The word “Merger” might excite or make someone cringe- depending on who you say it to. Most CEOs love the idea of a merger. In theory a merger can achieve market share and grow a company exponentially.
It’s a surprise that most CEOs still get excited about mergers considering that most mergers fail to achieve desired results. According to a study conducted by Watson Wyatt Worldwide (an international HR consulting firm) 70% of M&A deals fail to achieve anticipated synergies and 58% don’t create substantial results for the stakeholders.
During an anticipated merger most executives are busy with the Finance & IT due diligence that they rarely even think about their commnication strategy and cultural integration. The assumption is if the numbers are there the culture somehow will morph into a happy union. Research articles published in Harvard Business Journal detail that most mergers fail because of cultural clashes and poor communication efforts.
According to Kim Ribbink, author of “ The Most Critical Messages To Communicate In A Merger”, managers need to communicate how the merger will affect individual units in the short term and what gains it should bring the company long term.
Executives are merger knowledge thirsty and in a merger situation an organization cannot over communicate. The most critical information employees want to know are: compensation, benefits, organizational realignment, relocation and process changes. The issues that need to be addressed right away to the employees also include:
- Business Benefits of the M&A
- Reasons for the M&A
What will happen to their current role and information about their future professional prospects.
Change Management theory believes that in a change situation the key communication messages should come from an employees direct manager. Most employees have a direct relationship and trust with their managers and they do not want to hear about the change from CEOs. However, research from McKinsey Quarterly “Successful Management Starts At The Top” states that they believe in a merger situation the direction from the top is the only way to initiate change throughout the organization.
To contrast that theory University of Virginia also put out M&A research called: “Breaking The News: How To Communicate A Merger To Employees”. In their survey they identified communication methods that could be described as best practices. Here are their findings on how employees want to be communicated about a merger:
- 41 % of employees face to face meetings
- 35 % prefer email (the study suggests doing both)
- Most survey respondents feel that the immediate supervisor should make the initial M&A announcement to employees.
- A company wide CEO announcement should be scheduled after the immediate supervisors break the news to their teams.
I do believe that the Merger communication has to include messages from the immediate managers as well as the CEO. Organizations need to be as honest as possible with their employees during the merger announcement and integration process. Holding back information is never a good thing- if the executives are not communicating to their employees rumor - mills will begin and false/ fabricated information will start appearing. This can result in employees viewing the merger negatively and jumping ship.
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