Harvard Business School found that between 70% and 90% of M&As fail. The Leadership and Organizational Development Journal also found that two-thirds of M&As fail to reach strategic results because of misunderstandings caused by poor M&A communications. People-related factors, like employees’ reactions, cultural differences, and communication approaches were just some of the misunderstandings. These statistics make it clear why effectively managing employee concerns during a merger is crucial. It ensures a smooth transition and maintains a productive workforce.
Table of contents
- Understanding Employee Concerns During a Merger
- Creating an M&A Communication Plan
- The Role of IC Software in M&A Communications
- Successful M&A Communications
In this blog post, we will explore how internal communication software can be a valuable tool to facilitate M&A communications and implement a well-structured M&A communication plan.
Understanding Employee Concerns During a Merger
During an M&A, employees often experience anxiety and uncertainty about their roles, job security, and the future of the company. According to Daniel Kim’s paper, “Predictable Exodus: Startup Acquisitions and Employee Departures,” within the first year of a company’s acquisition, 33 percent of acquired workers left. What is more alarming, is that 47% of key employees leave a company within a year of the transaction, and 75% leave within the first three years, the EY report suggests.
In his insightful handbook, The Employee Guide to Mergers and Acquisitions, author Price Prichett lays outs in plain but compelling language the psychological consequences of a merger/acquisition for employees. Upon initial news of the merger or acquisition being imminent, Pritchett characterizes three distinct “psychological shockwaves” that ripple through the company:
- Uncertainty and ambiguity
The three initial psychological shockwaves typically result in various organizational problems that management must be ready to navigate and cope with. They are as follows:
- Communication Tangles
- Productivity Problems
- Loss of Team Play
- Power Struggles
- Low Morale, Weak Commitment
- Bailing Out
- Grief and Mourning
Communication is the number one reason for M&A failures according to A.T. Kearney’s Global PMI Survey.
Source: A.T. Kearney’s Global PMI Survey
Creating an M&A Communication Plan
With the right M&A communication plan, you can minimize these concerns and ensure a smooth transition for employees from both organizations. Here are some of the top 3 employee concerns during a merger you will need to address:
- Job security: employees fear they will lose their job during an M&A, and that is not an irrational fear. According to Harvard Business Review, an average of roughly 30% of employees are deemed redundant after a merger or acquisition in the same industry.
- New company culture: employees fear they will not fit in with the new company culture. How does your organization keep its values and culture when it is all of a sudden adding tons of employees and a whole other company to it?
- New leadership: employees worry they will not get along with new leadership and don’t know if they can trust new leadership. Not only that but they might be concerned about how to navigate communications around your new leadership.
Now, let’s take a closer look at how an M&A communication plan can assist in managing employee concerns during a merger or acquisition.
Step 1: Preparing for the Merger Announcement
An effective M&A communication plan starts before the merger is announced. Internal communication software can be used to prepare employees for upcoming changes. It provides context and ensures they receive the news from the company before it becomes public knowledge.
Before initiating the M&A communication plan, gather all relevant details about the merger and acquisition. Understand the reasons behind the deal, the anticipated benefits, and the potential impact on employees. It’s important that your employees understand how these details affect them and their role within the organization.
Step 2: Segmented M&A Communications
Then, segment employees into different stakeholder groups based on their roles, departments, and levels within the organization. Common groups may include management, individual contributors, HR, and support staff. Craft tailored messages for each stakeholder group. Address their specific concerns, highlight the benefits they can expect from the merger, and be transparent about any potential changes or employee concerns during a merger.
Select appropriate communication channels for each message. Consider using a combination of town hall meetings, email updates, intranet announcements, and one-on-one meetings where necessary. Develop an M&A communications timeline that outlines when and how each message will be delivered. Ensure that the timing aligns with key milestones in the merger and acquisition process.
Step 3: Integration and Onboarding Information
Communicate the new organizational structure resulting from the merger. Explain any changes in your M&A communications like reporting lines, roles, or responsibilities. Offer clarity on how the integration will unfold. Emphasize the values and culture that both companies share. Highlight how the combined organization will work together to achieve common goals.
If there are new employees joining as part of the acquisition, provide a comprehensive onboarding plan. Ensure that new employees feel welcomed and supported during their transition. Create channels (e.g., feedback surveys, Q&A sessions) for employees to voice their concerns and questions about the integration. Address these concerns promptly and transparently.
Step 4: Regular Updates
The final part of your M&A communication plan should be establishing a regular schedule for providing updates on the progress of the merger process. This could be weekly or bi-weekly, depending on the pace of the integration. Celebrate successes and milestones achieved during the integration process. Recognize teams and individuals who have contributed to the successful merger.
Acknowledge and address any challenges or employee concerns during a merger in M&A communications. Provide reassurance and a plan for overcoming these challenges. Continue to encourage employee feedback throughout the integration process. Use feedback to identify areas that need improvement and to make necessary adjustments to the integration strategy. Ensure that senior leaders are visible and accessible during the integration. This could include town hall meetings, open-door policies, and opportunities for employees to interact with leadership.
The Role of IC Software in M&A Communications
The right internal communications software is absolutely vital to the success of an M&A communication plan. It is the difference between communication and miscommunication during an M&A. Here are some of its capabilities you can utilize to deliver effective M&A communications:
Real-time Updates: Internal communication software allows companies to provide real-time updates on the progress of the merger. Timely updates keep employees informed about the latest developments. This ensures they are aware of how the process is unfolding and have the right information. It can prevent stress for internal communicators and audiences.
Open and Transparent Communication: Transparent communication is vital during M&A communications. Communication software provides a secure platform to share information openly. It addresses employee concerns and provides them with a clear picture of the merger’s impact on their roles and the organization.
Q&A and Feedback Mechanisms: To ease employee concerns, companies can use internal communication software to create Q&A sessions or feedback mechanisms. This allows employees to ask questions and express their concerns. These can then be addressed by management. This is especially useful with our team here at Cerkl; we use Slack integrations to achieve a feedback loop through the threads.
Successful M&A Communications
Individual commitment during M&A is linked to its success, according to the Leadership and Organization Development Journal. This is why organizations must address these concerns promptly and transparently to foster trust and prevent disruptions to daily operations.
M&A communications play a crucial role in addressing employee concerns and facilitating a successful transition. A study done by the International Journal of Resource Management studied 16 different M&As in banking; all of them with different levels of communication. The results suggest that mergers are likely to survive when organizations follow an immersive approach with “rich and continuous” communication.
Leveraging internal communication software can significantly improve the efficiency and effectiveness of communication. By providing real-time updates, encouraging transparent communication, and implementing a well-structured M&A communication plan, companies can navigate the complexities of mergers and acquisitions while fostering a positive work environment for their employees.
A well-structured M&A communication plan, segmented for different stakeholder groups, lays the foundation for effective M&A communications. It sets the tone for addressing employee concerns during a merger, providing clarity on roles, responsibilities, and the integration process. Through regular updates, organizations can celebrate achievements, address challenges, and maintain leadership visibility, fostering a sense of trust and confidence in the new entity.
Incorporating internal communication software into M&A communications can be a game-changer. It enables organizations to provide real-time updates, promote open and transparent communication, and establish Q&A and feedback mechanisms. By leveraging this technology, companies can keep employees informed, engaged, and involved in the process.
Our internal communication software Cerkl Broadcast has helped dozens of companies engage their employees during an M&A transition process. Access a free personalized, downloadable audit to share within your organization. Review the types of content your team creates and distributes across your channels during the merger, and see what we can offer to streamline it.
Want feedback? If you complete it, we will provide you with free, personalized advice on how to improve. Start using your email.
Before, during, and after an M&A, communication exists to keep employees informed and help them understand every step of the process. Effective communication will ensure employees stay engaged, and productive, and should be used to ease any employee concerns during a merger.
M&A communications should include establishing a dedicated team, crafting clear messages, using various channels, conducting town hall meetings, addressing employee concerns, providing training, and maintaining consistent leadership visibility.
An M&A communication plan outlines the strategy and approach for effectively communicating the details of the merger to various stakeholders, including employees, customers, suppliers, investors, and the general public. The plan aims to ensure transparency, minimize uncertainty, address concerns, and foster a positive perception of the merger.
For M&A communications, send a clear and concise email or hold a town hall meeting. Communicate the reasons for the merger, the expected benefits, and the vision for the new organization. Address potential employee concerns and provide a timeline for integration. Offer opportunities for Q&A to ensure transparency and understanding.