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Mergers & Acquisitions

Mergers & Acquisitions can have high costs in return for high perceived value but what of the human cost to both workforce’s in dominant and less dominant partners, in integration risk of disruption to unique work experiences, retention, attrition and loss?

‘Good Will’ can be expensive but poor ‘skill & will’ can cost dearly. ‘Skill’ being the managers ability in knowing how to manage through the change and ‘will’ being their motivation, or rational desire, to ‘will’ the engagement and effectiveness of both workforces, pre and post merger or acquisition.

One example of ‘skill’ is for managers to know the degree to which employees perceive aspects of their employment experience to be unique, though this is particularly important with the acquiring workforce. This shows how important it is for managers, responsible for employee integration following major acquisitions (and indeed mergers) to undertake an audit of what employees perceive as being unique employment experiences offered by employment at both the acquiring and the acquired workforces; “managers will need to carefully consider the degree to which these unique experiences are likely to change (for both groups) due to an acquisition.”

Furthermore, a 2013 key finding in the employee responses to changing aspects of the employer brand following a multi national acquisition, that shows as being important is that the acquired employees will be particularly sensitive to whether the acquiring organization is considered to act in accordance with its corporate identity claims (CSR identity claims in this case).

Ultimately, the study shows how important it is that when an acquiring organization makes corporate social responsibility claims, these claims must be followed through when navigating the rocky waters of subsequent integration and restructuring. The acquired employees will be particularly sensitive to whether these claims are fulfilled.

Importantly, in terms of post-merger and-acquisition integration, managing the employment brand campaign will require a careful consideration of the two constituencies, as any one change could well lead to different responses in the two groups. While intuitively this may make sense and could be considered obvious to those managing the integration process, the current study provides real evidence that employees in the two workforces react differently to changes in different employment brand elements, which adds significantly to our understanding of the impact of changing employment brands.

The hidden costs in M&A activity tend to follow post deal, yet prevention can be planned pre deal, particularly if management are aware of the factors that influence the likelihood and rate of employee integration. Speed of integration can save money.

At Business Integrated Solutions we can design workshops and one to one mentoring sessions that reduce fear and increase fairness that influence the likelihood and rate of employee integration post merger or acquisition. Recent research from university of Helsinki and King’s Business School London confirms that successful integration is much more likely when organizations actively help employees to feel that their jobs are safe (if they are) and that they will be treated fairly throughout the process.

Low perceptions of job loss and high perceptions of fairness are key in determining how quickly an employees speed of allegiance is transferred. Of course in any acquisition there is always a dominant and less dominant partner that impacts the speed of immersion and identity development. If it is a hostile take over other dynamics are at play that can lead to a feeling of exclusion resulting in compliant rather than commitment based transfer of allegiance.

In a less dominant partner, where a strong sense of purpose exists and meaningful work has contributed to positive employee experiences and performance, it can lead to a difficult transition to the new entity, unless management avoid underestimating just how different two companies can be, risking failure to create a firm foundation for the new entity.

Pre merger trust can be a predictor of post merger integration.

‘How’ is key. How staff feel about the change, how the organization goes about managing the integration based on their dominant, less dominant position. How much employees trust their managers before integration and how fairly employees feel they have been treated, demonstrated in the level of honesty and transparency built in to the procedures.

The how report offers empirical analysis on how governance, culture and leadership impact performance, but from our point of view the real insight lies in the support for our continued message for the need to re-huamanize business, not in what a business does, but in how it does it.


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