Five ways to beat post-merger blues

Every M&A brings in myriad challenges like possible downsizing, cultural incompatibility, relocation, or unexpected compliance requirements. Your timely intervention can keep employee resistance at bay, and ensure smoother mergers.

— By Nirupama V.G.

If we take a look at the data published by Kearney, nearly 60 percent of mergers and acquisitions (M&A) fail to deliver desired value to shareholders. This commonality is reiterated by a KPMG study, which pegs the number at a whopping 83 percent! Now, the inability of merging entities to maintain optimal employee morale contributes significantly in such M&A failures.

To take a case in point, the abundance of information (often unverified) overwhelms employees during a merger. This is where HR leadership must step in with optimal communication to ensure that the M&A event does not affect overall employee morale.

Here are some ways to beat the post-merger blues.

1. Focus on talent retention

Typically, most companies experience a drain of good resources within weeks of the merger news (or rumors). Controlling attrition must top the to-do list of the entire HR team—even as merger talks are underway.

A train of employee-exits following news, or even rumors of the merger, can have financial implications. Moreover, it also impacts your organizational reputation. To mitigate these risks, engage with top performers from every function and department on a one-on-one basis. Highlight potential career growth paths, and allay their apprehensions about job-loss.

2. Communicate regularly, clearly, and openly

Optimal communication strategies must be used to cement employee relationships between the merging entities. Employees should be constantly updated—even if it comes across as over-communication from your side.

Mergers bring in inevitable changes, which your employees are subconsciously aware of. Formal announcements about impending changes send out the right signals and create a feeling of being valued team members. In addition to being regular, your communication must also be transparent, factual, and unambiguous.

Ensure that your leadership teams openly answer questions of employees. Such interactive communication keeps rumors and false news at bay. Employees feel assured when information comes from the right source.

The initial period is the most sensitive one. Hence constant dialog either through town hall meetings, web discussions, and emails can assure peace of mind for your employees.

3. Demystify the reorganization process and structure

One of the most confusing parts of a merger is the lack of understanding of new rules, policies, and processes. Hence post-merger reorganization is essential to ensure clarity about the new entity.

All departments need clarity about new processes to ensure that it is business as usual. Acceptance and understanding of changes in a standardized manner eliminates feelings of favoritism. Employee buy-in for the merger can be achieved by laying out rules of engagement, shared decision making, and growth paths.

4. Focus on cultural integration

According to observations made by Society for Human Resource Management (SHRM), 70 to 90 percent of all M&As fail due to various HR-related aspects. It lists incompatible cultures and management styles as the two important factors.

When entities merge, their combined workforce is often a potpourri of people with different nationalities, ethnicities, religions, cultures, time zones, languages, food habits, and age groups. Organizational and HR leaders must proactively create policies where people with diverse backgrounds can work seamlessly with each other.

Hand-holding employees is a must during the cultural transition. Invest significant time to address issues faced by people from diverse backgrounds – with empathy. Help your employees understand, adopt, and adapt to the new culture so that they can succeed in the new workplace.

5. Onboard a capable HR consultancy partner

The merger process can be made smoother if you partner with a reputed and the right end-to-end recruitment consulting firm. The firm you select should be able to play a pivotal role as a trusted adviser to both, the management and the employees.

An agency with 360-degree HR domain experience will be well-equipped to understand the merger challenges faced by your organization. Besides advising your company on the risks involved, the right HR partner helps in many ways.

An agency with 360-degree HR domain experience will be well-equipped to understand the merger challenges faced by your organization

A capable HR expert team can assist you in terms of cultural integration, leadership restructuring, identification of specific competencies, new staffing models, compliance, and retention strategies. It also advises on good HR practices to follow before, during, and after a merger event takes place. These partners handhold you throughout the process.

Mergers open up myriad opportunities due to emergence of all-new synergies between the merging entities. These opportunities must be properly presented to your employees. The role of the internal and external HR teams proves crucial in this respect.

Through thoughtful actions and communication, HR leadership can create a cohesive entity for teams belonging to diverse backgrounds. Coordination and empathy of the top leadership alongside the right HR guidance will ensure that M&A scenarios prove successful—from the employee- as well as shareholder-standpoints.

Now, here is a question for my readers and industry peers. What is your perspective? Did you witness any post-merger scenario in your organization? Do share your thoughts and experience.

#MergersAndAcquisitions, #mergerchallenges, #HRleadership,#talentretention, #reorganization, #rulesofreorganization

Nirupama V.G. is the Co-founder and Managing Director of Ad Astra Consultants. With about three decades of experience in the Recruitment Consulting domain, she has worked with various large organizations and family businesses while building their people practices. She is a certified coach and a mentor.