Retaining Strong Leadership During Business Mergers

6 November 2020
6 minute
Retaining Strong Leadership During Business Mergers

Navigating mergers can be challenging for businesses and the key stakeholders involved, however, embracing change and demonstrating strong leadership at this crucial time can keep employee engagement high, and make the merger a true success.

We’re going to take a look at how to embrace change and what it is successful managers create within their organisations in a merger or acquisition that keeps team engagement high, especially in these uncertain times.

For many experienced in the area, when questioned, around 95% of executives describe “cultural fit as critical to the success of integration” whilst, “25% cite a lack of cultural cohesion and alignment as the primary reason integration efforts fail."

It is therefore important to get culture right when involved in a merger and acquisition (M&A). Problems evolve after the M&A traditionally because whilst the vision of the business is clear, the culture is not. Understanding how teams get things done and operate should be clear from the beginning and structure how discussions could progress moving forwards.

Leadership in these roles is key. Being able to keep the main players within the organisation at this time is essential. They might be mentors in teams, or senior stakeholders who understand the corporate culture and therefore can add value from the beginning.

Strong leadership can come in a few different forms at this stage. Importantly it should be to help guide the teams to find a common place of work but also put a plan forward to achieve certain objectives.

Beverly Goulet, former executive vice president and chief integration officer at American Airlines advises putting together a culture diagnostic at the start. This helps focus management to understand the key roles, features and styles of the businesses and draw upon facts rather than anecdotes to help move the company forward.

How to manage change during a merger or acquisition

Change can be traumatic for many different reasons. In a merger or acquisition, the process can be scary for all the parties involved. It's about navigating the waters between making the right decision for your business in the short, medium and long term whilst also protecting the staff. At the same time, the depth of change can lead to lost productivity in the short term, it can also weaken your company from within and make it vulnerable in the future.

Have you considered how the M&A will affect your staff? Will there be redundancies? Could you move people to job sharing and part-time roles? Will office moves lead to greater hardship for some of those without transport? This will affect morale and engagement from staff whilst also creating a lot of unnecessary stress if not managed properly and without communication.

To effectively manage change, you should focus on your most valuable resource: your employees and strong leadership does this.

The 5 things great managers do well during a merger 

Strong leadership in many areas can minimise the trauma caused by mergers and acquisitions whilst also better managing employee engagement in uncertain times.

What do great managers do to manage employees during a merger and retain high engagement? Here are just some of the tactics that they employ.

1. Identify skill gaps and overlaps 

When two businesses merge, one of the first things that passes through an employee’s mind is whether they still have a job. By addressing this from the beginning, you will avoid causing unnecessary stress or panic whilst change is occurring. Before communicating though, define how the organisation will work post merger.

Provide visibility to the departments on skill gaps and overlaps - by clarifying as quickly as possible, you will find it easier to manage change. Finally, by addressing concerns early on, employees will be able to focus on their work and engage throughout the process.

2. Make communication easy 

If there's one thing that can disrupt teams and lower engagement it is poor communication and that can take the form of rumours and gossip - which are based on assumption over facts. This type of communication can provide negativity throughout the whole business and disrupt culture.

At this stage, it would be a good idea to develop an organisational change management plan and hold weekly meetings to discuss the latest news related to the merger and to answer any questions people may have. This allows everyone to be on the same page whilst equally dispelling rumours helping the organisation work towards a common goal.

3. Establish purpose 

Clearly, communication is a large part of any merger and acquisition, but importantly it should be about the purpose of the acquisition that can help propel the business into different areas.

Understanding the objectives of the acquisition and communicating that clearly amongst staff can make a lot of difference for every stakeholder and especially those who are involved in the organisational vision. If the M&A is about going into new markets, then make that clear to your staff, if it’s to change elements of your business to deal with market trends, equally, discuss this clearly.

4. Focus on organisational culture 

We’ve seen that organisational culture will be impacted if not managed correctly. But culture can be one of the most important tools in managing change - it could highlight issues that you didn’t realise that your business had or if new problems have arisen, your corporate culture can be a remedy to the issue.

Getting teams to meet up regularly and discussing some of the organisational cultures and how they are managed internally will help teams to develop a new sense of belonging and help move it forwards. Managing culture at the beginning of the M&A process can make it easier for you to incorporate new employees and facilitate transformation in the new business.

5. Improve collaboration 

Rather than making the merger and acquisition seem like a top down imposition from management, one of the ways to best manage the process is to bring the team to collaborate on some of the transitional and acquisition issues. Recruiting integration teams is a great way to spread the workload of change management, and it makes people feel more involved in the process.

After a merger: offer leadership opportunities

For many businesses looking to grow their talent pool and develop their status, a merger and acquisition can be one of the best opportunities to bring some of the most promising talent into leadership roles.

It's also a way to help appease some of your key workers to stay during the transition process and be offered the kind of training and opportunity they would need to progress further within their career - and if you offer it - within your organisation.

This is of course different to offering wage increases which may not be possible at the time. What it does do is provide an opportunity to address some of the discussed issues that affect engagement and morale in the workplace - especially for your top talent.

If employees can be persuaded to refine and improve their existing skills at their current role, they will be less inclined to leave and show further loyalty and enhance their engagement within the organisation.

To conclude, the role of leadership during business mergers and acquisitions is essential to the success of the M&A as well as engaging staff, key stakeholders and reducing workplace losses and loss of identity.

Culture is determined by the role leadership plays in positioning teams to communicate and collaborate effectively whilst strong leadership plays a key role in helping organisations identify strengths and weaknesses whilst recognising opportunities for the most suitable employees in the business.

Strong leadership is the key to mergers and acquisitions being successful and adapting to change, and presenting the business with new opportunities for everyone involved. 

Manage change during a merger or acquisition with Thomas

We have a number of tools and assessments at Thomas to help you manage change during a merger or acquisition. 

See how data management company Winshuttle used our Behaviour assessment and 360 solutions to help the leadership team understand each other’s preferred work styles and team culture as part of their growth strategy.

Also, make sure to check out our Guide to Change Management to learn the importance of change management, how to get it right and the models you can adopt to see successful change. Our blog Enabling Change, Enabling Success also looks at strategies you can put in place to ensure positive outcomes.

To find out how our solutions can help make your merger or acquisition a true success, please speak to one of our team.

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