You might want to remember, it also comes with a lot of people – pleasant and unpleasant or brave and cowardly – each with a lot more expectations. Within these expectations, there are many sub-categories. First and the most obvious category; Fears. In the expectations bar, I would mark Fears from “Will I keep my job?” to “Will I have the same job?”. The extra-cautious employees already prepare for an all-out job hunt right after they hear the merger news. The patient and the positive ones may decide to lie low until the merger is complete. I would imagine Fears to be the type that the management should try to handle with utmost care while they are probably busy drilling down the finance books. Managing people’s fear is at the heart of a successful business integration. And behind every failed merger attempt, there are of course, hoards of mismanaged fears.
The next sub-category is the whimsical but potentially harmful cousin of the first – Apprehensions. Almost everyone in the company you are buying has Apprehensions. To begin with, please do not make them feel like they are ‘bought’ like in the times before the 13th Amendment. At the same time, using a lot of jargons like ‘combining business’ and ‘becoming one’ are not going to help either. Let’s face it, we live in era of information explosion and extra-smart sales people. Not everyone is an ass not to suspect the intentions behind your ‘sweet talk’. The apprehensions are the ones that can give birth to a motive that you don’t need right after the merger. The need for another job. And before you know it, it would be a full blown exodus.
The last category is High Hopes. No, it doesn’t play out the optimistic hymn as the Pink Floyd song does. People with High Hopes are likely to leave the merged entity soonest, especially if the process is slow and there’s a huge cultural conflict. They are mostly deferred decisions and usually, the best talent the company has, making the net effect devastating.
Why are the people and their expectations so important?
Let me go back to a basic (and often overstated) truth. When you buy companies, you don’t buy their furnitures, computers and stationary. You buy their business. And if you care to remember, their business would have been non-existent without their people. So really, you are buying their people. When you rang up McKinsey to complete your purchase and wrote an astronomical check, did you really think about it? Your answer should really show in your merged company’s headcount a few months after you completed the merger. You may have known it beforehand but you couldn’t manage it. You bought the company with the realization that most mergers are like lottery. Most don’t usually make it but some do. Yet, you took your chances. You hired McKinsey. Did you really think your company is going to strike it rich just because you managed to get a good consulting company to do the dirty work? (Well, what they usually do is dirty work. Most consultants do not -they cannot- play a key role after the integration is complete whereas, in my opinion, 90% of the success of any merger lies in the post-merger management. And it’s no picnic. A lot of thinking and strategizing should go in there. When you consider the challenge here, you would really think what McKinsey did wasn’t quite an Italian job. The real people who streamline the merger process are your own managers, their leadership skills and will power)
I know it’s easy to preach “look after your people”, definitely much, much easier than implementing that thought. However, you often get a feeling people pretend not to know about it at all. I failed to understand this. I have not seen too many mergers in action but I have never come across one that succeeded without giving people its due importance from my secondary research.
You should know where would you risk your new people. Look through their glasses. There are newer systems in the new company. Newer work culture. Newer economics. And newer, perhaps strikingly different vision of the future. BUT these are unavoidable changes. As you look at these factors, you would probably notice that it’s going to be graver challenge than you thought. Well, it is. And when you think of the cascade effect of this first hand experience would have on employees, it only gets scarier! The first step is to make it less impactful for the employees. Let them not know they are the only ones taking the hit (whereas in fact, they ARE the only ones. The trick is in communicating it carefully). The second challenge is a bit easier, but require a bit of soft skills on part of your middle management. It is in making them feel like at home. It is about setting the context right. Remember how would you add a newly bought fish into your existing fish tank. You would take care that the temperature difference is not so big to kill the fish. If you agree to this simple logic, you would have an even more cautious approach to a much more complex creatures than fish, while adding them to your company.
I am not qualified to suggest a remedy here. But I couldn’t help but share a few things I learned after having lived through a poorly managed merger. Correct me if I am wrong (in Blogging lingo, its please feel free to comment) but is it really rocket science? If the buying company looks at people as people and not as businesses, they would be able to sustain the Expectations of the incoming employees. This should be your action standard for a successful merger of any business. Imagine a bunch of incoming employees, happy about their new company. You could sit back and watch on your screen, how after you bought a company, the productivity and other goods are also added to your business just like how you saw it on the shelf. If managed well, you could also witness the magical effect of the synergy the two companies can bring. You can experience your buy just like how you envisioned it at the time of purchase. Unlike your neighbor’s (represents the majority, in my opinion) screen, who bought a company and never cared for their people, showing dwindling head count, clients, revenue and profit.