A merger or acquisition can often be a clash of the cultures. Cliff Ettridge discusses his three tips for keeping employees focused while going through an M&A.
Keeping employees focused during a merger or acquisition is of the utmost importance. As most business deals aim to deliver synergies; boost value to customers; drive innovation: the last thing brands want to see happen is inertia or worse, acts of sabotage.
My first ever M&A involved Compaq Computers who purchased Digital Equipment Corporation (DEC). It was a project we entitled ‘swallowing the elephant’ as DEC were by far the larger organisation and Compaq to some degree the young upstarts.
What became clear during the M&A talks was the clash of cultures. DEC was like a university campus, with engineers exploring the possibilities and inventing new solutions. Compaq was driven by sales: it focused on developing the product and then shifting units fast. It was a merger of behaviours. The innovation of DEC and the commerciality of Compaq. On paper, a marriage made in heaven.
In reality, it took a lot of effort to help the different mindsets to consider each other as partners, let alone fall in love. Culture eats strategy for breakfast. Peter Drucker first coined this term, and it’s no light quip. If a business is setting out a strategy to innovate and sell at scale (which Compaq were), then it’s imperative that work is done on allowing a culture to emerge.
So, here are my three tips:
1. The mourning period
Let’s say you’re in charge of the M&A. You may have been working on that M&A for over a year. You may have got to know your counterparts inside out. You may have a very clear idea of what the future holds and how exciting it is. Everyone else in the organisation is in the dark. And, remember this – the business strategy to date will have been built around getting employee to be loyal to a brand or strategy which you are now saying is defunct. That can be a shock to the system. Don’t underestimate the pride people have in the brand they work for. The very words in your brand name can evoke a strong emotional attachment – so allow for a period of recognition of the brands. Retire them carefully – with dignity and respect.
2. Show your investment in a simple strategy
Come out with it quickly. Be ready to set out a few key targets that show what success will look like. Keep it short and sweet. Nobody wants to read a 100-page report from PWC. They’ll want to know that the research has been done, but the reality is that they want to know what the three goals are and the three things that the new business will invest in to make that happen. And those investments must be positioned so that people can see how the work they are doing for customers will benefit. It might be something you will start doing. It can equally be something you will stop doing.
3. Make decisions quickly and be visible when you do so
People follow people. When times are hard and when people are fearful of their futures then they want to see and hear from those personalities that are making the decisions. They want to trust in the leaders. That means hearing directly from them. It means leaders making decisions swiftly and explaining – by film, podcast and stood up at townhalls – in person what the decisions mean and how and why they were made. Set out with this culture from the start and you’ll encounter an honest response from employees. Try to play catch up and you’ll have to overcome bitterness and mistrust.
There are many more tips, but from experience with Compaq, with RBS, BP and Knowhow over the years, these are just a few things I would bear in mind when going through change.