Managing Workforce During Mergers & Acquisitions
Mergers and acquisitions are undertaken to fulfill various corporate objectives. They may be intended to reduce the likelihood of hostile takeovers, to diversify risk, or to achieve competitive advantage through synergistic efficiencies. Regardless of strategy, workforce integration is a major component of any merger or acquisition and is a significant undertaking. Decisions have to be made on whether each employee of an acquired organization is retained, reassigned or terminated. Efficiently managing these changes in a consistent, streamlined way is imperative to meeting business objectives on time, retaining the right talent and delivering planned synergies.
In change management terms, mergers and acquisitions result in significant transformational changes that effect the company’s mission, strategy, culture, environment, workforce, and essentially the company’s overall identity. In many situations, changes will have to be made to realize the synergies of a merger or acquisition.
Depending on the type of merger, there can be a variety of challenges, including quickly having to decide who stays and who is separated in the newly merged company – a process known as rationalization. If the acquiring company is as large as the company being acquired, and both have differing values and processes, determining how to bring these two radically different groups together can be challenging. The most effective mergers and acquisitions take place when people at all levels of the organization participate early on, not just in the transfer of information (in terms of what comes down the hierarchy), but also in ensuring that vital information is being conveyed to the leaders.
There should be a clear vision for change and everyone must understand what it means for them (e.g., will they retain their job). This should include key milestones and targets for the transformation. Senior managers must demonstrate their commitment to the change by practicing what they preach. Managers and staff should clearly understand what is expected of them and what they need to deliver (e.g., changes to working practices, increased productivity). At this stage, it is critical to have collaborative decision making and clear visibility into the financial impact of each change.
Large-scale transitions can cause a drop in organizational performance, often due to unresolved cultural differences between the two organizations. Even if the imperative for change is clear and imminent, for a merger and acquisition to be successful, there are a number of prerequisites that need to be in place:
- Basing reductions on objective, fair, and consistent criteria
- People are involved in the change and can help shape the outcomes within their areas of responsibility
- Individuals are listened to and their expectations are managed effectively
- Managers have the skills, capability and confidence to manage the reaction to the change both in themselves and their team
- Everyone is encouraged to behave in line with the changes, and consequential actions are taken if they don't
- The changes needed for existing people and business policies, procedures and measures are clear and known