Lessons in Leadership: M&A—3 Things Leaders Should Always Do

Our second guest post in our “Lessons in Leadership” series includes helpful tips about what to do and what not to do when communicating during a corporate merger or acquisition from Alena DeLosReyes. Alena is a human resources executive who was actively involved as a key leader in the transition process of a recent acquisition.

The driving force behind successful mergers is being able to rely heavily on the leaders to be effective change agents where the rubber meets the road. As a key leader in the integration of two companies, I learned a great deal about what to do—and, more importantly, what not to do—to merge successfully.

On the surface, it all looked good. After due diligence, the leadership team commented on how similar the culture and values of the two companies were. And, in an effort to do the right thing, we highlighted these similarities to our employees through various communication vehicles. What we didn’t consider, though, was how much like a courtship the due diligence process is – you put your best foot forward and present information in the most favorable way. As the months went on, there were little things that started to bubble up, evolving from just a whisper of a problem to real concerns.

On the surface, most of the policies and procedures were very similar, but the interpretation of those policies led to a very different employee experience. Issues such as expectations around work schedules and the flexibility afforded to employees and leaders in allowing for these types of arrangements. Or how the internal job posting process was administered for employees interested in pursuing other opportunities within the organization.

In addition, there was the expectation and involvement (or lack thereof) of leaders in progressive discipline (employee relations) issues on their team. In the acquiring company, progressive discipline was largely handled by a team dedicated to employee relations. This team also made decisions about what the next steps in the process should be to ensure consistency. Contrast that with the former approach, where the managers worked very closely with their HR business partner in all facets of employee relations, including progressive discipline matters, which were handled using a customized approach.

These differences make sense when you consider that the acquiring organization has north of 30,000 employees, while the acquired entity had south of 2,000. But the fact remains that the employee and leader experience was very different pre- and post-merger.

There was a particular situation where an employee was posting negative statements about the company and company leadership on Twitter. We knew she was doing it — she even admitted to the posts. Needless to say, the leader wanted her out, and, previously, this type of behavior would have certainly gotten this employee fired (particularly when you looked at her record). However, the decision was made by the centralized team not to address the issue, due to legislation around freedom of speech and the NLRB, much to the dismay of the leader.

Leaders as crucial links

Organizations spend millions of dollars when acquiring a new company. And, when all is said and done, the leader is the crucial link in the chain of events that add up to successful integration. Companies that have a successful M&A experience handle the people aspects not as silos but as critical to every work stream, and they equip their leaders to help employees make the transition.

Leaders as translators

How can leaders help their organizations have a successful merger, or at least avoid doing harm? Think of the leader as the relationship counselor, or translator – bridging the gap between the employees and the new organization.

3 things leaders should do

So, here are three things effective leaders should always do (and three things they should never do) during a merger:

1.       Understand the expectations of the role.

Or, avoid lack of role clarity. The expectations of leaders’ roles will inevitably change as a part of a merger, and leaders’ understanding the new expectations is critical. It is especially important that leaders understand, at a minimum, their roles as change agents. Any confusion about a leader’s role can derail integration efforts, because leaders are the most important tools organizations have to transition employees from the norms of the acquired company to the norms of the new one.

For example, in my case, the new organization had very different views on the leaders’ roles as communicators. The organizational expectation, or norm, was that leaders would familiarize themselves with enterprise programs and champion those programs to their teams. Lack of participation in enterprise programs was not seen as an issue with the program, but, rather, an issue with the leaders’ ability to champion effectively. This perspective was very different from the organization we came from, where each program had a champion that partnered with leaders for delivery, and where lack of participation was attributed to an ineffective program and not to any leadership gap.

2.       Deliver effective and honest communications.

Or, avoid communication blunders. A merger, like any new relationship, requires effective and honest communication. It is not just about the message that is delivered. It’s also about all expectations around communication. For instance, how information is shared and the expectations of employees in the communication exchange. Is it a push philosophy, where employees receive emails and information at their desks without much effort? Or is it a pull philosophy, where information is posted in an intranet site and employees are expected to “fish” for the information they need? If employees don’t understand this, even the most carefully crafted messages can be completely lost on employees.

In my recent experience, that new organization spent considerable time and effort on well-crafted and customized messages regarding many aspects of employee benefits and posting these messages to an employee Intranet site. What they failed to realize right away was that employees in the new company were not accustomed to visiting the Intranet for this type of information, so the messages were literally “lost” on the employees.

3.       Be transparent.

Or, avoid a lack of transparency. Employees will notice even the most minor inconsistencies in messages, so being as transparent as possible is also critical. This includes being completely honest about the difficulties being experienced. Leaders who fail to acknowledge and set expectations for their employees for some curves in the road may be perceived as less than honest. In addition, glossing over the difficulties may impact the leader’s credibility.

Shortly after the merger, the decision was made to make a considerable investment in the facility. This decision was coupled with extensive communication about how wonderful the end result would be and what this investment meant to the new organization’s commitment to the employees of the acquired company.

Anyone who has renovated even a room in their house understands the upheaval and headaches that are part of the process. There was a large population that would have to be displaced for a considerable length of time to allow the renovations to begin. Because of the way the communication was handled, the displaced employees attributed the decision to move them with some sort negative outcome for their future with the company.

If you can work hard to do these three things, you can help pave the path toward a smooth transition for all those involved in your merger.

Alena DeLosReyes is a results-oriented strategic human resources leader who has worked in dynamic business environments across a number of functions in the financial services and insurance industries.  She lives in Chalfont, Pennsylvania, with her husband and two daughters. 

For more leadership tips from top executives, read our first blog post of this series, “Lessons in Leadership: Top 12 Leadership Traits.”

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