How do mergers and acquisitions affect employees?

archive

CW: There are a lot of smart books out there on mergers. Why do more than half of all company mergers fail?

Brigitte Winkler

Winkler: A merger is a complex process in which many things take on a momentum of their own. Companies have to have customers, employees and potential partners under control and be able to make the most important decisions quickly. The double burden of pursuing the business goal and at the same time forming a new organization is very difficult to cope with.

CW: How do the difficulties affect the employees?

Winkler: The employees wait for a while. They are often restrained in their room for maneuver and show less initiative. The situation is similar in middle management. Those affected wonder whether their suggestions are still wanted. They doubt whether they have the information they need to influence.

CW: What are the top managers struggling with?

Winkler: The upper management level is responsible for setting these important processes in motion. Since so many processes have to be initiated that are normally delegated to the different reporting levels, it can lead to confusion and excessive demands.

CW: How is a merger ideally prepared?

Winkler: You have to set up well-planned integration management. This includes looking for those responsible for designing the new architecture. Project teams have to be set up whose coordinator knows what should work by when. The employees must be informed about the most important activities and milestones: How should the new organization be set up? How will the new positions be filled? What changes in terms of salary, social benefits, jobs? These questions need to be answered quickly and competently. This is difficult because there are many different interest groups, for example management, the works council or the HR departments. Everyone has to come to a solution together.

CW: How can former competitors be sworn into one line?

Winkler: The most important thing is to quickly communicate the economic reasons for the merger to the employees, but also to the outside world, so that they can understand the decision.

CW: After a merger, a lot of things are duplicated in corporate IT, from the communication platform to the chief information officer. Often decisions have to be made for or against technologies and people. How can conflicts be avoided here?

Winkler: It all starts with the decision for a specific system. If, for example, the employees of a merger partner lack skills, they must be given the opportunity to acquire them. The personal experience of frustration can be somewhat limited by transition phases in which the old know-how is still needed and new skills are built up at the same time. It cannot be completely averted, because the employees have got used to a certain IT system over the years and have identified with it.

CW: Mergers usually lead to a wave of layoffs. Is there any research into who packs the suitcase first?

Winkler: Research shows that those who leave the company are more likely to leave the company if their company is in the losing position due to the power relationship in the executive board or management. Realistically, they expect that the recruitment process will not be fair, but that the "winners" will get their own people.

CW: The "losers" are not necessarily the worse workers. Are there any recipes to keep the good ones?

Winkler: The best thing is for people who are not supposed to go to positions of responsibility as quickly as possible. If vacancies are filled too slowly because the structures are not yet clear, the good people can be appointed to post-merger projects in which they take on management positions. The main thing is that the high potentials feel that the new company is also interested in them.

CW: Which tier of employees will be hardest hit in a merger?

Winkler: Every level of the company is affected in its own way. Top management is in the most difficult position because every measure entails countless follow-up decisions at other levels. In addition, managers sometimes have to face unpleasant communication situations. They have to give an account of their plans to investors, analysts, the works council and employees. That is why they are the focus of criticism.

CW: But the middle-level managers are also challenged?

Winkler: It is difficult for them because they are in a sandwich position: On the one hand, they have the task of keeping their employees engaged and of maintaining day-to-day business. In doing so, they have to answer questions about decisions that they cannot understand themselves because they are often poorly informed. On the other hand, top management expects them to support the merger, i.e. to take on project tasks in addition to day-to-day business.

CW: What happens to the employees?

Winkler: Employees suffer because they have to say goodbye to their usual tasks, processes and structures. He suffers because the team falls apart and he is often the last to find out what happens next.

CW: How important is communication in fusion processes?

Winkler: Only those who are informed can act wisely. So the company management has to make sure that the last employee also knows. Otherwise the following can happen: The customer asks the employee what is going on. If the employee reacts skeptically with regard to the merger project, the customer will also lose confidence in the company.

CW: When an employee vacillates between staying and leaving, what should they consider?

Winkler: If the dream job is waiting for him, it should go. But no company is currently immune to Fusionitis. Even if he changes employers, the same topic may be on his mind next year. Sometimes it is better to stay where you can fall back on a network and where the work done is valued. The effort of having to get to know new colleagues at another company and to learn new tasks is enormous. Many underestimate the effort out of their current frustration.

CW: How long does it take employees to get used to the new situation?

Winkler: You have to give the company one to two years before all of the processes are well established. Then the competition also becomes weaker. Teams were able to form, new rules of the game were created.

 

Brigitte Winkler and Stefan Dörr give detailed tips on dealing with company mergers in their guide "Surviving mergers. Strategies for managers." Published 2001 by Hanser Verlag Munich / Vienna. 340 pages, 39.90 euros. ISBN: 3-446-21487-9.