Mergers and Acquisitions Increasing in 2011–Are You Considering the Human Factor?

According to a Forbes article published December 28, 2010, merger activity will increase in 2011:

A recent study from Thomson Reuters and Freeman Consulting Services concludes that the global market for M&A will surge 36% in 2011 to over $3 trillion.

Sadly, most mergers do not achieve their objectives. Failed mergers that otherwise have a sound strategic and financial fit are typically the result of the loss of intangible, hard-to-measure, human factors on which the company’s tangible assets ultimately rest. M&As have the power to shake up an organization and ignite feelings of loss and uncertainty that can be devastating to a company and the people in it. Employees with years of knowledge and a depth of commitment to a company don’t just turn off the switch and feel dedication to something new. These transactions are fraught with challenges:

• People who previously may have been competitors are thrown together.
• Employees fear being earmarked redundant.
• Competitors capitalize on the uncertainty.
• Existing cultures change.

So what is the remedy? How can you manage in this climate of continuous change? How can you learn how to not only survive but also thrive in a constantly changing work environment? The solution begins with understanding culture.

• Analyze the culture of both organizations prior to the deal and decide the culture of the organization that emerges after the deal.
• Share with everyone the Purpose of the new organization, its distinctive Philosophy that directs employee actions, and the strategic Priorities that must guide workers so they are strategic in their work activities.
• Access the fit of employees with this new culture and give employees the opportunity to evaluate their fit or lack of fit with the new culture. A merger or acquisition represents a new opportunity to create a compelling, ambitious vision to capture value not present prior to the transaction. Individuals must determine if they buy in and want to be a part of that vision and strategy. Is the future of the company a future you want to share?
• Communicate–actually over-communicate. There is a lot of uncertainty and any and all communication will be appreciated by employees. Know that individuals want to know how the change will affect them so be sure to address the organization-wide changes and the changes that will impact each individual. Questions employees will have include: Do I have a job? Who will be my boss? What type of company will I be working for?

And a few months after things have settled, give employees an opportunity to voice their feelings and perspectives through a survey that is anonymous. Take the time to share survey results and any changes that will be made.

As companies choose to use mergers and acquisitions to grow and expand their reach and their offerings, they should take the time to clarify the cultural issues and focus on the people issues so that the deal is a financial, strategic and human success.