Three ways to make mergers work

By Evert Akkerman

There’s the textbook approach, the innovative way or the tyrannical method

In the HR business, we often hear people say they love change. Taking human nature into consideration, this may be more a fashion statement than anything. It’s part of our addiction to excitement, the hyper-society where everyone is busy, the adrenaline rush that comes from running around all day.

In reality, people crave structure, stability and routine. This makes perfect sense from an efficiency standpoint; in his book The Power of Habit, Charles Duhigg says an efficient brain requires less room.

People tend to resist change. If change was easy, and people loved it, then why is the transfer of training such a huge issue in human resources?

Employers spend billions of dollars every year on conferences, seminars and courses to teach people new skills, and when they return to work, they go right back to the old ways, which offer the comfort of an old shoe. If we don’t enforce the new way, nothing changes.

Let’s look at three real-life examples of successful organizational change.

The textbook way

Several years ago, Credit Union A and Credit Union B decided to merge. The transition really was a textbook example, as the HR manager at Credit Union A had taken his inspiration from books he studied while pursuing his HR designation.

In the run-up to the merger, he connected with his counterpart at Credit Union B. They mapped out the HR side of the transition, envisioning and addressing issues and concerns that might come up. They started sending regular updates to both groups of employees to ensure information flowed freely.

Authorized by their CEOs, they assured everyone of their continued employment. They answered questions and harmonized the benefits plans, pension plans and vacation entitlements.

The human resources functions were fully synchronized when the merger finally took effect, and they were physically in the same location a week before the official date. From an HR perspective, this merger went off without a hitch.

The innovative way

Many years ago, in Europe, a production company with 5,000 workers was losing money and headed for bankruptcy. The CEO, as a last resort, called one of his friends, a management consultant, and asked for help.

The consultant listed three conditions under which he would take on the project: he would bring in his own team; rather than moving into head office, he wanted a trailer set up just inside the main gate; and he wanted a flag pole erected in front of the trailer. The CEO, at his wits’ end, agreed.

A week later, the consultant moved his team of five into the trailer and raised a pirate flag to the top of the pole. The team started its audit, putting in long days, going through records, assessing revenues and expenses, and talking to people at all levels in production, sales, marketing, accounting and human resources to gauge where the company stood and whether it could be salvaged.

A few weeks later, they met with the board and the CEO to present their recommendations, one of which was the departure of the CEO. The board and CEO readily agreed.

Within months, morale, production, productivity and profitability improved and the company was on its way back to the black. Some six months after that, the old CEO met his friend the consultant for lunch, and asked about the three conditions: the team, the trailer and the flag.

The consultant explained: “I wanted to bring my own team as each of them is an expert and we had been working together for years. I wanted a trailer instead of moving into head office so that we wouldn’t be associated with sitting management, which had lost credibility. I wanted the trailer at the main gate, as each of the 5,000 workers would walk by twice a day, and they’d see the lights on, they’d see us at work and they’d be wondering what was going on,” he said. “Finally, the pirate flag signalled that we were renegades — defiant, different from the old structure. The message: ‘Something’s up, it’s going to be different here, things are going to happen.’ We didn’t have much time, and with these innovations, people were ready for change in a matter of weeks. We needed that vibe, to prepare 5,000 people for a major correction.”

The tyrannical way

A third approach to change management is quite effective, but human resources may want to stay away from this if it wishes to avoid lawsuits.

The situation involved two business associations, X and Y, that had been sworn enemies for decades and decided to merge.

Their leadership had finally recognized that since they were fishing in the same pond, representing the same members and targeting the same audience, it would make sense to stop fighting and start speaking with one voice. But when this decision was announced in 1994, several employees on both sides were both anxious and angry.

This was understandable — after decades of fighting and loathing the other party, they were now supposed to fall in love and get married? Yes, said the CEO of Association X, who crafted an internal memo along the following lines:

“Good day all. After careful consideration, our board and the board of Association Y have instructed their executive to commence a process of amalgamation, which is to take effect next March,” he said.

“As our missions and memberships largely overlap, we figured it would be silly to keep bickering. We expect great benefit and synergy from our joining forces and look forward to becoming an even stronger advocate for our members. If you have questions or concerns, please contact my secretary and we can talk about it.”

Following the dissemination of this memo through the ranks at Association X, six enraged employees picked up the phone, and made an appointment with the CEO. 

At the appointed time, each of them advised the CEO they had “great reservations about flushing our expertise and reputation down the drain by teaming up with those reprobates at Association Y.”

The CEO then advised them he had great reservations about continuing their employment, and they were fired.

The news of this development ricocheted through the building in a matter of hours (social media didn’t exist yet) and, as a result, no other employees expressed any further concerns about the intended merger.

The CEO wouldn’t have won industry awards for inclusivity and employee engagement, but his approach certainly was effective.

Communicating change

The best way to effect change is to communicate with stakeholders and prepare them for what is coming. Change always creates unrest and if employers want to bring people along, they have to ensure employees are not too worried. If questions aren’t pre-empted or addressed promptly, people will fill in the blanks and assume the worst.

Mergers succeed or fail based on people and cultures, and HR can play a key role from the get-go by planning, guiding and educating.

Before a major decision is announced, it is crucial to have a communications plan in place that lists every stakeholder, what they need to know, when they need to know it, who is going to tell them and who people can turn to with questions. This way, employers manage the message and suck the wind away from the rumour mill.

Evert Akkerman is an HR professional based out of Newmarket, Ont., and founder of XNL HR. He can be reached at [email protected].

Reprinted by permission of Canadian HR Reporter. ? Copyright Thomson Reuters Canada Ltd., October 16, 2018, Toronto, Ontario. 1-800-387-5164. Web:  www.hrreporter.com.