HR as Communicator during M&As

According to a recent Mercer Transatlantic Study, 75 percent of executives surveyed said that communicating with employees and harmonizing corporate culture were the most important factors for post-merger integration. Business leaders recognize that they often fall short in this area. A study conducted by the International Association of Business Communicators (IABC) and Mercer asked CEOs after a merger what changes they would make if they had it to do over again. Their top response: the way they communicated with employees.

-   Mercer Human Resource Consulting

Mergers and acquisitions are usually evaluated in terms of potential growth, improved cost structure and higher returns to the shareholders. Scarcely the management gives importance to the issues like low morale, decreased productivity among the employees, loss of key personnel resulting from a merger or an acquisition. But more often than not, these are one of the major causes of failures in M&A. In this era of globalization and competitiveness, management often uses M&A to reduce costs. Therefore, the term M&A is understood by the staff as a possible indication of restructuring and layoffs. If the management does not touch upon these issues quickly these feelings may prevail in the employees: anxiety, insecurity, fear, betrayal, anger and uncertainty. This would lead to a decrease in productivity and customer service. Also, if the management decides to go ahead with the restructuring without taking into account the workers considerations it creates an environment of distrust amongst the remaining employees. This is where HR needs to step in as the communications vehicle within the organization.

Often the management is reluctant to communicate with the employees on these issues in the pre-merger/acquisition stage. Such vague signals make the employees uncertain about their career and future role in the organization. They may rely on other information sources like rumors, and informal communications which would have a very negative impact on their performance. The only way out for the management is to open a clear channel of communication with the employees. Regular and honest information has a stabilizing effect on the employees. For the communication to be effective it should address the issues that are most relevant to the employees: compensation, layoffs, change in benefits and change in responsibilities. It is also important to communicate the rationale of layoffs. The above diagram spells out a simple way of implementing a clean and clear communication strategy during a M&A. It works on the premise that like all change processes M&As too need to have a buy in from the employees for it to be successful. The deal isn’t complete until the workforce has been convinced of its advantages, and that can only happen if the employee feels secure in the decision. To achieve that, the communication strategy of HR must focus on the big picture, identify key messages that can be sold to the employees and then implement them not unlike a marketing plan. And like all initiatives HR must make sure that the effectiveness of this drive is tracked, measured and the feedback must be used to improve the strategy. Ultimately HR needs to be aware that although capital can be perfectly replicated, human talent cannot, and unlike capital, the human talent is susceptible to miscommunication.

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