Prepare for Impact – The People’s Perspective on Mergers and Acquisitions

Last updated Oct 4, 2022

The need or desire for organisations today to acquire or merge is always present in the business world.

Mergers and acquisitions are viewed as a way for some companies to improve profits and productivity, eliminate competition and expand into new markets while reducing overall expenses.

While viewed as good for business, in some cases, they are not good for employees. With a merger and acquisition come the requisite layoffs, leaving many employees worried about their positions or the changing culture of the company.

In this article, we talk about mergers & acquisitions, what it means from a people’s perspective and how leaders and managers can facilitate the transition effectively.

What’s the Difference Between a Merger and an Acquisition?

A combination of two or more companies to form a new company is known to be a merger, while an acquisition is the purchase of one or more companies by another with no new company being formed.

The key difference between a merger and an acquisition is that in a merger, the two companies decide to join together as equals to form a new company, while in an acquisition, one company takes over another.

There are several reasons why companies pursue mergers or acquisitions:

– To increase market share

– To expand their product line or geographic reach

– To acquire new technology or expertise

– To eliminate competition

– To increase shareholder value.

However, such business combinations also come with challenges, particularly when it comes to the people side of things. Let’s explore this further.

What Does a Merger or Acquisition Mean from a People’s Perspective?

From a people’s perspective, mergers and acquisitions can be unsettling. There is usually a lot of uncertainty during this time as employees try to figure out how the merger or acquisition will impact them and their jobs.

There may be changes in job responsibilities, job locations, or even the elimination of positions. In some cases, there may also be a change in company culture as the two organizations try to meld together.

All of these changes can be stressful for employees, which is why it’s important for leaders and managers to effectively facilitate the transition.

The announcement of a merger or acquisition can have varied reactions, but you will usually find a general feeling of uncertainty – employees worrying about losing their jobs, anxious managers struggling to maintain control in a shifting environment, leaders stressing over tough decisions that need to be made, people at every level losing sleep over where they stand in the organisation. The impact on employees can be significant if the reorganisation of the business is not handled effectively.

From there the real impacts on an organisation itself start to show – from unexpected defections of key talent, declines in productivity, morale and engagement to the loss of customers and poor market performance.

During any merger or acquisition effort, there are at least two groups of employees involved, often coming from organisations with distinctly different cultures and styles. The way company leaders work with employees during the transitional period sets the tone for the new corporate culture being developed.

How Can Leaders and Managers Effectively Facilitate the Transition?

While there are many human issues that all organisations deal with during these times, the best approach is to prepared and informed. Help shake off some of the uncertainty that a merger or acquisition can bring.

There are several things leaders and managers can do to effectively facilitate the transition during a merger or acquisition:

Communicate, communicate, communicate

Employees need to be kept in the loop regarding changes that will be happening. They should also be given the opportunity to ask questions and voice any concerns they may have.

While forming these plans, it’s also important to communicate. Leaders and managers must explain the “hows” and “whys”.

By clearly communicating the new organisational structure and explaining how it will work, why it’s designed the way it is, and how roles will be staffed, you’ll be able to decrease rumours and incorrect assumptions. Helping employees understand where the organisation is headed and how they fit in will keep them engaged and motivated. Leaders and managers need to provide frequent updates and establish an open dialogue to give individuals a chance to voice their concerns and provide input. People are more likely to get on board when they feel as if they are involved in the process.

An effective merger hinges on having the best team to meet changing business needs. Good organisational design can help address this challenge by creating a clear relationship structure and well-defined roles. It can also help address the merger-related questions that often keep employees awake at night.

The key to this is having a plan – take inventory of your current employees’ skills, competency, and past performance; then match them to the capabilities required to support the new organisation’s objectives.

Be transparent

Leaders and managers should be transparent about the reasons for the merger or acquisition and what the expected outcomes are. This will help employees feel more comfortable with the changes that are happening.

Promote a positive outlook

It’s important to promote a positive outlook during this time of change. Employees will be looking to leaders and managers for guidance and reassurance.

When it comes to the talent that you don’t want to lose, you need to act quickly. Talented people are decisive, action-oriented, and highly marketable. They need to know that they are valued and have nothing to worry about. Don’t give them a chance to even think about leaving.

Encourage open communication

Encourage open communication between employees and managers. This will help to identify any issues that need to be addressed and help make the transition smoother.

Foster a team environment

It’s important to foster a team environment during a merger or acquisition. Employees will need to work together to make the transition successful.

Another idea may be to have a ‘bonding event’, create an event so that all employees – in the old organisation and the new – have the opportunity to connect with each other. This can be in the form of company-wide meetings, smaller social gatherings, or encouraging employees with team-building days and workshops.

By taking these steps, leaders and managers can help to make the transition during a merger or acquisition smoother for everyone involved.

Final Thoughts

Mergers and acquisitions can be a tumultuous time for employees. Leaders managers help to ease the transition by communicating effectively, being transparent, and fostering a team environment. Employees will need to work together to make the transition successful. By taking these steps, leaders and managers can help to make the transition smoother for everyone involved.

By: Curran Daly + Associates


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