Merger advice from the trenches: Dear management,

Going through a merger has already proven an exciting, interesting and challenging experience. But how do you connect with your employees when there are more questions than answers? And how do you put your best foot forward as a new organization?

70 percent of all corporate mergers fail. This blunt conclusion comes from a 2014 Bain & Company study, assessing 22,000 companies’ ability to deliver on pre-merger promises. Prompting natural self-reflection one might ponder that the rate of corporate-marriage implosion make people-divorce rates look desirable (apparently expectation management - at work or in the home - is not a forte of human kind).

Back in my university days this was the type of pondering we did, back then M&A struggles was something thrifty one could write a paper about. After joining the corporate world, however, the practical reality of restructures and mergers has come to life.

As we head into another complex and exciting implementation phase, and with a deep desire to see us succeed, here are some reflections for the vantage point of one millennial employee.

Dear Management,

Let me start by saying WOW. Facing any merger between two large, idiosyncratic organizations is a challenge and you deserve quite some credit for taking on this task. In the immortal words of Uncle Ben ‘with great power comes great responsibility’ – a new company will take shape, the success of which you are laying the groundwork for.

I’m sure that behind closed doors you are speaking up for the type of company you believe in. We - the employees - don’t necessary know the effort and energy, which has been expended for us, so for all the courage to share, explain and most importantly listen. Thank you.

Mind the gap

You have to excuse us if this grateful outlook is not what you are met with when you wonder the halls. But the truth is that a merger makes us all a little on edge. Even if we understand the rational, believe in the idea, and are excited about what the future will bring. We’re also scared about what it means for us, the colleagues we care about, and the professional area we have worked so hard for. You know us; we care about whether the canteen is stocked with bananas, so worrying about the future of the business is only natural.

Maybe due to this sense of unease, we can - if we’re being honest - have a tendency to judge you and the integration process harshly. It’s almost a uniting sport: the ‘spot the holes in the merger-cheese’ Olympics. You have to forgive us; it’s just a defense-mechanism.

You see the nit-picking flames up when the distance between you and us becomes greater. The gap will widen if you dismiss our worry, opt for impersonal corporate communication or worse if we are met with silence. The unfortunate side-effect is that you can end up dealing with two divisions: the traditional one between the two companies and the ‘you and us’ between management and employees.

Combining Strength AND Vulnerability

The uplifting news is that you can affect this, it just takes you getting a little naked (emotionally that is; definitely keep your kit on). The only way to make us feel like we’re in the boat together, is if you trust us enough to share your own personal struggle and doubts.

Two cornerstones govern this trust-provoking experience. One is the power of a story; the ability to transport the audience with a narrative that creates heightened empathy. It is not enough to serve up a sound bit ‘change can be scary, I think so too’; it has to be something that for a moment allows us a glimpse of how it’s like to walk in your shoes. The key is putting a face, an experience, a personal perspective on something that can otherwise feel impersonal and distant.

The second cornerstone is the willingness to expose yourself and be vulnerable. Sharing something that is not really your struggle will come across as inauthentic. Think of the organization like a horse (stay with me); equestrian therapy is based on a horse’s unparalleled ability to pick up on a person’s energy and truth – an organization has a similar authenticity barometer sensing your genuineness, more so than your actual words.

You should never try to mimic what you have seen work for others or what you learned on a management course, instead you have to figure out your own vulnerability soft-spot and how you might share this in a powerful manner.

Allowing yourself to be ‘naked’ also shines a human-light on the fear and doubt inherent in this process. Nothing makes a fear-monster grow powerful like being dismissed, ignored and glossed over. With acknowledgement you take the power back. 

Best left in the 80ties: Bad perms and invulnerability

I assume the above advice is quite angst-provoking if you are from the ‘I need to be strong, confident and all-knowing’ school of management. However, the idea that strength and vulnerability is at odds has to be dispelled once and for all – like shoulder-pads and bad perms it may have been okay in the 80ties but it has no merits in the 21st century.

Luckily people are practically falling over themselves to point out that vulnerability is not a weakness. From where I sit the ability to be honest, trusting and relatable is anything but a flaw; it is exactly what a strong, powerful, modern leader looks like. 

Balancing Decisive AND Flexible

In the ongoing merger efforts it has been uplifting to see the energy that has gone into understanding the two organizations, everyone determined to create a strong joint business. It’s understandable then that after weeks of discussing, explaining and imagining different scenarios if you - when you finally agree on an outline – are impatient to implement and get back to a new normal. 

No size fits all

However, as an organizational design is selected the only thing that is certain is that the new structure will work great for some things and be terrible for others. That’s not a critique of any given design that is just the nature of the beast.

Back in 1972 Larry Greiner talked of the organizational life cycle in terms of evolution and revolution with each growth phase inadvertently sowing the seed for the companies’ demise in a tricky game of ‘what got you here, won’t get you there’. In this way Greiner argued that the start-up has creativity and struggle with leadership, but as directional leadership is introduced the organization eventually yarns for autonomy and so on. 

The limits of the Org Chart

What is important to appreciate is the space between the need for disruptive change. In this space there is a constant tension as real life is not divided up into neat phases. Static stodgy organizational design will never completely fit the constant changing demands on a micro level, where the need for direction and autonomy often complete - sometime on an hour to hour basis.

And so the typical organizational change story goes: if you outsource power you get empowerment, but risk a lack of control and standard processes, or if you embed experts into the operational fabric you get specialists with a realistic sense of daily business, but risk weakening the knowledge sharing between experts.

So the humble advice here is to acknowledge that all approaches have an Achilles heel, hence in a Pareto optimal world it makes sense to spend 20% of the time picking the right outline and 80% dealing with its weaknesses. Not being squeamish about looking at all the ways the current model will let us down. 

In Finance and Organizational Design: Hedge Against the Downside

Too often the downside is glossed over – no one wants to wear the ‘no-hat’ – so when problems appear there’s an immediate assumption that the design is the culprit. When really it’s unimaginative implementation - often lacking four elements:

1.      Helicopter time-outs to revisit, reassess and readjust.

Now you have the new design, people in place to execute and a clear idea of how it should work. However reality rarely lives up to all our ‘shoulds’. 

When teaching someone to swim it makes sense to let them struggle in the water followed by learning interventions a la ‘maybe try a little less feet splashing Peter’, acknowledging that swimming cannot be perfected without getting wet.

Similarly you need to design time-outs where you and key employees can get back up in the helicopter and ask ‘what in this organizational set up is working as intended and what is not’. This could be set up as monthly cross-functional meetings where a few discuss, but where anonymous feedback from the wider organization is included.

This iterative improvement process both allows for bugs fixing as well as conditioning a corporate mind-set where people speak up in search of a better way.

Otherwise what tends to happen is that the new structure and all its good intentions get divorced from the real organization where people do what they believe is the right thing in spite of the formal organization. Ending up with one organization on paper and another shadow organization in practice.

2.      Silo crushing initiatives

In an organization of a certain size we have to own that aligning and making sure everyone is pulling in the same direction is a mammoth like feet. On any given day it’s crucial that the organization breeds boundary spanners and breaks down organizational silos, so what is best for the overall business always trumps departmental priorities. In a merger this only increases in importance.

Therefore, it’s time to audit and reimagine the support programs in place. This includes rotational graduate programs, 360 degree feedback sessions, job shadow initiatives, mentoring programs, knowledge sharing forums etc. But also grass-root initiatives like Hackathons and case competitions are a way to foster understanding and speed collaboration along. Now more than ever is the time to nurture these efforts and to consider what more can be done on all levels.  

3.      Willingness to be- and keep people accountable

Most people hate calling others out. We like being liked and struggle with how to confront under-performance. But back to the horse analogue, it only takes one time when the new values, systems, structures are not lived for the entire system to crumble. The organization (and the horse) responds to what you do, not what you say.

Any manager should be extra vigilant and call out any miss-steps in the fragile early months of any change. Whenever someone is not following process or say something that goes against the values laid out it should be seen as an opportunity to intervene and reassert what the vision is.

One way to encourage accountability is to incentivize what needs to be done. However, incentives may sharpen the focus, but also assumes away the employees critical thinking. For something as complex as joining two corporations managers need to think, be flexible and see the bigger pictures. If-then incentives often pollute this, therefore focusing on how over what incentives is recommendable.

4.      Hiring the right leaders.

There are a lot of great managers floating around in a scenario like this. In some areas there is double the amount needed as functions are merged.

Hence, it’s easy to get caught up in the Manager A or Manager B decision- dichotomy. That’s a mistake. You need to assess what type of company you want to become and what managers you need to get there. Then and only then can you assess whether anyone on the current roaster fill that criteria. If not then go find the right person.

We are going through all of this to become a stronger business, this is your opportunity to clean-up and reshuffle. It’s terribly uninspiring if all the same faces (and related short-comings) are brought forward into the new organization, as the most convenient safe choices. You have a unique chance to be bold; people will leave, others will join, this is a natural part of a merger. Use this opportunity!

In it Together

I have no idea what the future will bring. I find this both exciting and terrifying. I appreciate that managing change can be a lot like a blindfolded game of pi?ata. You know what you are trying to achieve, but it can be hard to hit the right spot.

I’m still on board, cheering for us to succeed, ready to get to work on making the new organization more than the sum of its parts.

_________________

Haven't had enough? Please see this May post on Energy Management, the April post on Hacking Mentoring or the March blog on How to get beyond corporate theater.

In these monthly posts I share my own experiences and reflections. I only speak for myself. I hope my musings, mistakes and a-has will resonate, but settle for supporting my own learning loop.