A lot has been written about the financial aspects of merging companies. Less attention has been focused on the human element. Successful merger management absolutely requires successful management of the people involved.
Key Element of SuccessIn the Ottawa Citizen Online article "Managing post-merger consolidation", human resources guru Jeffrey Sonnenfeld says "Take at least as much time as you spend with your financial analysts and spend it with your employees. People care about where they work. Make them a strategic partner."
Get people in both the merging company and the company being absorbed together as early as possible. Discuss the issues that were the perceived potential benefits behind the merger openly and frankly. If Company A's strength is sales and they are absorbing Company B in part because of B's distribution capabilities, make sure A's distribution people know to listen to B's distribution people and B's sales force understands the opportunity to learn from A.
You probably need to reduce the number of people. Cost savings through combining redundant tasks is a common goal for mergers. The trick is to release the individuals least well equipped to contribute in the new organization and to hold on to the best people. Make sure the evaluation of "best" looks at both companies' people equally. After all, you don't want to lose a great person from Company B so you can keep a mediocre person from Company A.
Be honest with people. We all appreciate frankness. We may not like to find out that our job is going away, but we would much rather hear it up front than to find out when we get our two weeks notice from someone who has been telling us all along our job is "safe".
The article "Mergers and Acquisitions: The Human Equation" from The Change Management Group concludes "Progressive corporations have realized that a merger is in name only without the positive support of the newly acquired human resources."
Merging two companies with their different policies, procedures, and culture will create stress for all the people involved. The 'survivors' from both companies will have to deal with new people, new procedures, possibly more work, and the loss of previous co-workers and friends.
Be realistic in your workflow planning. Plan for people to be less productive than normal as they deal with the changes. Expect to lose some good people who are not comfortable with the new organization. Give yourself and your department time to work through the changes and get back up to full speed.
Departmental PerspectivesA merger affects different functions differently. Each function is important to the success of a merger. Consider the way a merger affects these other departments and then use those lessons to minimize the same effects in your department.
"Merged companies may need to get their systems harmonized in record time, and smooth integration of operations can be critical to the company's new public image."
- Human Resources/HR/Personnel
"The first issue to resolve is whether to combine your company's plan with the merging company's. Your answer in most cases will be yes."
- Product Management/Operations/Marketing
"It should be noted that after a major merger, the product management function in the controlling bank is usually knocked off stride a bit."
- And a small business perspective:
"gettin' hitched involves more than just deciding whose name to use, where to set up shop and who runs the show."
Walk the TalkIf we as managers truly believe that people are our most important asset we need to treat them that way. A merger or an acquisition gives us an opportunity to do well by our people by being honest with them, keeping them in the loop, and giving them all the information we can as early as we can. Do that and you will keep more of the good people from the company you are acquiring, and from your own company.
If you have any questions or comments about this article, or if there is an issue you would like us to address, please post them on our Management Forum to share with the entire group.