When a company is considering a merger or acquisition, its leaders conduct an abundance of research on the other company’s customer base and how it does business, and they perform rigorous legal and financial due diligence. What is almost always forgotten — and is the biggest risk once you’ve committed to the investment — is how executives will lead their teams during this change.
Once finance and legal dot all their I’s and cross all their T’s, they throw the task of operational integration over the wall to someone in HR or operations. Companies typically have long lists of who will be told about the transaction and when. They also typically have extensive project plans for implementing changes in network access, payroll and desk location.
However, they almost always forget to address the most significant driver of engagement and productivity: leadership.
Leading a team on the day-to-day aspects of a business can be challenging enough. Leading a team through the uncertainty, emotions and tactical demands of mergers and acquisitions (M&A) can be daunting. If any employee notices a twinge of concern in the eyes of an executive, you’ll quickly see engagement and productivity plummet. Those millions or billions you just invested in the acquisition are being wasted by the minute because you didn’t take time to ensure the leaders were fully prepared to lead the change.
My team leverages a five-point system to ensure that you make more money with less stress during M&A. Here are some key insights you should address:
1. Align leadership across all teams.
Regardless of what organization bought what organization or the terms of the merger, executive teams absolutely must agree on the vision for the future and get to know each other as human beings. If you skip the relationship-building phase of M&A, you are looking at a long, painful integration and a high likelihood of failure. Similarly, if leaders give inconsistent messages about the future, or worse, demonstrate a lack of belief in the go-forward vision, your top employees will immediately start looking for new jobs and your mediocre employees will become actively disengaged.
2. Know how to lead change.
Yes, the key executives in your organization are there for a reason. They are clearly strong leaders who brought the company this far. However, leading people through M&A is a whole new ballgame. While the executive team is crucial, you may want to consider workshops on leading change effectively throughout your organization.
One of the top mistakes that great leaders make in times of change is assuming the people who speak out against the change are just being difficult. In fact, people who ask you tough questions may be the people who care most. They are being honest with you and offering insight into what may be worrying other key employees. The more the employees know about their future, the more likely they will stay with the organization, remain productive and integrate quickly.
3. Get support for the leaders.
Even the most successful leaders can be overwhelmed with the massive amount of questions, restructuring and logistics that take place during this type of change. With all the paperwork, deadlines and stress that come with M&A, most executives don’t take time to think about what the change means to them personally, much less how to customize what it means to the rest of their team. If they don’t feel confident about what’s going to happen to them during this transition, they certainly can’t role model confidence to employees throughout the organization.
Executive coaching can be critical during this time because executives need to have an impartial sounding board to manage their own concerns, create action plans on the fly and prepare themselves to be the best leader they can during this complicated transition.
If possible, bring in executive coaches who also understand how to lead change greatly so it can be positioned as more of an executive advisory program than a coaching program. Successful leaders often prefer to have an advisor who has walked in their shoes and can serve as both a sounding board and trusted partner.
4. Integrate the cultures.
Don’t overlook how big of a deal the small things are. I use a 23-point cultural analysis that can help guide tactical integration and, more importantly, guides verbiage for everyone from the CEO to the individual people manager to ensure team members feel confident, stay engaged and boost productivity during the first three to six months.
Key among these points is customer commitment. You may assume both organizations are customer-focused, but at a closer look, you’ll see variances in perspectives on service excellence or how much support employees have to problem-solve for customers. Taking time to clearly evaluate the simple nuances will help you establish clear expectations around what is changing and what is staying the same. This may sound like an employee-serving solution but its greatest impact lies in what your customers experience during the integration, which directly impacts your bottom line.
5. Don’t stop too soon.
It’s way too easy to think, once everyone has new payroll, access to the shared drive and both organizations are serving customers, that your job is done. Far from it! Executive teams need to remain focused on the integration for a series of months. It becomes more and more subtle month over month, starting with excitement, then integration, then sustainability. If you follow the steps above of aligning executives, ensuring leaders know best practices for leading change and do the leg-work to truly integrate the cultures, your timeline to success will be much quicker.
Without these elements, your productivity and profit will drop significantly upon announcement and may never fully recover. With key strategic workshops, executive advisory on leading change greatly and executive coaching on dealing with all the nuances of leading M&A, you can and will get through this exciting time in a way that retains the top performers, maintains productivity and ensures profitability.