by Sheila Margolis on January 5, 2011
According to a Forbes article published December 28, 2010, merger activity will increase in 2011:
A recent study from Thomson Reuters and Freeman Consulting Services concludes that the global market for M&A will surge 36% in 2011 to over $3 trillion.
Sadly, most mergers do not achieve their objectives. Failed mergers that otherwise have a sound strategic and financial fit are typically the result of the loss of intangible, hard-to-measure, human factors on which the company’s tangible assets ultimately rest. M&As have the power to shake up an organization and ignite feelings of loss and uncertainty that can be devastating to a company and the people in it. Employees with years of knowledge and a depth of commitment to a company don’t just turn off the switch and feel dedication to something new. These transactions are fraught with challenges:
- People who previously may have been competitors are thrown together.
- Employees fear being earmarked redundant.
- Competitors capitalize on the uncertainty.
- Existing cultures change.
So what is the remedy? How can you manage in this climate of continuous change? How can you learn how to not only survive but also thrive in a constantly changing work environment? The solution begins with understanding culture.
- Analyze the culture of both organizations prior to the deal and decide the culture of the organization that emerges after the deal.
- Share with everyone the Purpose of the new organization, its distinctive Philosophy that directs employee actions, and the strategic Priorities that must guide workers so they are strategic in their work activities.
- Access the fit of employees with this new culture and give employees the opportunity to evaluate their fit or lack of fit with the new culture. A merger or acquisition represents a new opportunity to create a compelling, ambitious vision to capture value not present prior to the transaction. Individuals must determine if they buy in and want to be a part of that vision and strategy. Is the future of the company a future you want to share?
- Communicate–actually over-communicate. There is a lot of uncertainty and any and all communication will be appreciated by employees. Know that individuals want to know how the change will affect them so be sure to address the organization-wide changes and the changes that will impact each individual. Questions employees will have include: Do I have a job? Who will be my boss? What type of company will I be working for?
And a few months after things have settled, give employees an opportunity to voice their feelings and perspectives through a survey that is anonymous. Take the time to share survey results and any changes that will be made.
As companies choose to use mergers and acquisitions to grow and expand their reach and their offerings, they should take the time to clarify the cultural issues and focus on the people issues so that the deal is a financial, strategic and human success.
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by Sheila Margolis on October 15, 2010
An article in the Wall Street Journal today states:
Many CEOs stand to come out losers if they sell their companies, even when shareholders would reap a substantial premium.
M&As are a source of growth and an opportunity to enhance competitiveness. But what about the human issues? Are the employees of the companies receiving the attention they need through such a change?
Mergers and acquisitions bring tremendous change to an organization, causing issues of job security and identity to move into central focus for its employees. M&As can shake up emotions and produce feelings of loss and uncertainty that can cripple people emotionally, not only during the change but into the future.
M&A activity can be considered a trigger event because of its potential for erupting organizational change and altering people’s mindsets. Often, as soon as CEOs of acquired companies are able to leave, they do, and with that departure is an added loss for those employees who are loyal to that leader.
The complexities of blending cultures or changing cultures is monumental. Making the decision of what the “new” culture will be is a major concern that is rarely addressed upfront for employees. The result is lots of rumors and resistance that can deter the company from achieving expected synergies.
Mergers demand change and adaptation, yet too often the companies neglect to communicate effectively to guide employees through the process. Communication reduces uncertainty and diminishes resistance. It answers questions like: What’s happening? Who is in charge? What will happen to me? The purpose of the M&A must be communicated clearly, the vision for the new organization must be shared and the schedule for implementing change must be provided. The culture of the merged or acquired company must be understood so employees can evaluate if the new culture is a fit for them. Information must come from all levels, but particularly the top-levels must see this as one of their major roles. Any information that reduces ambiguity is essential for employees. Even to communicate that there is nothing new or bits of information can be helpful.
If your organization is anticipating M&A activity, be sure there are plans for defining the new culture and creating a plan for culture change as well as creating a communication plan; these discussions should be at the top of the list with the financial discussions.
The future of organizations depends on the people who live their lives there each day. M&A leadership must be concerned about the CEO and also the employees.
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by Sheila Margolis on July 20, 2010
Sage is a global software business, but with so many acquisitions, it has lacked a united culture. As Mary Welch reports in the July 18th issue of the Atlanta Journal Constitution, the company “is redefining itself as an entity greater than its parts.”
To retain the success of acquisitions, organizations tend to leave them alone for awhile to avoid disrupting their productive operations. But now for Sage, building a global brand will require some disruption in order to build a united culture. There are real benefits to collaborating across acquisitions and business units. A company often starts with a re-branding effort to jump start the process, but that’s just an image adjustment. Real synergies and prosperity will only be derived from an internal process of building a united culture.
Including the people of all acquisitions–the entire organization–in defining the Sage culture that all will share may be the formula for uniting employees and making the brand a seamless and customer-focused solution for those they seek to serve. The process of building a united culture is much more than a re-branding effort. It is an internal process to define, shape and manage organizational culture. By building this shared foundation, a united effort can be realized.
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