Acquisition & Integration: People First
No matter what side of the acquisition you are on, there is always a level of anxiety felt about the future. In most cases, the operating model and culture will change for one or both companies in an acquisition. These changes commonly include new senior leadership, tweaking policies, adjusting processes, and altering the day-to-day work.
Your employees are bound to be rattled in some way. Can you blame them? Change is hard, and with every acquisition, large or small, it is important to address the anticipated anxiety and concerns of the employees. Failing to address the employees’ concerns will affect a seamless and effective integration. In most cases, the inability to prioritize employee concerns will also lead to poor business performance, the loss of employees, and difficulty capitalizing on synergies.
So, what can you do? First, you must understand that change management involves more than just addressing operational integration. In fact, honesty and cultural integration will play a major role in the organization’s success going forward.
In this article, we will dive into the actionable steps you can implement to reduce employee anxiety and promote the objectives and success of your organization.
Be Honest with Employees
We all know that with any acquisition, change management is key to successful integration. Using the statement “we are not going to change anything” is like putting your head in the sand and not addressing the obvious changes that need to happen to successfully capture the synergies and ensure business success.
Employees know that there will be changes within the organization following a merger or acquisition. Denying this fact will contribute to a relationship without trust. Why should you care about trust? Well, studies show that nearly 80% of employees who trust their employers feel motivated to work. Without building trust from the beginning, you can expect your productivity and efficiency metrics to be low, which is not a great starting point.
To prevent employees from running straight for the door, your leadership team must analyze how employees might act toward a merger or acquisition. Although you may have strategic operational goals, be reasonable with what you want employees to accomplish right away. You shouldn’t drive the importance of reaching new productivity or profitability immediately following the merger or acquisition. It’s just not realistic and will send a bad message to the team.
Be honest about your goals but implement flexibility throughout the transition process. Employees are most likely going to be under a new management style. Data shows that it takes employees anywhere from three to six months to adapt to a new work environment. This means that your operational goals shouldn’t include reaching excessive benchmarks in the first few months of integration. Bottom line is that honesty is an important factor in building trust, but you should be strategic about your objectives right away.
Focus on Cultural Integration
I have found that most buyers spend a generous amount of time planning the organizational structure of the new entity. Typically, those discussions stop at structure and do not cross over into a very critical conversation about cultural integration. For a Private Equity Group: What impact will the transaction have on the culture? For a Strategic Buyer: What are the cultural differences of the group/office? How will we weave two cultures together? These questions are critical because of the challenges that will occur when culture is not addressed. It’s not until you start to lose trust from employees, when employees leave the organization, when the business is declining and when time is wasted trying to “fix” things without recognizing the culture has been broken that you address culture.
Cultural integration after an acquisition isn’t necessarily about creating a new culture but instead maintaining or merging two existing cultures. Culture is what defines an organization and how work gets done. It is the engine that will power the full integration. Pinpointing how you can create a maintain a culture is vital throughout the implementation process to reduce backlash and promote seamless integration.
Completing a cultural due diligence will guide you to understand what the potential challenges may be. Just like you scoped out potential targets, you need to evaluate the cultural components of the workplace. Take the time to assess and understand cultural barriers, the different groups involved, and how you can create a culture post acquisition. Your due diligence will pay off immediately by ensuring you have an engaged team.
Prioritize Operational Integration
In addition to addressing culture, the operating model must be addressed. In most cases, two different operating models come together, which will pose a significant amount of stress to the teams. The revised operating model may include changes in roles and responsibilities, a new structure, new processes, or a new reporting structure. No matter how big or small, these changes will impact the employees and how they view the acquisition.
Operational integration can also be maximized by providing the proper training to employees. Taking the time and resources to train employees immediately on new systems, processes and policies will reduce conflicts between employees and the new management team. Proper training improves efficiency and shows employees you are taking the time to work with them to develop new procedures. This relates back to trust. The more resources you have available to employees throughout the transition process, the more trust that will be built.
Develop Clear Communication Channels
Clear communication channels are important in every step of the acquisition, from creating a culture to boosting operational integration. Without defined communication channels, rumors can develop that lead to broken trust and high employee turnover. Keeping everyone in the loop in each step of the process reduces speculation and ensures smooth changes.
Remember that key employees can leave at any point, making it critical that you take the necessary steps to make everyone comfortable during the acquisition. At a minimum, your business should address employees at every critical step, such as when the deal is finalized or when new processes or policies are expected to roll out.
After the deal is finalized, the old owner should send an email to each employee that announces the acquisition. It’s important that employees hear it from the old owner first. In this email your company should be introduced and lay out a few of the steps going forward. The reason for the acquisition should also be clearly stated, such as retirement or growth. If employees have any questions, there should be information on who to contact.
The more details you can give employees, the better. For example, if you plan on retaining all talent, state this and make sure employees know their value throughout the transition process.
Developing clear communication channels isn’t just being concerned with the initial announcement. In fact, you need to have these channels open indefinitely. A concern might not rise in the first month, but something may come up six months down the road when employees are having trouble with new expectations, leadership changes or policies. Giving employees a viable outlet to go to with concerns and questions is important to build trust and retain key talent.
Summary
There’s no set guideline on how to approach an acquisition or integration. Instead, you will need to analyze the employees you are working with to find the cultural, operational efficiency resources, and communication channels that work best for them. Receiving feedback from employees on how your company is doing is important for implementing the necessary changes.
The good news is that you don’t have to work through acquisitions alone. Our team can work alongside you to find the right steps to promote a smooth transition, from easing employee concerns to improving operational capacity. Reach out today to learn more.