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As companies seek out growth and a competitive edge, mergers and acquisitions have become customary in the business world. But M&As bring with them many changes, chief among them the integration of the two organizations’ employees.
Combining two firms’ corporate cultures, organizational structures and team members presents hurdles that must be overcome for a successful post-merger integration. From aligning job responsibilities to promoting worker retention, getting through these challenges is crucial.
In the sections below, we lay out proven strategies companies can use to successfully navigate staffing challenges following an M&A.
Understanding Post-Merger Staffing Challenges
After a merger or acquisition, companies frequently come up against staffing problems that have the potential to derail organizational integration. Here are several:
Culture Clash
Many such issues arise from cultural-compatibility issues between the two sets of staff.
“Because culture encompasses the beliefs and assumptions shared by members of an organization and influences all areas of group life, the M&A integration always has a degree of misalignment, regardless of the perceived similarity between the two firms,” according to a white paper by the Society for Human Resource Management.
This ‘clash’ can show up in various ways: differences in work expectations, decision-making processes, and even leadership styles. Because it can reduce employee morale, engagement, and productivity, it can have a significant impact on a business after a merger. Employees may leave the company, resulting in the loss of critical talent. Workers who stay may become resistant to change and unwilling to collaborate with their new colleagues. If left unaddressed, a culture clash can ultimately hamper post-merger integration, stopping strategic goals in their tracks.
Roles and Responsibilities Alignment
Another main staffing challenge that can follow an M&A is the alignment of roles and responsibilities. After merging, organizations often have people doing overlapping jobs, and fixing this requires thoughtful workforce restructuring. The process necessitates identifying talents and skills the newly merged firm needs, then assessing any gaps and making decisions about reassignment or dismissal.
Restructuring can lead to concern and stress over job loss among remaining workers, leading to decreased job satisfaction and performance. This is particularly true when there is a misalignment of roles, which can create inefficiency, confusion, and a slower integration process.
Communication Breakdowns
Breakdowns in communication and gaps in information can also challenge a merger or acquisition. Setting up and maintaining clear lines of communication is crucial to address employee concerns, manage expectations and give updates on the integration.
As Michael Schrage writes in a piece for Harvard Business Review, “People need to understand the new cultural, organizational, and operational values they are being asked to embrace.” If they don’t – or if they feel otherwise left in the dark – rumors and distrust can result, aggravating existing post-merger team integration.
Recognizing the significance of culture clashes and the need for proper alignment of roles and open communication can help a newly merged entity figure out where and how to invest in integration programs to promote cross-cultural understanding and establish a shared vision.
Key Strategies in Managing Post-Merger Staffing
Successful handling of post-merger staffing demands a holistic approach that evaluates multiple aspects of integration. Here are some strategies to consider using:
- Effective Communication Strategies: Transparent communications is key to mitigating staffing problems after an M&A. Giving employees timely, accurate messages that include information about any role, responsibility and organizational changes will alleviate worker anxiety. Clear lines of feedback and dialogue let employees ask questions and air concerns, while regular communication from leadership keeps team members engaged throughout the transition.
- Fair and Equitable Treatment: Ensuring fair, equitable treatment of employees is essential during post-merger staffing. Set up clear guidelines for decision-making processes that relate to staffing, such as job assignments, compensation and promotions. Criteria should be transparent and applied across both merging organizations. Both entities should seek to recognize the skills and contributions of all workers, regardless of previous affiliation, to build an inclusive new work environment.
- Legal Considerations: Staffing after a merger or acquisition has to comply with all applicable regulations, labor laws and contractual obligations. This comprises compliance with employment contracts, non-compete agreements, any collective bargaining agreements and other relevant obligations. Be mindful of any potential employment discrimination or other unfair practices and take immediate measures to mitigate risks. Make sure to conduct a full review of legal considerations and retain legal counsel when needed.
- Addressing Redundancies and Managing Overlapping Roles: As we mentioned, merging companies often face redundancies in employee roles, and this requires careful decision making from company leaders. Identifying critical talents and skills gaps, as well as aligning responsibilities, is necessary to streamline a newly melded workforce. Consider conducting a thorough analysis to determine the most effective staffing setup for the new entity. Offer support – such as outplacement services or retraining – to affected employees. And remember: Clear communication can help minimize disruption and maintain employee morale.
Retaining Key Talent During and After a Merger
Keeping talent after a merger or acquisition is not always easy. In fact, “acquired workers” are approximately twice as likely to leave their jobs as those who were hired directly, according to a recent study cited in a white paper by accounting firm KPMG International.
But talent retention after an M&A is critical to preserving organizational stability and institutional knowledge, and to future success. So what can a newly merged entity do? Below we detail some best practices for retaining key talent.
Communication and Engagement
We’ve mentioned this before, but it bears repeating here: Clear, consistent communication is essential following an acquisition. It will allay worker concern and keep up engagement during the merger process. Company leadership should talk frankly with workers about the reason for the merger or acquisition, their vision for the new firm and how team members fit into it. Town halls and other forums for communications, such as newsletters or email updates, let people voice worries and ask questions. Be sure to answer these queries to foster a sense of responsibility and commitment to the workforce.
Growth Opportunities
M&As can make workers feel uncertain about their career paths and/or futures with a company. When you give them opportunities for professional development, they feel as though you are investing in them, and they are more likely to want to stay at their jobs.
“[W]hile all employees need paychecks, most are engaged and motivated by recognition, culture, career paths, training, and development,” according to the KPMG paper. “Today, appealing employee value propositions are likely to include regular coaching or other touchpoints with management, and support for personal wellbeing. People at every level will look for new training and development offerings, offered within the company or by external providers.”
Offer clear information about paths forward for growth and/or promotion in the new organization. This might include access to training classes, mentoring initiatives or bespoke action items employees can take to grow within the firm.
Rewards and Recognition
Making special note of worker contributions and achievements through rewards or other recognition can bolster workforce morale and retention. Formal acknowledgment programs, performance-based cash bonuses, equity-based compensation, public congratulations and/or career-advancement opportunities are just some ways to create a positive work environment and foster loyalty.
Case Studies: Successful Post-Merger Staffing
In recent years multiple M&As have made the news, as much for their success as their global footprint and name recognition. Here, we detail some of the best known.
The Disney-Pixar Merger
When Disney acquired Pixar Animations Studios in 2006, both firms knew the importance of talent retention and sound team integration. High-profile leaders from both companies made moves to create a positive merger experience that respected the unique culture of each organization. Pixar executives stepped into significant roles at Disney Animation to ensure a smooth transition and enable collaboration between the studios. The success of films that followed – including “Frozen” and “Zootopia” – are a testament to the soundness of the companies’ acquisition approach.
The United Airlines-Continental Airlines Merger
In 2010 the merger of United Airlines and Continental Airlines created one of the largest air-carrier services on the globe. The two companies saw the need to address a potential culture clash and do as much as feasible to prevent talent loss during the process. Thus, the post-merger staffing approach keyed in on identifying employees with strong leadership skills and potential and assuring the integration was fair and equitable. The two airlines conducted thorough worker evaluations and reassigned roles based on performance and skill sets. The newly blended organization also started communication initiatives to encourage dialogue and build trust among new colleagues. Following the merger, United consistently ranks among the best airlines.
The Exxon-Mobil Merger
The merger of oil giants Exxon and Mobil in 1999 created ExxonMobil, one of the world’s biggest publicly traded companies. To overcome staffing hurdles after the merger, the new company conducted comprehensive evaluations of the workforces of both Exxon and Mobil to ensure that the most skilled and experienced employees stayed in critical jobs. It also offered career-growth opportunities and incentives to necessary workers, promoting a culture of growth and stability.
Leverage M&A for Team Building
Companies can leverage mergers and acquisitions to create a stronger, more cohesive staff. To combine different workforces, it is critical that firms create an environment that enables open communication, relationship building and shared-goal alignment.
Bringing people together through team-building exercises, cross-department projects and collaborative problem-solving can build trust among new coworkers. This can help combine the two former companies’ teams.
Open lines of communication and actively seeking worker input can create a sense of ownership in the new company among employees. Giving workers chances for skill sharing, knowledge transfer and other professional development helps build a shared sense of purpose.
By using the merger or acquisition as a way to create a stronger team, companies can make the most of the diverse expertise and experiences of their new, larger employee pool.
Conclusion
Post-merger integration can present multiple staffing challenges that organizations must overcome in order to see a successful overall M&A. A clash of cultures, less-than-ideal alignment of roles, communication breakdowns and overlapping responsibilities are the main obstacles to success.
However, by implementing certain strategies–such as clear communication, fair and equitable treatment of employees, legal evaluations and work-redundancy analyses–companies can alleviate many potential problems and show that successful post-merger staffing is possible.
FAQs
What are the common staffing challenges that companies face after a merger or acquisition?
Common staffing challenges faced by a business after an M&A include culture clashes, poor alignment of staff-member roles, communication breakdowns and failure to address redundancies in employee tasks and responsibilities.
How can a company manage redundancies and overlapping roles after a merger or acquisition?
A business can best manage potential redundancies through comprehensive workforce analyses and the assessment of skills gaps. Once these have been completed, company leadership can make informed decisions about necessary job reassignments, separations and/or firm restructuring. Sensitivity toward affected employees and open communication with the entire workforce are paramount during this time.
How do mergers and acquisitions affect employee morale, and how can this be managed?
M&As can affect worker morale owing to uncertainty about job stability, new-company structure, leadership and more. Effectively assuaging worker fears and keeping morale high entails effective communication, transparency, timely responses to questions and the provision to employees of support, resources and growth opportunities.
How can a company leverage the merger or acquisition to build a stronger team?
Businesses can leverage M&As to build a stronger team via encouraging open communication, assigning cross-departmental projects, helping employees build relationships with each other and with leadership, aligning the two firms’ shared goals, and providing opportunities for team-building exercises. An environment of shared purpose and trust fosters worker satisfaction and retention.
