Archive for the "Mergers & Acquisitions" Category

The Power of Thanks During M&A – 5 Steps to Merge Company Cultures

Mercer Infographic on People Issues during M&ARecognize This! – Culture is the most powerful (and the most neglected) tool for successful M&A.

Mercer periodically puts out terrific infographics summarizing research around a particular topic. The most recent is “People Issues Affect M&A Transactions More Than Ever” (see it at right or click through). Infographic by Mercer Insights

Notice in particular the last 2 charts showing how neglected company culture is during M&A, with these two major takeaways.

1. Culture Most Neglected Across the Board

The red chart shows nearly all regions of the world agree culture is largely ignored during the M&A process. This is detrimental not only post-M&A, but during as well. People cling to the culture they are accustomed to, either because they enjoy working within the culture and are loyal to it or (at the other end of the spectrum) prefer “the devil they know.”

Ignoring the need to address and ultimately merge cultures will result in a “culture of cultures” after the merger, lengthening indefinitely the process of actuall integrating people, teams, processes and critically, success outcomes.

2. No Process to Leverage Culture Post-M&A

The purple chart shows few have a process in place to proactively leverage the company culture successfully after the M&A integration is complete. This is a huge miss as your culture is the driving force of the organization – it’s how people behave when no one is looking. What is going to be the driving force in your merged organization? How will people know what behaviors are now preferred, from all employees regardless of originating organization?

The lack of a culture-focused process during M&A can be addressed through a strategically designed social recognition program, which is an approach proven to get people focused on and bought into new goals and desired behaviors in the shortest amount of time.

5 Steps to Merge Cultures through Recognition

  1.  Merge the two companies’ vision and values into a new statement and set of core values that are meaningful to employees from both organizations. Then use the new recognition program as a positive communication tool of the vision and values to all employees. When done correctly, recognizing behaviors, actions or attitudes that are tied to a specific value will help those new values come alive for all employees, creating a more meaningful and memorable impact. Designate recognition ambassadors within both merging companies to encourage and demonstrate appropriate use of the recognition program.
  2. As with any strategic program, secure executive sponsorship of the new organization’s recognition program, but be sure to include key senior leadership from both companies in the initial roll-out. By seeing familiar and trusted leaders encouraging positive appreciation moments throughout the merged organization, employees from both companies will begin to notice and acknowledge the valuable efforts and contributions from their colleagues in the other company.
  3. Any strategic program requires measurable goals to track success. Frequency, timeliness and appropriateness of the rewards are critical in recognition programs. In the special case of M&A, specific goals should be included to track the progress of the merger of the two cultures into one of appreciation across the global workforce.
  4. Prior to program launch, confidentially survey employees on current job satisfaction; engagement level in their current roles; level of concern with the M&A relative to job retention, potential culture change and leadership; understanding of the values of the merged entity; and how those values translate to daily behaviors. Conduct the survey again periodically to measure improvements in these and other predetermined critical-to-success areas.
  5. Launch the program soon after the M&A is announced to engage all employees in this new culture of recognition, help them understand their continued value to the merged organization, and unite all employees behind the new vision and core values designed to achieve it.

Have you been part of a merger or acquisition? What was the greatest challenge or biggest missed opportunity?

More on HR Needs in Global M&A and How to Focus on Positivity & Happiness

Recognize This! – Sometimes, perfect illustrations for a blog post come too late.

Fellow bloggers, have you ever written on a topic only to come across two days later a very interesting piece that would have been a terrific complement to your original post?

While this, of course, has happened to me before, just last week I had two posts I wish I had elaborated on further. So I’m taking the opportunity of this post to expand further.

Global Mergers and Acquisitions * Top Challenges for HR

Mercer’s research on M&A in 2012 revealed interesting points on what HR needs to support M&A change actions most effectively. Top needs were better executive direction and better project management, especially in departments that didn’t meet leadership requirements for HR support during the M&A process. This is unsurprising as goals for M&A can be a moving target as the integration moves forward, but acknowledging these needs up front can help HR leaders plan for better serving their constituents throughout the entire M&A process.

Also unsurprisingly all global regions reported “change management” and “business/culture integration” as the top two people issues receiving insufficient leadership attention in M&A (see image at right; click to enlarge). As I wrote in my M&A post last week, the importance of integrating cultures cannot be ignored. This is the biggest fear for employees: “How will my workplace experience change in the new, merged organization?” Managing expectations around this (change management) is critical. (See my earlier post on how to do that.)

Changing the Formula for Success: Rewiring the Brain for Positivity and Happiness

Also last week I shared a TedX video from Shawn Achor on “The Happiness Advantage.” In the video, Shawn discusses that the brain, when in a positive frame of mind (pardon the pun), is 31% more productive than when it is in a negative, neutral or stressed state. The good news is, it’s possible to retrain the brain for positivity and happiness. Shawn shares several tips for how to rewire the brain, including focusing on gratitude.

Again, after I published this post, I read a terrific post by Alexander Kjerulf on his Chief Happiness Officer blog about how to focus on gratitude. Alexander suggests:

Sometimes the simplest things work the best, and this week’s happiness tips is one of the simplest we know:

Before you leave work, make a list of 3 things that made you happy at work today. It can be big things or small things, that doesn’t matter, just list 3 things that you enjoyed about work today.

It could be things like:

  • We closed a big sale with a new client, that felt great
  • A co-worker told me how much he appreciates working with me
  • I had a great time at lunch with my team – everyone was laughing

We  suggest making this list daily for a week and then switching to doing it only every Friday, where you list 3 things that made you happy that week. A study showed that making the list weekly rather than daily actually works better – possibly because you don’t tire of it as quickly.

This is one practice that seems almost too simple to work, but one study showed that if you do this for two weeks, you will be measurably happier for 3 months afterwards.

This matters because, pointing back to Shawn Achor’s research, someone who is measurably happier is also more productive and effective at work. Switch your focus from solely what still needs to be done, to what has been accomplished and celebrate those successes.

5 Steps to Smooth the Merger & Acquisition Process through Strategic, Social Recognition

Recognize This! – Merging the people and the cultures of two organizations is the most difficult and crucial element of a M&A event.

The long anticipated merger of two major US airlines is now official. American Airlines and US Airways will merge their operations, their customer bases, and – most critically – their employees. Yet every merger, no matter how well planned or how well aligned, is fraught with potential roadblocks along the way.

An article in yesterday’s Wall Street Journal highlighted the major challenges facing these two storied airlines as they merge:

“A marriage of American and US Airways would represent a much greater challenge. American is almost twice as large as US Airways by traffic but would be run by the management of the smaller carrier, which is expected to move into AMR’s headquarters in Fort Worth, Texas. The cultures are different. Tempe, Ariz.-based US Airways is scrappier and more relaxed and has rebounded financially and operationally from hard times after its merger. American, a proud and button-down company that was king of the skies for decades, had been in a downward spiral for years and had a bad experience with its ill-timed 2001 purchase of Trans World Airlines.”

The business details of a merger are rarely the stumbling block to completing a merger successfully. No, it’s merging the cultures and the people that usually presents the greatest challenge. This is because employees on both sides need validation, consistency and a clear plan for the future – all of which can be addressed through a strategic, social recognition program, easing the transition period and keeping employees engaged and performance high.

Outlined below are five steps to smoothing the M&A transition process through strategic, social recognition.

1) Merge the two companies’ vision and values into a new statement that is meaningful to employees from both organizations. Then use the strategic recognition program as a positive communication tool of the vision and values to all employees. When done correctly, recognizing behaviors, actions or attitudes that are tied to a specific value will help those values come alive for all employees, creating a more meaningful and memorable impact. Designate recognition ambassadors within both merging companies to encourage and demonstrate appropriate use of the recognition program.

2) As with any strategic program, secure executive sponsorship of the recognition program, but be sure to include key senior leadership from both companies in the initial roll-out. By seeing familiar and trusted leaders encouraging positive appreciation moments throughout the merged organization, employees from both companies will begin to notice and acknowledge the valuable efforts and contributions from their colleagues in the other company.

3) Any strategic program requires measurable goals to track success. Frequency, timeliness and appropriateness of the recognition and rewards are critical in recognition programs. In the special case of M&A, specific goals should be included to track the progress of the merger of the two cultures into one of appreciation across the global workforce.

4) Carefully track progress on the cultural merger. Prior to program launch, confidentially survey employees on current job satisfaction; engagement level in their current roles; level of concern with the M&A relative to job retention, potential culture change and leadership; understanding of the values of the merged entity; and how those values translate to daily behaviors. Conduct the survey again periodically to measure improvements in these and other predetermined critical-to-success areas.

5) Launch the program soon after the M&A is announced to engage all employees in this new culture of appreciation, help them understand their continued value to the merged organization, and unite all employees behind the new vision and values.

Have you been through a merger or acquisition? How did your organization leaders handle the impact of the merger on employees?

Preserving Your Culture during Mergers and Acquisitions

Recognize This! – A formula for M&A success: “People + Culture + Numbers = Success.”

Why do 83% of mergers or acquisitions fail? Because too much emphasis is put on the financials and not enough on the people and the culture.

That’s the focus of an article in TLNT last month by Ron Thomas, and I couldn’t agree more. In the article, Ron says:

“Interviews of over 100 senior executives, according to the KPMG report, which tracked close to 700 deals over a two year period, revealed that the overwhelming cause for failure ‘is the people and the cultural differences.’ …

“It is understood by all that financials are (and should be) at the top of the pyramid. The problem is that many of the specialists leading the M&A team are, for the most part, financial people. They are also expected to handle the implications of culture and people, which is totally not their domain of expertise. These major challenges are underestimated all too often, and in the M&A environment, end up at the bottom of that same pyramid. …

“Numbers only tell a part of the story. Numbers can paint a portrait, but in order to paint a masterpiece, the formula is People + Culture + Numbers = Success.”

One client of ours tells the story of their rapid growth through multiple acquisitions in a very short period of time. As a consequence, they developed a “culture of cultures.” You could walk into a meeting and plainly see each person evaluating the other attendees, “She’s one of us. He’s one of them. I’ll go sit with her.”

To overcome that “culture of cultures,” Symantec decided to create a new culture of recognition, centered on a new set of core values meaningful to all of the employees. Within 9 months, Symantec saw a dramatic turn-around in how people thought about their colleagues – along with a 16% increase in employee engagement.

You can watch Symantec tell their own story of success in this webinar.

Don’t let numbers rule when planning for a successful M&A. Be sure to include your people and culture as part of the success equation outlined by Ron.

Company Culture after M&A

Recognize This! – Merging cultures and is as critical as merging “the books.” Be sure to give it the attention it deserves.

Yesterday, I offered a review of the book Building a Magnetic Culture. Nowhere is that more difficult – or more necessary – than in an organization that has just completed a merger or acquisition. One reason this is true is because culture is a constantly moving target, and one that moves faster under stress.

A recent article in HRZone.co.uk pointed out:

“As soon as a merger or acquisition is announced, the culture of both entities begins to change as people start to think about, and behave towards, their immediate environment in a different way.”

That change begins to happen as soon as the M&A is announced. The fear factor kicks in almost immediately (a topic ably addressed in this article speaking to the impact of evolutionary psychology on employees going through M&A).Employees start to worry about their positions, redundancies, changes in reporting structure or responsibilities, and an number of other factors.

One such major concern is the culture of the company. Most people are at least accustomed to the culture they work in if not actively fond of the culture. The fear of how “they” do things in the other group is almost palpable. One client of ours tells the story, after several acquisitions in a short period of time, you could walk into a meeting and see people picking out “one of them, one of us… I’ll sit with the ‘one of us’ person.”

Often the best solution is to work with all employees across the merged organization to create a new culture. The HRZone article goes on to point out:

“Creating a new culture is not about ‘creating a new culture’. It is instead about establishing the right processes and capabilities to lead to a new culture. It starts with forming a senior leadership team that understands this proposition and is prepared to show others what the new organisation is really going to be about.”

Often this requires respecting the cultural mores of both organizations. A wise approach can be to begin again with defining the core values of the merged organization, re-establish the strategic objectives, and then clearly communicate those changes to all employees. A baseline requirement – involving people from multiple functional areas and levels and definitely both organizations. As HRZone reiterated:

“By involving staff from all areas of the new entity as well as all of the former brands from each country, employees quickly began to see how the newly-integrated organisation would really work. They were also provided with some real evidence to this end and as back up to an extensive and professional communications programme.”

A final point to make this real is to use positive reinforcement via strategic employee recognition to bring those new core values and strategic objectives to life within the daily work of all employees. I’ve briefly outlined 5 steps to do so in this post.

Have you gone through a merger or acquisition? What was the impact on the culture in your organization? Did one entity dominate and force their culture onto the other, or do a truly new culture emerge?

Building a Team Culture Boosts Productivity

Recognize This! – Don’t let productivity increases slip through your fingers by ignoring the importance of relationships in the workplace.

How important is building a team culture in your organization? A recent British survey reported in HR Magazine found:

“16% of Brits state that getting on well with co-workers increases productivity in the workplace. A further 39% also claim that knowing their colleagues strengths and weaknesses helps them to work better as a team.”

That finding links in well with the webinar I led yesterday with Workforce Management, “Building a Global Team Culture with Recognition.” (You can get the recording here.)

In the webinar, I discussed the three challenges of:

  1. Creating a winning, engaged, strong, team culture.
  2. Overcoming localized, disparate recognition programs
  3. Proactively managing company culture so your culture doesn’t “just happen.”

I also tackled the 3 key ways to build a global team culture through strategic recognition:

  1. Elevate team engagement through shared values and goals.
  2. Use industry best practices to create a culture of recognition.
  3. Build relationships with global technologies for social and mobile recognition.

There were also some great questions, including:

  • What’s the appropriate frequency of recognition? (Daily – not quarterly, and certainly not annually)
  • Isn’t peer-to-peer free “ethanks” a great way to recognize employees? (Peer-to-peer is a critical part of a strategic recognition program mix, unless employees are also recognized by managers and with awards with economic value, they can become cynical about the real worth of their efforts to the organization.)
  • How do you get buy-in from management and commitment of budget for recognition? (You need the metrics and data to support the importance of recognition. You need to build your business case – the focus of my upcoming workshop series in Atlanta (27th October), New York City (28th October), Chicago (14th November), and San Francisco (17th November). It’s not too late to register. Blog readers should use registration code: RECOGNIZETHIS for half off the registration price.)

If you missed the webinar, be sure to watch the recording.

The Opportunity to Create a New Culture in M&A

Another reality of the recovery is continuing mergers and acquisitions, especially on a global scale. As discussed in a recent Workspan magazine cover story:

“According to a KPMG study, ‘Eighty-three percent of all mergers and acquisitions [M&As] failed to produce any benefit for the shareholders and over half actually destroyed value.’ Interviews of more than 100 senior executives involved in these 700 deals during a two-year period revealed that the overwhelming cause for failure ‘is the people and the cultural differences.’ Difficulties encountered in M&As are amplified in cross-cultural situations, when the companies involved are from more than one country. …

“Companies routinely underestimate the value of integrating cultures and its stickiness. Increasingly companies have realized the folly of this approach. Low morale, resignations, unionization, expensive retention Band-Aids, political infighting and outright conflict lead to a sapping of energy and an inward focus rather than competing in the market. …”

Merging companies requires merging company cultures as well as bridging the geographic cultures in global acquisitions. In some M&As, this may involve new geographic cultures never before encountered, which creates potential for serious cultural gaffes and misunderstandings.

I’ve written before on five steps to unite company cultures and goals on acquisitions. But in geographic cross-cultural M&A scenarios, it’s just as important to create and offer a single “language” of recognition that communicates consistently and clearly to all employees, from both original organizations, the company values and objectives.

Use a merger or acquisition as an opportunity to launch a new culture of recognition for all employees.

The Economic Benefits of Culture in M&A

A very interesting paper out of Harvard Business School applies economic theory to the culture clash in mergers and acquisitions – what’s the cost and benefit? How do most effectively merge cultures? Defining culture as “the degree to which members have similar beliefs about the best way of doing things,” the model used found that:

“Shared beliefs lead to more delegation, less monitoring, higher utility (or satisfaction), higher execution effort (or motivation), less information collection, less experimentation, faster coordination, less influence activities and less biased communication.”

Think of it this way – culture clash often manifests years after a merger when employees “still refer to a colleague’s pre-merger origin firm as an explanation for his or her behavior.”

So how do you more quickly overcome these “us v. them” tendencies to achieve the benefits of shared beliefs? Acknowledge these differences in culture and the expected outcomes at the outset and plan immediately how to address and potentially overcome them, even prior to the merger finalization.

As I’ve written in more detail here, these five steps will help merger your cultures as well as your business:

1) Merge the two companies’ vision and values into a new statement that is meaningful to employees from both organizations. Then use the strategic recognition program as a positive communication tool of the vision and values to all employees.
2) As with any strategic program, secure executive sponsorship of the recognition program, but be sure to include key senior leadership from both companies in the initial roll-out.
3) Measure: In the special case of M&A, specific goals should be included to track the progress of the merger of the two cultures into one of appreciation across the global workforce.
4) Survey employees prior to program launch and periodically afterwards to determine its effectiveness in achieving culture goals post merger.
5) Launch the program soon after the M&A is announced to engage all employees in this new culture of appreciation, help them understand their continued value to the merged organization, and unite all employees behind the new vision and values.

What other steps do you recommend to smooth the merger process and achieve a unified culture?

Uniting Company Cultures and Goals during Mergers & Acquisitions

In my last post, I discussed the fears that employees usually experience when an M&A is announced and the importance of maintaining consistency for employees throughout the process. These needs for validation, consistency and a clear plan for the future can all be addressed through a strategic recognition program, easing the transition period and keeping employees engaged and performance high. My five steps to smoothing the M&A transition process through recognition are:

1) Merge the two companies’ vision and values into a new statement that is meaningful to employees from both organizations. Then use the strategic recognition program as a positive communication tool of the vision and values to all employees. When done correctly, recognizing behaviors, actions or attitudes that are tied to a specific value will help those values come alive for all employees, creating a more meaningful and memorable impact. Designate recognition ambassadors within both merging companies to encourage and demonstrate appropriate use of the recognition program.

2) As with any strategic program, secure executive sponsorship of the recognition program, but be sure to include key senior leadership from both companies in the initial roll-out. By seeing familiar and trusted leaders encouraging positive appreciation moments throughout the merged organization, employees from both companies will begin to notice and acknowledge the valuable efforts and contributions from their colleagues in the other company.

3) Any strategic program requires measurable goals to track success. Frequency, timeliness and appropriateness of the rewards are critical in recognition programs. In the special case of M&A, specific goals should be included to track the progress of the merger of the two cultures into one of appreciation across the global workforce.

4) Prior to program launch, confidentially survey employees on current job satisfaction; engagement level in their current roles; level of concern with the M&A relative to job retention, potential culture change and leadership; understanding of the values of the merged entity; and how those values translate to daily behaviors. Conduct the survey again periodically to measure improvements in these and other predetermined critical-to-success areas.

5) Launch the program soon after the M&A is announced to engage all employees in this new culture of appreciation, help them understand their continued value to the merged organization, and unite all employees behind the new vision and values.

What has your experience been during an M&A? Was it successful? Did you feel left out of the communication loop? If you were a leader during the process, what worked well and what would you consider doing differently next time?

Using Recognition to Sustain Performance through Mergers & Acquisitions

It seems to me that the possibility of a merger or acquisition is on the lips of more and more people today. Any major change in the workforce is disruptive and frightening for employees, but M&As typically dramatically affect the performance of the merged organization, which usually falls short of projections. This can largely be attributed to the fear and uncertainty the average employee feels when an M&A is announced. Employees fear their positions may become redundant, the new organization will not appreciate their skills and contributions, or that the company culture will change drastically. These fears lead to reduced employee engagement in their daily tasks and lost productivity as people become consumed by worry.

To allay these fears and positively impact employee engagement during a time of upheaval, leadership of both companies must look beyond the technology, departmental and other functional integrations and focus on the emotional and psychological needs of the employees for validation, consistency, and a clear plan for the future. The need for validation is rooted in employees’ fear that a new boss from the “other” company may not appreciate their expertise or efforts or even fully understand the value of the job function being performed. All employees in any situation need validation that their efforts are appreciated and valued, but this becomes more true in the uncertain atmosphere surrounding M&A.

Maintaining a consistent work environment during the M&A transition process is equally critical to employees. While maintaining full consistency in job role, supervisor or even job location may not be possible as the details of the merger are finalized, employees require consistency in communication and company culture to remain productive in their current role.

Employees fearful of culture change or job loss often try to regain control of their personal situations by preemptively resigning. Top performing employees who may feel trapped between the two companies never fully engage in the merged entity, resulting in reduced productivity. By establishing and communicating a clear plan for the future of the merged organization, leadership will also manage these employee retention challenges more effectively.

In my next post, I’ll give five steps to smoothing the M&A transition process through recognition.