Employee communications in an M&A: key features to keep in mind – Part 1

(For ease of reference, the expression M&A in this blog refers to any company consolidations, like mergers, acquisitions, joint ventures, and other strategic alliances).

Employee communications during an M&A is one of the most important factors to ensure the successful integration of the organizations coming together to join forces.

When an internal communications plan is comprehensively developed to cover all aspects and stages of the M&A journey it helps to minimize undue employee concern and friction, it encourages greater engagement and buy-in, and helps a more seamless transition to the new entity.

But it’s crucial that every aspect and facet of internal communication should be explored and considered before, during and after an M&A. This includes the different levels of communication (corporate, function/department, team, and individual; global vs. local), directions (top-down, bottom-up and horizontal), mix of online and offline channels and tools, message relevance (what’s in it for me?), audience understanding, tone of voice and result measurement.

However, the employee communications function or department frequently finds itself having to deal with the issue of confidentiality around a good chunk of M&A-related information, or information that can be disclosed only to specific groups of employees (in general those working as part of integration committees and workstreams).

In any change program, and particularly where companies are merging or part of an acquisition, it’s normal for employees to have concerns and questions about what the future holds for them. But, quite often, all the answers they are looking for aren’t always there, especially at the beginning of the new journey.

Therefore, communicators have to make a compromise between what can and can’t be said to employees. But instead of ignoring requests for clarification or hiding behind silence, they shouldn’t be afraid to acknowledge that if the answers aren’t available or can’t be shared yet, that the information will be made available as soon as possible when it’s possible to do so.

This blog isn’t intended to be a comprehensive overview of the very wide topic of employee communications in M&A, but will instead focus on six important components that do not always get the weight and attention they deserve for a successful outcome.

Employee communications workstream

For employee communications to be highly effective during the entire integration lifecycle, the starting point should be the creation of an employee communications workstream with members from across the organizations joining forces. The aim is to ensure that:

• Infrastructure, resourcing, and governance are in place
• A common strategy is developed and plans are executed
• Consistency of messaging is maintained across the organization
• Internal differences are assessed and addressed. From language and cultural nuances to stakeholders’ requirements and expectations, there are a range of organizational characteristics likely to impact how communications should be structured to reach out effectively to target audiences
• Key milestones and what they entail from a communication perspective are identified and mastered

Designing a workstream with the “right” balance of skills and experience is essential if the communications component of the M&A is to be given the best chance of achieving the desired outcomes for the entire project.

Having communicators who are good at drafting messages and plans is not enough, as the complexity of integrations require people who have strong project management skills, understand change, possess a very clear picture of the business including its employees, and, above all, know the integration program in detail. Thus, having a cross-function workstream is a great advantage.

Strategy development and execution

It has to be highlighted and remembered at all times that Internal communications during company consolidation is a process and not just a one-off event. It must be structured and thought through; it should convey a narrative and build engagement. Therefore, it requires a strategy and execution plans essential to:

• Connect people to the business strategy explaining why the integration is needed
• Create a persuasive narrative that drives rational understanding and emotional engagement, guiding employees from the initial stage of awareness-raising of the M&A to the consolidation of the new entity, and ways of working this into business as usual
• Communicate core messages: overarching messages supporting the rationale behind the deal and vision for the future, and tailored messages for the different internal audiences
• Put target audiences and their requirements at the center of communications and use data for segmentation based on employees’ needs. Unless what needs to be communicated about the M&A, is function or role-specific, it is advisable to not use hierarchical segmentation criteria as this can lead to information gaps between senior people and those who sit towards the bottom of the organization structure. Senior people will get the full picture whereas the others will only get the practical details in a fragmented way, creating a sense of exclusion.
• Identify obstacles and personal resistance to embracing change, and adopt solutions to overcome barriers along the integration process
• Establish metrics and measure the efficiency and effectiveness of channels and tools, processes and messages, but also evaluate outcomes as shifts in attitudes and behaviors. M&As are very frequently characterized by rumors and speculation so it’s imperative to immediately clear up any misunderstanding
• Emphasize the roles of senior leaders, team and line managers, change agents and other internal stakeholders as communicators
• Develop schedules, assign tasks and responsibilities
• Manage risk and contingency planning

Integration lifecycle

Drawing a geometric representation, the integration lifecycle is a ray made up of a sequence of line segments with a given starting point – the due diligence performance – and that extends to the consolidation of the new business, spanning integration planning, announcement, Day 1 and integration implementation. These connected line segments represent a roadmap to help communicators:

• Determine what needs to be communicated to whom, by whom, when, how and why
• Plan well in advance
• Set clear communications objectives for each stage of the integration cycle. Broadly speaking, Day 1 – or “launch Day” - is a vertical line that separates two major phases:
  1. Pre-Day 1 or transition from “old” to “new”, i.e. from the combing organizations to the new entity
  2. Post-Day 1 or post-M&A integration execution

The Pre-Day 1 phase is aimed at setting the M&A in context, explaining why it is needed, how it is going to impact both the organization and its workforce.

It is about “selling the business case” for the M&A, creating an understanding of what it implies and articulating the new business direction. It is also the phase where you need to build emotional buy-in to change, listen to employees, address concerns and questions.

The shift from rational buy-in to emotional engagement corresponds to the shift from an information and fact-driven approach of the early days, to a more emotion-driven and benefit-oriented communication.

The Post-Day 1 phase has a different focus in terms of objectives and is targeted at educating employees on the new brand (not only the visual identity!!), what it stands for, its values and desired behaviors; addressing those behaviors that are no longer aligned with the “new” culture; embedding new ways of working; providing employees with the tools and training needed to do things differently; consolidating change into business as usual.

• Communicate things at the “right time” and refrain from going too fast too soon or too slow too late. There are various examples of misaligned communications:
  • Failing to communicate how the M&A is going to affect the positions of individuals
  • Keeping uncertainty prolonged as a consequence of late communication about redundancies, team/department restructuring, appointments to different roles or creation of new positions
  • Failing to communicate early in the process what employees are supposed to do, know and feel about the new organization.
  • Failing to find lines of continuity between the legacy firms and the new business. There are bridges between “old” and “new” and they must be communicated clearly to employees. This is particularly true at the cultural level. What elements of the previous culture are part of the “new” culture? What is the best of our culture we are bringing along with us on our journey?
  • Failing to highlight connections between cultures: What do the cultures of the organizations coming together have in common? What are the shared values, attitudes, behaviors, beliefs, practices and so on? If people don’t see such culture similarities, M&A integrations and consolidations become very hard to reach; instead, they turn into painful processes and toxic environments characterized by antagonism – we vs. you – silos and nostalgia for the good old times
  • Failing to acknowledge differences. In an M&A, the principle that “one size fits all” does not apply. Failing to recognize, openly and distinctly, the differences between the partner organizations and how some of these differences could turn into a strength or even a competitive advantage is counterproductive. It makes the integration process difficult to manage, with one party trying to impose its solutions on the other(s); it becomes a source of friction and misconceptions; it creates wrong perceptions and conflicts among employees from the different legacy companies. A smooth integration requires an education process – not to be left to the last minute – to help the combining partners understand each other and where they are coming from, assess what differences represent an obstacle to the integration, which ones should not be part of the new course and which are to be leveraged internally and externally. There are key differences that can’t be neglected and poor communication (and education) about them makes the job of the integration workstreams quite challenging, both in terms of tasks to be completed and relationships among its members.

Case Study 1 During one acquisition in the tech sector, leadership was visible only at the time of the announcement and then missed the opportunity to communicate the wider strategic framework and direction for the time ahead as well as informing employees of future opportunities.

As a consequence, communications became immediately very technical, centered on HR policies, procedures, and systems. The result was stark: a disengaged workforce, low morale, and the best talent left the organization due to the uncertainty created by poor communication and the lack of clarity about the future.

Case Study 2. During a set of acquisitions in the telecoms sector, the process of defining what the acquiring organization stood for, and its culture, were communicated at the end of the acquisition process which had taken a number of years.

While the exercise was done very thoroughly and supported by deep research, it happened late in the acquisition cycle so the first part of the integration implementation was more a collection of companies, systems, and processes.

The process was necessary and proved to be very successful as, up until that point, the amalgamated business was very fragmented; employees didn’t identify with the new acquiring entity and generally referred to themselves in relation to their legacy organization.

Although this was not ideal, a benefit of doing the process at the end of the acquisition cycle was that the organization could pick the best elements of the acquired entities and jettison the worst, and because the process was felt to be inclusive and collaborative it had the effect of creating greater buy-in and cohesion in the new, restructured, organization.

In Part 2, which will be published on January 23, Gianluca Bregoli explores Four Enablers of Employee Engagement.