Coleman Barton Johnson
The responsible parties have done their parts – the accountants have certified the numbers, the lawyers have drawn up the contracts and the publicists have prepared a glowing press release. The buyer can already envision the return on investment and the seller is making plans for a new beach house. What could possibly go wrong?
As the economy improves, corporate mergers and acquisitions will increase steadily. But according to several studies, an estimated two-thirds of mergers and acquisitions ultimately fall short of their expected value.
The reason so many mergers and acquisitions fail is simple: poor communication. Take a look at the dealmakers around the table. Who in that group is representing the employees?
Companies often claim that their people are their biggest asset but fail to consider them during this critical transition. Employees are the key factor in the new company’s success or failure, but often the last asset considered, if considered at all.
In all aspects of your business, your “people strategy” is as important as your financial strategy. Companies do not leave their finances to chance but many fail to develop and implement a formalized, intentional plan integrating people into a newly acquired organization. Communication is critical to managing through a successful transition.
Homework begins during due diligence: Meet with as many employees on both sides as possible. Try to understand their culture, their perspective and their pain points. How are the two organizations alike and how are they different? What are possible opportunities? Don’t over promise or create expectations that you can’t meet, but do convey the value of their opinions. You will hear some incredible insights about the company that may help shape your integration strategy. Making an effort early in the process will create an invaluable foundation of trust.
Create an Internal Communication Strategy: Once a merger is announced, internal communication can easily be overlooked. During this critical period, uncertainty over jobs, work location, compensation, benefits and any number of factors typically runs rampant. When regular formal communication is absent, rumors fill the void, creating distractions and confusion that can result in costly employee turnover.
Communicate even when you don’t have all the answers: Many business leaders hesitate to speak to employees, especially when they don’t have all the answers. The impulse to say nothing instead of saying something inaccurate is understandable – but wrong. Silence fosters an environment of distrust. It is far better to admit you don’t have all the answers than to remain silent.
Seek Feedback from Employees: Remember that all employees, from senior management to back-office staff to front-line customer service representatives, are extremely valuable during this period. Treat them as your partners in this endeavor. Seek their feedback and listen to it. Ultimately, they are key in determining future success.
Transitions your business faces during this crucial time can be disruptive and challenging, but they also provide tremendous opportunities. Change is inevitable; how you handle it is up to you.
Coleman Johnson is a principal at PeopleCap, a boutique firm specializing in helping organizations develop “people strategies” aligned with their goals.