Engaged employees are critical to a company’s success under any circumstance, and that is especially true during a merger, when employee dedication can quickly make the difference between success and failure.
A Gallup survey found that companies with a highly engaged workforce outperform their peers by 147 percent in earnings per share. But just 33 percent of American employees are engaged at work in normal times, and during a merger or acquisition, the organization can become stressed considerably. Under stress, some employees do the bare minimum to stay employed while polishing their resumes on the side.
It is easy to understand why. Decisions affecting employee career paths and livelihoods are being made by executives behind closed doors. When questions go unanswered, rumors fly and people become anxious and pessimistic, their drive sapped by worries about layoffs. It’s a valid concern—on average, 30 percent of employees are deemed redundant after a merger or acquisition of companies in the same industry.
A merger is never simple for anyone – employees, executives or HR. But if they all pull together, they can reduce frustrations, achieve a better outcome for the company and perhaps even some gain new skills in the process.
Culture can be a competitive weapon for a company, and there is no more important time for leaders to reinforce (or harm) their culture than how they behave during an M&A process. According to Bain & Company, a culture that inspires and spurs performance makes companies 3.7 times more likely to be top performers. Culture is defined by the demonstrated behaviors – decisions, actions and communications – that reinforce an organization’s values. The way a company’s leaders embody those values are on full display through an incredible amount of visible behaviors during an M&A event. HR managers should ensure that all integration and synergy-related decisions, actions and communications are made in line with the culture and underlying values, keeping in mind that current, new and departing employees – as well as customers and investors – will be watching to see how a company behaves.
Gallup discovered a gap between how employees and leaders view communication. When leaders feel they have said enough, employees still want more. If they don’t get enough solid information about the company’s future direction and where they fit into it, they are more likely to clock out – literally and figuratively. That is especially true for top performers, who have already been contacted by recruiters and who are the last people a company wants to lose during a merger.
Executives should step up their communication game during a merger, holding town-hall style meetings and encouraging managers to meet one-on-one with their teams to answer questions. They should relay both good and bad news as soon as legally possible. Employees want the truth, and the sooner they know it, the better they can prepare for their future – mentally and practically. Learning you will be laid off is better psychologically than not knowing. It puts employees back in the driver’s seat, and most will choose to wrap up their tenure with a strong performance and a good recommendation for their next stop.
Employees respond to leaders who demonstrate they understand and share their feelings. In a Businessolver survey, more than nine in 10 employees said empathy was important. Seventy-seven percent said they would work longer hours for an empathetic employer, and 60 percent said they would take a lower salary.
Expressing empathy is more important than ever during crucible moments such as a merger, yet many executives remain too buried in the macro picture to think about it. HR managers need to help leaders focus on the company and the people who make it tick, and encourage them to express their very real appreciation and concern for employee welfare. An empathetic leader can galvanize the workforce even during the most difficult times. Their leadership should be supported with coaching and outplacement services, as well as an open-door policy for managers whose teams have questions.
Managers may start to ignore employees destined to be laid off, but these workers are crucial to a successful transition. If they’re not offered support, they can demoralize others around them and damage the company’s reputation on social media. Workers you don’t plan to cut pay close attention to how you treat all employees, and may decide to stay or leave based on what they see. If you treat departing workers with kindness and respect and offer them help in finding a new position, they will do a better job and help spread an atmosphere of good will throughout the company.
During a merger or acquisition, companies set up dozens of committees, task forces and teams to facilitate the transition. HR should explain the benefits of serving on them and recruit strong performers to get involved.
Serving on a transition team helps employees build project management and analytical skills. And there is no better place to learn about collaboration than bringing together people from two different corporate cultures toward a common goal.
Facilitating the integration of a merger can work wonders for a resume, especially if employees can list specific transformational accomplishments. Employees who may not otherwise get to present ideas to senior managers have the opportunity to do so on a transition team. If their proposals go over well, they may be given additional opportunities post-merger. If not, another employer may value their newfound skills and demonstrated results.
Mergers and acquisitions present serious challenges to employee engagement. But by communicating honestly and often, expressing empathy, and involving employees in important decisions, companies can go a long way towards keeping workers motivated and productive, both during the transition and in the critical first weeks of launching the new organization.
Access Chief People Officer Jeremy Benedict is giving a free webinar May 17 on “Driving Employee Engagement During M&A and How to Measure Success.” To register, click here.