Five steps to avoid merger and acquisition meltdown

6 min read

Mergers are an exciting and scary time for any company. Change is difficult – it causes anxiety and stress even in the best of circumstances. So even if you’re thorough with months of careful planning, even if you’ve taken care of all the fees and you’re confident the merger makes all the sense in the world – you might be headed for a complete merger meltdown.

It’s an unfortunate reality that not all mergers succeed. And when they don’t, leaders are often left wondering what went wrong and if it could have been avoided.

As part of a merger, leaders evaluate and determine how to integrate systems (financial, technological, operational, etc.) yet, what often gets labeled lower priority – and sometimes completely ignored – are the people systems.

Here are five tips for how to avoid merger meltdown by making sure you have an eye on the people systems that support your business.

Investigate reality through detailed employee and customer feedback

Many leaders think they know what people think about their company, its work culture and the customer experience, and they base crucial merger decisions on these assumptions. But the cost of being wrong can destroy a merger in year one, with the potential for significant losses from turnover (among both employees and customers). According to an article from “Business Insider,” typical employee turnover can be as high as 20% following a merger.

To make sure your employees don’t become a part of that statistic, it’s important to investigate the following two realities to fully understand the experience being delivered to employees and to customers for each merging enterprise:

• Carry out a work culture audit: What is it like to work there? Think about the people, the processes, quirks and traditions. Ask yourself, how are these companies similar and how are they different? How can each company’s people and corporate culture add to the other to come out stronger through the merger?
• Assess the different customer experiences: Why are customers loyal to each company? What are they looking for in a relationship with each company? Are these outcomes currently being met, missed or exceeded?

How do you investigate these realities? That’s simple... you ask! To get a clear picture of the current culture and brand from the inside out, conduct employee surveys to determine what they like, how they feel and what concerns they have about working in each company. Outside of your employees, survey customers to get an insider perspective of what’s most important to them when finding a partner to work with.

Remember that exploring multiple viewpoints leads to powerful thinking.

By investigating the perceptions of employees and customers, you are better positioned to determine strengths to capitalize on differences to address, rather than avoid, during the merger.

Build and communicate a shared set of values to support a unified culture

Most companies have a set of values that define what the organization believes about the work culture, what it means to be operationally efficient, how to demonstrate leadership, integrity and trust, and what it looks like to share knowledge and expertise – all while serving, or not serving, customers.

When a company buys or merges with another, the parties are not buying or merging with the system of beliefs; they’re buying or merging with the people who have their own understanding about how to deliver (how to live) those values in their day-to-day jobs.

So, it becomes imperative for the new enterprise to formulate a unified set of values that will fuel the combined cultural and customer experience, otherwise you are at risk of inconsistencies that could have negative repercussions.

But don’t be alarmed... this presents a challenge as much as an opportunity. It’s a prime way to uphold and promote values that are important and vital to the ongoing success of the merged enterprise. Just make sure that you take those value definitions off the wall and support them with “the how” – that is – how employees live the values with respect to your operations, culture, service and other tenants of your business.

Appoint culture champions to lead the way

In general, most people are uncomfortable with change. This is especially true during a merger, when change can be perceived as chaotic and in the best interest of a few leaders pushing their own agenda and creating more work for individuals or teams. It is easy for people to feel doubt, push back and consciously refuse to make necessary change happen. Leaders can underestimate how much of a challenge it will be for their team to adapt or move out of their comfort zone.

And all of this discomfort and uncertainty can affect your team’s level of engagement. Less than half of employees will remain engaged if they feel that change is not being managed well. With that in mind, consider forming a team of culture champions made up of cross-functional, respected leaders who can help begin building the trust necessary for connecting with employees’ hearts and minds and continuing to improve employee engagement.

As these leaders model and demonstrate the desired actions and behaviors that support your values, others will see it and follow suit. After enough repetition, positive reinforcement and time, a critical mass will evolve with a common mindset that fuels your unified culture.

Don’t brand for the neighborhood

It’s energizing and fun to create the marketing materials and messages to announce to the world about the merger and how it will have a positive impact. Usually, pulling together logos, taglines, new websites and advertising campaigns is high on the merger to-do list.

These things look great from the outside, but what happens when customers actually come in? The advertising and marketing promises made by merging companies are equivalent to mowing the lawn, planting flowers and painting the house. Great curbside appeal, but what’s behind that façade?

What’s truly important is making sure the combined workforce can fulfill on the promises being made.

If you spend too much time on curb appeal, you won’t be able to because the “inside of the house” won’t get the same attention. Employees can’t or won’t deliver on your promises, which will end up frustrating your customers.

Allocate resources for people systems

As noted in the beginning, oftentimes a company’s people systems are given more lip service than actual planning, and budgets estimated and prepared often overlook the necessary human integration activities. Make sure to apply the time, money, tools and resources needed for setting expectations around the desired culture and employee and customer experience – whether that’s training, leadership roadshows, cross-functional team building activities, etc.

And don’t forget resources for communicating and reminding people about those expectations throughout hiring, onboarding, performance conversations, ongoing strategic recognition, reviews, one-on-ones and more. An employee engagement platform that allows you to segment communications for different sections of your workforce based on location or other demographics can help!

The journey of merging two workforces can be complicated and full of surprises. The fact is that you can’t take Company A and Company B, put them together and announce the unified culture of Company A&B.

Instead, you have to build that unified culture through an intense focus on a shared set of values that everyone can get behind.

Follow these five tips to prevent merger meltdown and you’ll be on your way to an aligned, engaged workforce that delivers a consistently good (if not great) customer experience.