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Culture Change During Mergers and Acquisitions

How to Navigate Culture Change During Mergers and Acquisitions

News of one company buying another one makes for splashy headlines, broadcasting rising stock prices and the overall cost of the deal. Just look at the headlines Disney garnered for its recent $52 billion bid to acquire most of 21st Century Fox, as well as all of Sky News. However, what really counts after the dust settles is how you help your employees adjust to the cultural shift. Author and management consultant Mark E. Mendenhall writes that “cultural and psychological sides of M&A are often overshadowed by the financial side,” and SHRM notes “studies consistently show that most mergers and acquisitions fail, mainly because of people and culture issues.” As an HR professional, your participation is crucial during each step of the transition, but the most significant contribution you can make is probably in the area of employee engagement. During this high-stakes period, you have the chance to prove your value to the company if you keep the following factors in mind:

Expect Employees to Feel Stressed

Before you can help employees adjust to upcoming changes, you have to be aware of what they are feeling. From the moment the merger is first announced, your entire workforce is likely to be distracted by uncertainty. It’s disturbing to imagine one’s livelihood simply disappearing, especially for those workers who are older or who doubt their ability to land an equivalent job. Employees may even wonder if financial pressures or job-hunting may force them to move out of their home. Relationships inside and outside the workplace may suffer, and engagement in job tasks often plummets.

Even though mergers aren’t exactly a cakewalk for your HR department, you must find time to alleviate your workforce’s stress and provide each person with the support and empathy they need to stay engaged. Glassdoor advises, “Even if an employee is losing their job, studies have shown that the worker will be more productive and more valuable in his final days if he or she is notified well in advance and provided with adequate support and guidance.”

Learn From Your HR Counterparts

Whether you are part of the target company or the acquiring company, you have a lot to learn from the other HR department. Mary Cianni, Ph.D., global leader of M&A Services at Willis Towers Watson, suggests that regardless of who will continue on as CHRO, you need to learn about the other company’s people. She notes that key questions to ask include the following: “What are the key drivers to employee engagement? What motivates them? What are they accustomed to with regard to rewards and recognition?”

Practice Transparency From the Beginning

The more your workers understand about what to expect, the better equipped they’ll be to meet the challenges of change. Cianni advises management to use accurate language right from the beginning: “If [the transaction] is an acquisition, call it that, versus using terms like merger or combination. The less ambiguity about the integration approach, the clearer the messaging to employees.” You build trust by being direct and truthful.

Provide Accurate Information

HR departments are under considerable pressure during mergers, and you may find yourself called upon for answers at precisely the moment when you have least control over your workers’ situation. Be careful not to release any specifics about dates, roles, retention and so on until all those plans are definitely in place. Telling even one manager about something that “might” happen is a way to create disruption and rumor. Cianni recommends that HR staff provide regular updates, even if all you have to say is “there’s nothing new to report.”

Listen to Employees

Most of the information flow during mergers move in only one direction, because workers are anxious to know what to expect. Nonetheless, this is a time when you should make a special effort to empathize with your employees. Let managers know that it’s helpful for them to meet one-on-one with direct reports so they can find out what’s on everyone’s minds. Glassdoor recommends that companies seek input from old and new employees alike regarding how the transition is going. They may have valuable suggestions and feedback that can help everything move along more smoothly.

Similarly, when you hold HR meetings to orient staff to new benefits or policies going forward, it’s important to allow time to listen to and address employees’ concerns. Sending out anonymous surveys ahead of time is another useful way to find out what’s keeping your workers up at night. Employees need to know that the company takes their questions seriously and value their input.

Institute an Employee Recognition and Rewards Program

There may never be another time when it’s as crucial to express your company’s appreciation to employees. Connect with your managers and discuss how they can use recognition to unify their teams. RecruitLoop points out that after a merger, “Setting a proper incentive or rewards program is essential to boost the morale of your new employees and make them feel part of your organization.” If the merger results in the integration of new employees, a peer-to-peer recognition platform is an excellent way to begin the process of bringing everyone together.

When handled effectively, mergers represent a surge of fresh energy and inspiration for the entire organization. HR professionals have a major part to play in the success of this transition. To learn more about how employee engagement and the right strategy can positively impact your workplace culture during times of change, download our ebook: Engage or Die: How Companies that Act Fast on Engagement Outpace the Competition.

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Which company has already reaped the benefits of instituting a recognition culture? Availity, the nation’s largest real-time health information network, has maintained a fun and engaging work culture with its employee recognition and rewards program, LOVE (Living Our Values Everyday). Availity employees continue to embrace the Achievers platform as a method for celebrating accomplishments large and small, with nearly 70% sending recognitions and 98% receiving recognitions in the first year of the program. To learn more about Availity’s success, access their case study here.

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Smart & Final: Effectively Engaging 10,000+ Employees

How do you effectively engage over 10,000 employees? This was the challenge presented to Smart & Final, a major chain of warehouse-style food and supply stores. Smart & Final has over 10,000 employees and approximately 211 stores in 5 states. Their previous employee recognition strategy consisted of a ubiquitously disliked service awards program that was perceived by employees as being impersonal and demotivating. This type of employee experience was unacceptable and something had to be done about it. The Smart & Final team took on the huge task of overhauling their employee recognition strategy and finding a new way to boost employee engagement across the entire organization.

With 66% of HR leaders currently updating their employee engagement and retention strategies, Smart & Final is not alone. Companies worldwide are finding immense value behind putting more time and resources into employee recognition and engagement programs. For starters, 60% of best-in-class organizations have stated employee recognition is extremely valuable in driving individual performance and 50% of HR leaders said that an increase in employee recognition would boost employee retention. If that isn’t enough, a 1% increase in employee engagement equates to an additional 0.6% growth in sales for companies.


Businesses share why employee recognition and engagement matters

It’s a no-brainer why so many companies, such as Ericsson, Rogers, and Availity are jumping on the employee recognition and engagement wagon. Smart & Final wanted to make sure their new HR strategy would hit employee recognition numbers out of the park. And that’s exactly what they did. After Smart & Final implemented its new Spotlight program with Achievers, they saw stronger employee alignment, activity rates, and revenue. The business impact was significant with amazing results, including:

  • Increased monthly recognition activity at 11 times the normal average
  • More than 43,000 recognition moments in one month alone
  • Sales grew 1.1% on average
  • 96.8% of employee recognitions were sent without points attached, making the cost virtually free

Joe Tischbern, Manager of Learning and Engagement at Smart & Final, has seen a shift in perspective from executives on employee recognition after kicking off Spotlight. In our customer testimonial video, he shared:

“Some of our executives were skeptics when we started this. They’re no longer skeptics because they see the impact that a recognition they give has on the hourly associate working in the store. Our CEO himself has said that he’s seen the difference. He’s seen the fact that when he has the opportunity to recognize people, he sees a change in their behavior.”

Not only did Smart & Final’s new employee engagement strategy convert recognition naysayers into believers; sales numbers, employee happiness, and customer satisfaction all improved. Tischbern further shared:

“Sales actually increased during the process because associates were excited. There was a better attitude. The customers were more excited because our associates were more excited.”

Smart & Final’s Spotlight program successfully increased employee engagement across its entire organization. With only 13% of employees engaged worldwide and disengaged employees costing organizations between $450-$550 billion annually, it’s important to address the current state of employee disengagement sooner than later. Avoid high turnover rates and unnecessary costs by re-evaluating your current employee engagement strategy today. Ask yourself the following questions:

  1. How are you currently engaging employees? Is it working?
  2. Are you successfully measuring employee engagement at your company?
  3. Would you consider your company culture positive or negative?
  4. How often do employees recognize colleagues at your workplace?
  5. Are your employees overall happy at work?

If you are unsure how to answer the questions above or unsatisfied with your response, it might be time to join the 66% of HR leaders who are updating their employee engagement and retention strategies. Follow in the steps of Smart & Final and start making a change to create an unbeatable impact on employee engagement.

To learn more about Smart & Final’s Spotlight program and HR success, download Smart & Final’s case study.

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If you’d like to learn more about another employee engagement success story, check out 4 Strategic Drivers of General Motors’ Adoption of Recognition Technology.

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About Kellie Wong
Kellie WongKellie Wong is the Senior Editorial and Social Media Manager for Achievers. She manages Achievers’ social media presence and The Engage Blog, including the editorial calendars for both. In addition to writing blog content for The Engage Blog, she also manages and maintains relationships with 35+ guest blog contributors. Connect with Kellie on LinkedIn.