Mergers and acquisitions are two of the most important drivers in increasing the need for internal communication in both buying and target companies. In this article you can find out the 7 key steps you can take to optimise internal communication when your company is acquiring another, or is being acquired or merged.
Mergers put a huge strain on communication managers as they find themselves truly between a rock and a hard place. On the one hand, senior management go into purdah as they jostle behind the scenes for the upper hand in negotiations while, on the other, staff panic about losing their jobs and related position, lifestyle and pension.
Most communication professionals go through a merger or acquisition only once in a decade so you can afford to pull on a wide variety of external help and skills to get through a process that will stretch and develop you more than any other professional experience. There is usually a management consultancy on board, who have come in to help with the rationalisation and restructuring of the merged business. They always put a high emphasis on the importance of communication. Studies by Booz-Allen & Hamilton indicate that over 70% of merger objectives go unmet, and just 23% earn their cost of capital. However, change consultants are often involved flat out on their task of bolting two disparate companies together so they will have little time and expertise to help out the beleaguered communication manager stuck in the middle.
So what should you do when those first indications of a merger start blowing in the wind? Here I suggest a 7 point strategy:
1 Build the convincing story
The first thing is to get together the big picture of why the merger is happening in the first place. This is none too easy since senior management will have different Big Pictures, depending on their views of how the pieces are going to fall, post-merger. Remember that at least half of senior management are likely to leave following a merger, either with full pockets or hurt pride – sometimes both so go back to basics.
You know with whom your company is merging and there will be speculation in the financial press on the reasons for the deal going ahead. Of course, the story given out to investors is not necessarily the story you want to promote internally; the fact that 40% will be shaved from overheads or three vulnerable factories could be closed down will not play well in the canteens of your organisation. So be honest : resist attempts by senior management to proclaim a new age of prosperity and happiness and get the team behind a cast iron story. Remember that the rules have changed. Morale and productivity are already in decline; (aren’t you wondering how many people doing your role will be required in the new business?).
Your job is to use communication to get staff through the change curve with the least damage to productivity, morale and company reputation. Do not wait for senior management to tell you what is going on. Make shrewd guesses, turn them into communication themes and test them against those who are in the know. For instance, “If we are going to close the North West plant then we need to communicate the attached to the following audiences…” Taking a proactive line is a lot faster and you will get to the truth quicker.
When you have agreement on the main elements of your argument, test it on a few discreet peer colleagues around the office. Watch their eyes as you tell them the main points and you will know soon enough which bits of your story do not hold water. Tell the story without a prompt; your own memory will sort the wheat from the chaff. Once you have a realistic story that will move staff through the Change Curve, force it on to the agenda at the most senior meeting you can find and get it signed off. Those responsible for the changes will be your biggest blockers as they will want to have all the answers off pat before they go public with any statement to staff. Point out what the staff are currently saying about the merger – it will always be worse than the truth. Then point them to the evidence about the vital role of communication in mergers. Then threaten to resign; no senior manager will want to take on your job during this period and you can safely go to the next stage.
2. Capture The Radio Station
In times of crisis, it is no good rushing out an emergency version of the company newsletter (too slow) or using the CEO’s column on the intranet (too little credibility). Instead, create a new site on the intranet called ‘Merger News’ and get it up as soon as possible. You can email staff about its existence but, once they realise that this is the only channel for up-to-date, company-endorsed information, they will all be logging on 6 times a day – if only to see if you are refuting the rumour in that day’s financial press. Make contact with your opposite number at the acquiring or target company. Your bosses won’t like this and will even say that you can’t talk to him or her under the legal restrictions of The Financial Services & Markets Act 2000. This is actually untrue; their financial PR has told them to use it as an excuse to keep tight control of information among senior staff. If you are not inside that loop then threaten to resign again.
Ensure that you are co-ordinating any internal announcements with your opposite number. Once you have captured the radio station and broadcast your Convincing Story, you will then have the ticklish problem of having nothing more to say.
3. Talk about Talking
The worst message you can give out is the one in which you stop talking. No talking means the worst is going to happen, in the minds of your staff, so start by talking about talking:
- Explain to people what facts are already available, signed off and in the public domain.
- Describe the process of consultation that is going to happen as the process moves forward.
- Establish a timetable for announcements of integration information and milestones – but be conservative. No one will mind if news comes quicker but do not break your own deadlines.
- Publish a list of FAQs and review them daily.
Give out information about the target or acquiring companies and emphasise those values and characteristics you share. Give a history of the other company: the more your people learn, the less antagonistic they will become. Quite legitimately, a company that is on the verge of acquiring a large competitor will want to talk as little as possible and it is constrained by The Financial Services & Markets Act 2000. Companies often use legislation to avoid discussing issues internally, even though it is permitted within the guidelines of the city regulators. The reason for this taciturn approach is that there is bad news on the way and it’s just too hard to even think about communicating until the issues have been thrashed out.
Senior management will argue there is nothing they can talk about to staff so they prefer to stay dumb. However, this merely exacerbates the situation as the behaviour of management speaks volumes – and none of it good.
3. Use the right media
The Concern Scale shows that the importance of information to an individual is in inverse proportion to their desire to have it broadcast from the rooftops. So …
- Use the intranet, mass emails and newsletters for the broad facts and major movements in the merger.
- Use team meetings to reveal changes in reporting lines and large-scale changes, such as shutting down offices or plants.
- Use individual, one-on-one meetings to discuss redundancies, moving locations or even promotions.
- Never, ever use mass text messaging or voicemail systems until the merger is a distant memory.
As a rule of thumb, around 80% of your communication effort should be spent on going into face-to-face events with plenty of feedback. Hard work, but it’s the only way. Make close friends with HR and ensure that you are working to the same time scales. Remember, they are the only people in all this who have a tougher job than you.
4. Remember the Survivors
Once the merger has been announced, meetings have taken place and the redeployment consultants and counsellors have moved in, you need to think about the survivors. Companies have got so good at softening the blow for the people they are letting go that it is the people who stay who feel like the bigger victims of change. Organise meetings for your workforce and allow them to get off their chests all the bad news about the changes. Accelerate them through the change curve as they cannot buy into the new company until they have gone through all the stages. If they aren’t angry and depressed now, they will be later so try and get it over as soon as possible while you have the energy and resources to cope.
Watch out for the signs of survivor syndrome: depression, lack of initiative, unwillingness to volunteer for projects, cynicism, lack of communication. During the merger process, senior management will be further along the Change Curve than their staff so will be gung-ho for the new company. Make sure to temper their language about a bright new future while the rest of the company are still grieving for their lost colleagues and heritage.
5. Celebrate Your Heritage
Don’t try to bury the past the minute you become the new merged company. Create a permanent memorial of the old company: a plaque of the old logo; a book of what you achieved together. You need to celebrate the passing of some very important emotional ties. Give people the chance to mourn the old company before you expect them to embrace the new one. Texas Instruments has a ‘corridor of honour’, celebrating all the companies that they acquired on the road to growth.
6. Create a Network Of Communication Champions
The change consultants will have set up a team of change champions already, to help with the integration of the new business. Recruit your own team of communication champions; they will form a crucial network for you in the months ahead.
You will be overdosing on “tell” mode as you impart news of the changes so use your champions as your eyes and ears around the organisation, alerting you to the major concerns of staff. Establish a formal feedback loop so senior management have to take notice of your feedback channels. Use peer pressure to encourage recalcitrant senior managers to keep their staff informed and motivated during these difficult times.
Make sure you know what’s on the rumour mill, what’s old and unimportant and what’s coming round the corner. Also recruit some senior management champions (once you know who is staying) and use them as mouthpieces for the company. Select credible and, if possible, unreasonable people. If your messages convince them, then they will convince anyone.
7. Measure the Improvement
When you are fighting the alligators, it is sometimes hard to remember that you came here to drain the swamp. Whatever you do, do not try to get back to the levels of employee satisfaction that you enjoyed pre-merger in less than 24 months. You will only depress yourself and jeopardise your bonus. Measure employee morale a month after the announcement and then test regularly for improvement. Remember that managing a merger is like going through crisis management – only it’s much longer. You are going to need all the evidence you can find to prove to yourself, and the executive suite, that things are getting better.
So, as a Communication professional, what can you do?
- Communicate often and regularly, even when you have nothing to say.
- Restate the position and emphasise that staff will know first, once there is news.
- Explain the process for consultation.
- Use the Concern Scale to match the right media to the content of your messages.
- Create a dedicated channel for breaking news.
- Listen to the concerns of staff and feedback regularly to senior management.
- Deflate any rumours that are untrue.
- Agree your communication structures and systems throughout the merger process – don’t wait until you have a major leak.
- Co-ordinate with Communication managers in the target or merging company, as well as with any major partners or suppliers who are privy to sensitive information.
The last is very important. One case in point is where the staff of a factory discovered they were due to be closed down when a supplier revealed that a piece of equipment, which was due for delivery, had been cancelled. The result was a collapse of trust in management and the wrecking of the entire consultation process. Communication professionals have to operate on two fronts when their company or organisation goes through a restructure. On the one hand, you have to work hard to keep staff informed and on course while, on the other, you are fighting calls for cuts in your own department.