May
03,
2023
Where change managers need to focus in M&A
Companies thrive on growth. Mergers and acquisition provide fast inorganic growth. So they’re not going away; the challenge is to make M&A better.
The people issues with M&A are many. For example, the term “merger” sounds like an integration of equals, but that’s rarely the case. Most often, there is a perceived “winner” and “loser.” So an uneven merger, or an acquisition, severely impacts those on the “losing” team.
That’s one reason mergers and acquisitions feel threatening. They generate fear, anxiety, and outright resistance in much of the workforce. Yet organizations often overlook the people implications. Employees are left to “figure it out,” which further damages engagement and productivity.
Organizations in the throes of M&A need the power of their people, so there is a lot riding on change management. Change managers have to address M&A at three levels.
1. Strategy
Change managers rarely build the business case for a merger or acquisition. But they must use use that strategy, and the rationale behind the deal, to help the workforce transition at the both organizational and individual levels.
The business case typically includes access to a new market, addition of a new product or offering, increased market share, and/or operational efficiencies. Additionally, senior leadership often uses the M&A as an opportunity to refresh the corporate strategy.
Change managers have to translate that complex content into messages that speak to employees.
They want and need to be in the know.
At a minimum, employees must be clear on the “why” — the organization-level purpose, vision, values, and strategy. Employees also need to understand the individual impacts: how their daily activities support those things.
2. Culture
M&A always has cultural implications. People deal with any change differently depending on the cultural context.
Employees from the “losing” organization often feel like they’ve been dropped into the world of the dominant organization’s culture; they struggle to survive and succeed.
Culture is especially important when blending companies from different locations across the world. In that case, employees of an acquired company are navigating two culture shifts: the dominant organization’s culture and the dominant geographic culture.
Change managers should start by assessing the dimensions of the companies coming together, and the geographies (if applicable). One good tool is the the Trompenaars Model. Knowing the cultural dimensions can help change managers design the right interventions and engage people effectively.
Here is a good video on Trompenaars Culture Dimensions.
| Cultural Dimensions | |
| Universalism vs. Particularism | What is more important: rules or relationships? |
| Individualism vs. Collectivism | Do we function as a group or as individuals? |
| Neutral vs. Emotional | Do we display our emotions? |
| Specific vs. Diffuse | How separate do we keep our private and work lives? |
| Achievement vs. Ascription | Do we have to prove ourselves to receive status, or is it given to us? |
| Sequential vs. Synchronic | Do we do things all at one time, or several things at once? |
| Internal Control vs. External Control | Do we control our environment, or are we controlled by it? |
Read more about it in Riding the Waves of Culture by Fons Trompenaars and Charles Hampden-Turner
Once the team understands the cultures coming together, they can create change management interventions that resonate with each employee group. They can also help acquired employees migrate to the new culture.
3. Organization, Process, and Technology
Most change managers have had the phrase “People, Process, and Technology” drilled into their minds. In M&A, all three are equally critical.
Employees often experience changes to the organization structure, the processes they engage in, and the technology they use. They need to work in different ways, with different people and tools. No wonder they are often fearful and anxious about the change. It’s a big challenge for a change team.
Most change managers have a favorite methodology to navigate this type of situation. Emerson is no different and, you guessed it, we have our own methodology. A key principle behind our methods taps into psychology to make the change feel familiar, controlled, and successful. They are the “levers” we pull – each activates a different brain mechanism to propel the change.
Familiar
What are the stakeholders comparing this change to? Can we point to a time when they successfully navigated something similar? If so, let’s talk about how this is similar.
Are employees comparing it to something negative from the past? If so, let’s talk about how this situation is different. Additionally, we might make the change look good by comparison (e.g., what would happen if we didn’t change).
Controlled
Most people don’t like surprises. How can we make the event predictable?
Showing people what is coming, and when, is a must.
The messages may not always be rosy from an individual employee’s perspective, but it’s better to be transparent. In the absence of sound information, people will make up their own stories – and act accordingly.
Address the perception of chaos. Show structure in the approach and future state. People need to see roadmaps and org charts.
Try to find ways to give employees some degree of choice. People love to have choices on big things like position in the new organization or on a project, but even small choices help individuals navigate change. For example, the organization might offer flexible working hours, choice of technology, or options for work location.
Successful
Engineer small wins. A merger can feel overwhelming. Break the change into small, attainable, milestones.
Celebrate!
Feeling successful and celebrating with others makes us feel good and want more. Simple things like successfully navigating a single new process or completing an initial transaction in a different system should be cause for celebration.
Conclusion
M&A is not going away. In fact, many believe that there will be an uptick of M&A activity throughout the rest of 2023. M&A is a classic trigger event for change management. However, the complexities and nuance of M&A situations often call for anything but change management as usual. The stakes are high!
