquisitions, The role of HRM in Success, Carolyn Krisjanson Love, Queen's University Press, 2000.
Barbara J. Bowes, FCHRP, CMC, CCP, is president of Legacy Bowes Group. She can be reached at firstname.lastname@example.org