M&A: Don't Forget the People

Mergers and acquisitions bring together two independent organizational infrastructures. The companies involved spend countless hours developing blueprints to unite their finance, technology, and human resource departments. Profit and growth are the overriding objectives. Economic considerations are indeed crucial to creating a seamless infrastructure and paving the road to success. A purely economic approach, however, fails to consider one key ingredient: the people. When merging companies ignore the human side of the equation, their nicely paved road will quickly develop potholes.

Take the first step in avoiding cracks in your corporate asphalt by acknowledging that the merger impacts employees. Transitions are tough on employees who are not involved in the planning stages and have no insight into the end result. Get your employees on board by making them part of the process. This does not mean that you engage the entire workforce of each organization in planning the merger. Rather, managers must keep their employees informed of the merger's progress. Managers should hold regular meetings to inform their staff of the latest developments, to field questions, and respond to employee concerns. The merger will cause some degree of trepidation in your workforce and it is incumbent upon you to offer reassurance.

Anticipate the negative effects that the merger will have on the culture of each organization and develop a means of minimizing the harm. Blending two distinct or even similar cultures requires advanced planning. Each company must first identify and articulate the culture of their organization. Then those in charge of carrying out the merger must assess how best to unite their people. Without a plan, the merged management will not know how to react when employees who came from a nurturing atmosphere become disgruntled with an environment of "every man for themselves." Avoid the resignations and in-fighting that inevitably will result from such a situation by painting a clear picture for your employees of the merged culture and their role in it.

Merging companies often make the mistake of overlooking the need to get executives on board with the new vision. Executives will be tasked with implementing the vision once the merger finalizes. It only makes sense, therefore, to seek the input of executives from both sides during the planning stages. A one-sided process places executives of the under-dog company in the untenable position of carrying out a vision they had no part in creating.

Before carrying out the merger the companies should decide where to place their key talent. This task cannot be saved for post-merger because the placement of key talent directly impacts the success of the transition. Companies should strive to place key talent in line with the merged company's strategic direction. Top executives understandably will want to retain their top talent under their direct control, but this may not be best for the new merged organization.

Slow and steady will not win the integration race. When companies merge, swiftness and efficiency surpass timidity and passivity. A wait and see approach fosters a frustrated workforce and magnifies the chaos left in the merger's wake. A proactive approach, by contrast, minimizes the growing pains that employees will feel. Managers of the merged company must immediately take charge and make decisions that need to be made. Give employees as much continuity and normalcy as feasible under the circumstances.

No merger can be deemed a success without clear communication channels to manage feedback about the merger. Leading executives of the merged company must anticipate the questions and concerns of employees, customers, and shareholders, and be ready with answers. When companies undergo major transitions, there is no such thing as too much communication. Those in the know should impart their knowledge about the trials and tribulations of the merger to those whom the merger impacts. Poor communication or lack thereof leaves employees, customers, and shareholders guessing about the success of failure of the merger. Prevent the proliferation of negative sentiments by offering your employees an honest appraisal of the situation.