HR has a significant role to play in helping to ensure a merger is effective. Talent management and cultural issues have the power to support or derail virtually any corporate marriage. Employees are understandably wary when organizations announce a merger; left unchecked, suspicion, misinformation, and layoff fears can delay the anticipated benefits of a merger or acquisition for months and even years.
According to Deloitte’s recent mergers and acquisitions (M&A) research report, 2019 is expected to provide an optimistic climate for M&A activity. The report found that 76% of surveyed M&A executives at U.S.-headquartered corporations and 87% of M&A leaders at domestic private equity firms expect the number of deals closed by their organizations to increase over the next year.
Executives at both corporations and private equity firms point to effective integration as the single most important factor in a successful merger. Yet roughly 40% of respondents reported that half their deals don’t generate the expected value or return on investment (ROI), with internal factors like “integration gaps” and “not achieving cultural alignment” as major reasons why.
Studies show that following a merger announcement, the number of highly engaged employees typically drops by 50%, while the number of highly disengaged employees jumps significantly. Complicating matters is the fact that managers have their hands full with merger activities and often aren’t able to focus on employee engagement. Such distractions can prevent leaders from addressing the human side of a corporate union, potentially putting the deal in peril.
Digital Platforms at the Center
As organizations contemplate potential M&A activity, it’s important to understand the larger changes impacting the workplace. As a global society, we’re entering a new reality: the era of the social enterprise. Cultural forces—enabled by the rise of social media—are making relationships with employees, customers, communities, and society essential to fulfilling a company’s mission.
While technology is fueling this seismic shift, it can also help manage it. HR leaders have a number of tools at their disposal to positively impact both talent issues and cultural integration, giving any merger a far better chance of success—the key is proper implementation. Here are some essential actions to help ensure a smoother transition:
Create a detailed cultural inventory. Online services and software products can be used to audit each company’s culture before operational changes begin; once the differences are identified and understood, steps can be taken to lessen their impact using strategic communications that meet the workforce where they are.
Listen. Employees want and need the opportunity to offer input and feedback—and again, technology can help. In addition to face-to-face meetings, live town halls conducted via social media workplace tools can provide a platform for employees to participate. These kinds of events create trust and allow voices to be heard. Social media and employee engagement platforms also enable work groups from both the acquiring and the acquired organizations to collaborate and post comments in a controlled setting, enabling management to dialogue with employees.
Additionally, by sensing internal and external data, trends, and leading practices, organizations can develop a holistic view into a merger or acquisition and the combining workforces. By listening, and collecting and analyzing data, leaders can yield insights on the business and their people today to anticipate the needs of tomorrow.
Embrace integration. With the advent of cloud-based computing systems, integration between companies has become easier. This advantage can be leveraged to facilitate mergers of e-mail servers, workflows, and accounting processes. The cloud can also make it easier to disseminate information. Workers can now be indoctrinated and trained through cloud-hosted portals where learning materials are uploaded. Video updates on merger activity from senior leadership can also be posted weekly, or even daily, for improved transparency.
Yes, integration has advanced with technology, but with it comes the need for clear, custom, and consistent communication with the workforce. Building a tailored, innovative, strategic communications plan can make the difference between successful adoption of new processes and culture and a failed merger.
These examples are just some ways to creatively share information with employees because communications in the world of the social enterprise means so much more than just e-mail. However, strategic communications plans are not one size fits all—to be successful, the communications should be tailored for the specific workforce in the ways they want to be communicated with. Communications today are truly strategic and innovative in nature, so think outside of the box when engaging employees, especially during times of change.
Platforms including mobile apps, corporate websites, digital workplace portals (like Deloitte’s ConnectMe), and sites dedicated to merger activity can all be put to work to facilitate integration. Digital tools can tailor and deliver messages to specific employee populations, and analytics can identify people who have read a communication—allowing HR to act with agility to reinforce a message or change delivery mechanisms to increase penetration.
Be Transparent and Employee-Centric
HR should get involved in communicating with employees at an early stage. Involvement can start as soon as the initial agreement has been reached. It’s important to point out that mergers impact employees at the acquiring company, as well as the one being acquired. Workers deserve the chance to not only ask questions but also understand the strategy and advantages of the union. An FAQ should be established that outlines the impact on operations, workflows, and employment benefits.
Employees are one of the biggest assets organizations have. Without strong planning for employee engagement, staff turnover and disengagement can reduce productivity and even jeopardize the M&A transaction itself. Enterprises must internalize the people aspect of a merger by addressing both cultural alignment and talent management—two of the most important success factors.
In the age of the social enterprise, employees want to feel valued. They demand information and the chance to be heard. Technology, in the hands of HR, can not only support requirements like benefit sign-ups and employment agreements but also facilitate bidirectional communication and a better understanding of a new corporate vision. If the merger of two organizations is a journey, enabling people through the use of technology is one of the best-possible ways to smooth out the road ahead.
Bill Docherty is a managing director for Deloitte Consulting LLP.