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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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How to Incentivize the Modern Workforce

Management strategies have been evolving, over the last two five years, to favor more bottom-up measures to drive greater workforce productivity. While many Best-in-Class companies are retaining and using labor investment resources in payroll and compensation management, many of their peripheral Human Capital Management (HCM) investments are moving away from pure labor cost quantification to favor goal-based platforms in rewards and recognition. Are you currently offering incentives, such as rewards and recognition, to your employees?

With the inherent uniqueness of the individual in the corporate workforce, it is a virtual impossibility to find a one size fits all approach to incentivizing employees. An unincentivized employee is likely a disengaged one, meaning aspects of your business such as innovation, productivity, and retention could suffer. Furthermore, a workforce should be recognized and rewarded for embodying clearly defined corporate values or meeting specific company goals in a highly visible way, otherwise, employees may lose sight of the relevance of their work to the overall company mission, leading to disengagement and eventually attrition.

Moving from Disengaged to Incentivized

In their recently published report, Tomorrow’s Management Today: Incentivizing Workforce Innovation, The Aberdeen Group further stresses the importance of instituting and maintaining a well-defined, highly visible recognition and rewards program. Specifically, the report finds that employees at Best-In-Class companies were 31% more likely to stay with their employer if they felt that their work was relevant, and visibly impacted the organization. One of the easiest ways to ensure that recogntion reinforces successes aligned with company values in a highly visable way is by investing in an HCM system that offers a robust, goal-based recogntion and rewards component.

In-line with Alignment

Employees shouldn’t have to guess as to what the values and goals of their given organization are, nor should it be difficult to recognize and reward them for adhering to these values in pursuit of the stated goals. These shared goals and values should be apparent to everyone in the company, regardless of job title. Difficulty in effectively communicating key corporate objectives on an enterprise-wide level, isn’t a new phenomenon; companies have long been challenged with providing granular clarity to lower-level employees. Merely, announcing these goals at a quarterly kick-off meeting or sending them out in yearly newsletter does little to align individual employees’ around these goals.

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Bottom-Up Drivers of Greater Productivity

Where it was once difficult to measure concepts such as productivity, innovation, etc., the continuous evolution or HCM systems, specifically those emphasizing recognition and rewards, can offer a tangible measurement as to the employees demonstrating those qualities a company values most. In this report you will learn how best-in-class companies are beginning to focus their peripheral HCM spend on goal-based platforms in rewards and recognition and how they are favoring bottom-up measures to drive greater workforce productivity.

Now that you have a general understanding as to the major cultural shift emphasizing employee engagement, download Aberdeen’s report on Incentivizing Workplace Innovation for more information, including recommendations regarding the selection of an HCM ecosystem.

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About the Author

Iain Ferreira

Iain Ferreira is the Content Marketing Manager at Achievers. He lives in San Francisco. You can view his Linkedin profile here.