Sustaining Performance During Mergers and Acquisitions

Managing expectations to maximize merger or acquisition performance can be daunting, especially when supervisors are unsure how the new organization will emerge.

Involving both firms’ communication strategies before and during a merger will reduce financial and personnel losses.

“The reason we are at the table is that we can… determine whether this is, from a holistic point of view, a good deal or a bad deal. We have input in shaping what the deal should be or whether we should pursue it at all from a HR standpoint.” – James Otieno, VP, Compensation & Services, Hewlett-Packard

Employees feel powerless, paranoia, doubt, and low morale become contagious. Communication is critical to neutralize the uncertainty. The fear of being part of the inevitable layoff can be minimized if the workforce is kept current on the progress and next steps of the reorganization. Employees should be informed if (and how) their role will change in the new organization. To mitigate productivity losses, companies can provide what is known, and what is not known, on a regular basis (in the company newsletter, or at the start of monthly meetings). Otherwise, ambiguity about their future will cause employees to withdraw from others and avoid their commitment to responsibilities.

It is sometimes a difficult necessity, but the new organization may have to downsize its workforce. For those that will stay, a formalized transition process is critical. That process must address changes in their role and workload, integrate new work procedures and provide realistic job previews into the (post-merger) workplace. These practices will dramatically optimize merger and acquisition performance, decrease cultural conflicts and ultimately turnover.

Communication Practices to Support Organizations in Transition

The human capital angle of the merger is a crucial part of the entire financial picture. Within the organization’s financial investments, HR will focus on salaries, benefits, and contracts. However, the acquiring company is purchasing customers as well as a new organizational culture, and the emerging organization will encounter friction if new work processes are not gradually introduced. Sudden, drastic changes will erode confidence in employee’s role in the firm’s future. During transitions, frequent employee feedback is the tactic which will mediate workplace stress, maintain productivity, and sustain the quality of customer service. Lack of attention here risks the loss of valuable employees and customers.

Additionally, executives of the acquired company should ensure equitable opportunities for its key personnel as part of the deal. This negotiation is essential to prevent the exodus of talented managers. High-performing employees will quickly depart a firm that overtly favors tenure over performance.

Avoiding Managerial Dysfunction in your Workplace

“The workplace, like the home, can become psychologically toxic if dysfunctional people are in charge.” – Adrian Furnham, Financial Times, November 29, 2000

What supervisory behavior impacts voluntary turnover?

Yes, your company’s organizational climate and productivity are significantly impacted by supervisory behaviors. Seasoned managers are assumed to be skilled,reliable, and knowledgeable. However, many are not able to translate those valuable assets into managerial communication or employee motivation.

Often overlooked, managers may not exhibit counter-productive behaviors until they are settled into the organization or promoted into higher positions. Managers employing an autocratic leadership style are unsuccessful at building long-term commitment with their subordinates, and the organizational climate can become toxic and unproductive if they advocate an environment built on fear. However, it may not always be their fault. Some managers are never taught to address the needs of their people and cannot handle the stressors of the new position. These are the hallmarks of this management style that you can recognize:

  1. Inconsistent, unpredictable messages that lack clarity (which creates insecurity among direct reports);
  2. Lack of emotional control when encountering a stressful situation;
  3. Inflexibility when managers repeat mistakes and do not take steps to improve or learn new skills. To often, these characteristics are compounded with
  4. A lack of mentoring knowledge; or
  5. Disinterest in guiding their direct reports’ long-term career goals.

Solutions for leadership development.

Essentially, the above-described managers focus on how team performance reflects on them rather than acknowledging the effort and quality that went into the finished product. Managers who fail to see (or recognize) individual contribution will stifle productivity and creativity amongst their team. They also cost the firm talented employees. If left unaddressed, it can lead to mass exodus or anti-leaders in the ranks.

New hires (especially Gen X/Y) take cues from their direct supervisors. Management must be aware of the influence that it has over employees’ burgeoning leadership potential. Learning how to master interpersonal skills gives managers the ability to control their influence as well as motivate talented employees. Setting clear, specific, and realistic goals and rewarding open communication creates a supportive environment that produces high quality work from a loyal employee base.