According to Harvard Business Review, studies repeatedly show that roughly 70 – 90% of mergers and acquisitions fail. Many mergers are unable to fulfil business aims because employees struggle to integrate. Research by King’s Business School and the University of Helsinki has found that mergers are more likely to be successful if staff feel that their jobs are safe.
As consultants who specialise in corporate change, we understand the complexities surrounding M&A. Managers must create a strategy to support business plans and financial budgets while also effectively communicating with stakeholders and employees. Unfortunately, leaders can fail to provide the right support for staff.
Prioritising the well-being of employees will make the performance goals of a merger much more achievable.
How to navigate your team: Create a positive mindset
Research by LSE Business Review examined employees living through a four-year merger integration. The study found that their experience of the merger centred around these questions: “Is this a place I want to stay in?”, “Is this a place I can survive in?”, “Is this a place I can thrive in?”
Corporate change can often be met with resistance and a lack of enthusiasm because it increases fears around job security. To encourage staff to get on board, consider how a merger can accommodate the goals of your company as well as the personal goals of your employees. Help people understand why you are merging with a new company, and what plans you have in place to support them through the transition.
Lead with authenticity
It is not surprising that new workplace dynamics and team structures will cause some unease. During a merger, workers will be feeling uncertain, and they will look to their leaders for confidence. Managers who do not show an authentic and honest leadership style will increase feelings of distrust and scepticism. You cannot bring a team together if people do not trust the leaders in charge. It is better to be honest and open from the beginning of a merger, as opposed to selling a false reality to entice employees to feel optimistic.
Respect both cultures
When we worked with an American multinational energy company, we found years of mergers and acquisitions had resulted in cultural differences and a lack of vision. The lack of a unified cultural identity led many clients to partner with competitors. To help executives understand why this was happening, we created a simple approach that gave every executive a clear understanding of how they could improve.
Mergers bring together two different sets of values and ideas around work (and if the companies have been through several mergers already, there will be many more sets of values embedded in varying depths). While simplicity can help break these divides, it is important to also show respect for all the cultures at the table. For instance, during our time with the energy company, we designed workshops that were adapted to suit both their American and South-East Asian managers.
Bringing large groups of people together from different work environments will affect technology and team structures. Expecting one side to adapt their tools and communication strategies will form an unfair imbalance and likely increase any negative attitudes towards the merger. In large organisations, mergers are often perceived as acquisitions, and the acquirer can be identified sometimes at a departmental level as different, depending on decisions and their impact. In the planning stages, leaders must decide how to adopt the cultures into a unified one, ensuring there is enough time to train staff if technology changes.
Adopt a new mission statement
While the corporate change from a merger can be a fresh start for a business, it can also be a good incentive for workers to create their own change by looking for a job elsewhere. Retaining top talent should be a significant priority for leaders. Staff resignations can increase the financial burden during a financially vulnerable period and impact the knowledge and skills required to lead a company post-merger.
Research proves employees value purpose – people want to join organisations that have a clear set of values that align with their beliefs. To keep employees from leaving, leaders must create a mission statement with values that everyone can easily understand and adopt. People need to know how the culture of their company will be affected post-merger.
If you are in the process of a merger or if you have recently merged with a new company and are having challenges with culture, we can help. Contact us today to find out more about our M&A solutions including facilitation and bespoke training programmes.