Mergers and acquisitions can leave CEOs at a loss–and employees, too!

Mergers and acquisitions have a human impact

An article in the Wall Street Journal today states:

Many CEOs stand to come out losers if they sell their companies, even when shareholders would reap a substantial premium.

Mergers and acquisitions are a source of growth and an opportunity to enhance competitiveness. But what about the human issues? Are the employees of the companies receiving the attention they need through such a change?

Mergers and acquisitions bring tremendous change to an organization, causing issues of job security and identity to move into central focus for its employees. M&As can shake up emotions and produce feelings of loss and uncertainty that can cripple people emotionally, not only during the change but into the future.

M&A activity can be considered a trigger event because of its potential for erupting organizational change and altering people’s mindsets. Often, as soon as CEOs of acquired companies are able to leave, they do, and with that departure is an added loss for those employees who are loyal to that leader.

The complexities of blending cultures or changing cultures is monumental. Making the decision of what the “new” culture will be is a major concern that is rarely addressed upfront for employees. The result is lots of rumors and resistance that can deter the company from achieving expected synergies.

Mergers demand change and adaptation, yet too often the companies neglect to communicate effectively to guide employees through the process. Communication reduces uncertainty and diminishes resistance. It answers questions like: What’s happening? Who is in charge? What will happen to me? The purpose of the M&A must be communicated clearly, the vision for the new organization must be shared and the schedule for implementing change must be provided. The culture of the merged or acquired company must be understood so employees can evaluate if the new culture is a fit for them. Information must come from all levels, but particularly the top-levels must see this as one of their major roles. Any information that reduces ambiguity is essential for employees. Even to communicate that there is nothing new or bits of information can be helpful.

If your organization is anticipating M&A activity, be sure there are plans for defining the new culture and creating a plan for culture change as well as creating a communication plan; these discussions should be at the top of the list with the financial discussions.

The future of organizations depends on the people who live their lives there each day. M&A leadership must be concerned about the CEO and also the employees.