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Change Management Means Morale Management during Mergers and Acquisitions

A man jokingly strangles himself with his tie unhappy with change management

When organizations undergo mergers and acquisitions (M&A), senior management often believes its keeping its eye on the proverbial ball, namely the technical and financial details of the deal that will ensure the resulting entity accomplishes what M&A are used to accomplish: greater market share, more diversified products and services, greater efficiencies, fresher vision, and greater market share – in short, what many would call “change management”. M&A are often criticized for offering little to no shareholder value, and one of the reasons for that may be the all too common mismanagement of employee morale that occurs during the process. Unfortunately, studies show that organizations often take their people for granted during M&A, not realizing just how much of an impact poor employee morale will have on the bottom line.

Why mergers and acquisitions make for disturbers and resignations

The reasons M&A almost always cause dread among employees are many. Rumours easily run rampant, conjuring unsettling questions about the changes that may occur: Will I have a different boss?; Will our location change?; Will I have to take on new duties?; or the most anxiety-inducing question, Will I get laid off? Such questions will also run through the minds of the most talented people in the organization(s), making them no exception among the many employees who jump ship for solid ground, namely other organizations they perceive to be more stable. And, of course, the time and money spent replacing these employees can be enormous.

According to the Kenexa Research Institute, apart from layoffs, which not surprisingly cause the most anxiety in any workforce, most employees’ discomfort stems from ideas about their organization’s future. They often feel that with change, particularly at the top, performance will suffer and success will be compromised. In fact, it can become a self-fulfilling prophecy: employees fear organizational performance will suffer, their anxiety gets the better of them affecting their productivity and/or persuading them to leave, which ultimately affects the performance of the organization. Specific fears that often arise pertain to the security of retirement funds and other benefits, dramatic changes in corporate culture, and, of course, downsizing. With such concerns on their minds, employees get distracted – especially if they’re focused on finding another job – and they may even start to fight, ironically damaging their own performance as they compete to stay where they are.

Change management done right during mergers and acquisitions

If better change management means better morale management, then the key to an effective merger or acquisition is communication – early, ongoing, frequent, and transparent. Early because, regardless of how secretive an organization tries to be about such a significant business deal, someone will find out somehow, and the rumour mill will start spinning. And with all the uncertainty M&A inherently bring, secrecy only makes things worse. However, even if an organization decides to come clean from the get-go about a merger or acquisition, communication should not end there – not by a long shot. Communication with employees needs to continue throughout the entire deal process, and as frequently as possible. Furthermore, the communication has to be detailed and possibly even involve addressing specific individuals about their likelihood of being able to stay with the organization.

However, despite the need for early, frequent, and detailed communication, the International Association of Business Communicators (IABC) reports that, unfortunately, most M&A budgets allocate far more spend on external communications than they do on employee communications – a trend that needs to be inversed.

The all-important role of managers in M&A communications

According to Kenexa and research conducted by Deloitte, the worst thing any manager can do during a merger or acquisition is to remain quiet around and distant from their subordinates. Managers are – whether they like it or not – the face of their organizations. And this fact is rarely more pronounced than during M&A. With so much uncertainty on their minds, employees will turn to their direct reports for information, and how those reports choose to handle such situations can mean the difference between retaining seasoned talent and losing it. The bottom line is that employees feel better when managers provide face time via group meetings and one-on-one time, delivering updates that not only explain what’s happening with the deal, but also why those things are happening, and what the advantages are to the organization – all in a supportive tone.

Measuring the effectiveness of change management during M&A

Considering the amount of communication – especially in-person communication – that needs to happen, not only once a merger or acquisition has been announced, but also while the deal is being hammered out, it’s important for organizations to devise an employee communication strategy (even more so than an external one) well before word gets out. To measure morale, and therefore how effective the strategy is, employers should regularly send out employee surveys not only to evaluate the mood of the workforce, but also to ensure that the communications being deployed are conveying the right messages. Such surveys are also key to understanding where the discrepancies lie in terms of culture and core values for both organizations – and that kind of insight can help managers determine the messages they need to communicate in order to keep the peace, find common ground, and ensure that their employees believe in the future of their employer.

3 Comments Post a comment
  1. Remarkable issues here. I am very glad to peer your post.
    Thanks a lot and I am taking a look ahead to contact you.
    Will you please drop me a e-mail?


    June 8, 2014

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