After The Merger Or Acquisition
Two Organizations May Look Great Together on Paper But Bringing Them Together After a Merger or Acquisition Is Another Story
On paper, two organizations may appear to be a perfect match. But bringing them together in the “real” world after a merger or acquisition can present opportunities and challenges, which can ultimately make or break a newly combined organization’s success in the future. Not only are companies uniting their strengths for a bigger and better organization, but they are also integrating different visions, practices, philosophies, cultures, leadership and employees.
The reasons why companies merge are clear. For years, they have done it for additional market share, to put the competition out of business, to buy the talent of another company’s leadership team and to increase product distribution channels. But once two companies merge, they must decide which employees to keep and which ones to let go, which vision to follow and which one to drop, and which practices to implement and which ones to set aside. That’s where the challenge really begins.
“Maximizing your business strategies with your staffing strategies after a merger is a challenge for both parties involved,” says Bill Wells, managing director in the Irvine office of leading human capital solutions company Lee Hecht Harrison. “When there’s a merger, one prevailing culture and leadership always takes the lead, and your remaining people are key to your success.”
For this reason, Wells stresses the importance of considering the cost of turnover-which can add up to $1 million for every 10 people who leave following a merger-then taking strategic steps to retain people needed to move forward. he also says that paying attention to employee behaviors and concerns is key. Studies show human resource executives spend at least one-third of their time dealing with leadership and personnel issues after a merger. “The consequences of alliances and layoffs can have lasting effects on the morale, productivity and ultimately the success of the company,” says Wells. “The right staffing strategy can definitely compensate for some of the negative impacts from a merger.”
A good strategy focuses on open communication at all levels of an organization and remains consistent, according to Wells. In fact, he suggests over communicating to employees during times of uncertainty so that they aren’t surprised by change and in turn take their talent elsewhere. “It starts at the top, never at the bottom,” he says. “A company’s leadership needs to decide what best practices to rely on after the merger and then hold steadfast to those moving forward. They should consider what culture and values they want to create and then go through the process of implementing those throughout the organization. The key is no surprises. Keeping employees in-the-know allows them to choose their behaviors, positive or negative, after the merger. They can choose to either ignore the changes taking place or embrace them.”
Although executives who work for acquired companies are often the first to go and have less say in these new strategies, Wells suggests that they do their homework and approach the situation from a position of strength. “They should make an effort to become involved in developing new organizational strategies and if that’s not an option, they should at least look at the acquiring company’s track record. They’ll be able to determine what processes the company has gone through in the past, how quickly they let people go, which people they let go, etc., so that they know what to expect.”
To minimize the negative blow of a merger, Wells also recommends evaluating the new team and reorganizing where necessary. One way to achieve this is for companies to recruit new talent from within by matching employee skills with the organization’s short- and long-term needs, and providing valuable training opportunities for employees. Companies should also be respectful in the way they treat employees who are let go. This might include providing severance packages that include outplacement services to assist out-of-work employees with taking the next step in their careers.
“By providing these services and treating people with dignity and respect, companies can restore trust and positive feelings toward the organization among those employees who remain,” says Wells. “If properly handled, these can also speed the transition of those who remain in the organization and get everyone back to work quickly and more effectively, which goes a long way in meeting the company’s long-term goals as well.”
About the author
Bill Wells is managing director in the Irvine office of leading human capital solutions company Lee Hecht Harrison.
About Lee Hecht Harrison
Established in 1974, Lee Hecht Harrison’s experience includes helping companies of all sizes effectively manage change, downsizing and internal career mobility. Lee Hecht Harrison is the flagship brand within the Adecco Human Capital Solutions division of Adecco S.A., the world’s largest HR solutions company with over 6,600 offices in 70 countries and territories around the world. For more information about the company and its recent research on HR topics, please visit Lee Hecht Harrison’s website at www.LHH.com.
