As we have written in the past, M&A transactions can cause a tremendous amount of trepidation and angst among employees of both Buyer and Seller.
While completely normal, the root of fear associated with merging two firms generally revolves around change in human capital (“Will I lose my job?”), change in legacy process (“We’ve always done things this way, I don’t want to change!”), and simply fear of the unknown (“Who am I reporting to?” “Is my salary staying the same?” “Will my parking still be paid for?” “What will my new title be?”). To calm these fears and prevent them from escalating, it is critical that leaders of both merging firms communicate early and often with their employees throughout the entire process. These lines of communication can be tricky under normal circumstances, but with the staff of both firms all working remotely from their respective homes, leadership must make an even more concerted effort to inform employees of upcoming changes, compromises, and improvements to technology, processes, and workflows.
M&A experts always say that culture is the most critical component of success when it comes to two firms coming together as one. When a merger is announced to employees, the first question that runs through their minds is typically, “What’s it going to be like?” They start talking to one another and speculating what the culture of the new firm will be, who will be reporting to whom, and what their new day-to-day responsibilities will be. In a work from home environment, there are no closed-door meetings taking place in the eyesight of employees, which helps keep speculation in check (“Did you see so-and-so’s face when they came out of that meeting? They did not look happy!”), but the feeling of isolation can become overwhelming when employees are starving for information. A group text message chain, where employees can let their imaginations run wild, can be worse than whispered “water cooler” talk that would be taking place in the office under normal circumstances.
When it comes to times of emotional distress for employees, there clearly is no such thing as over-communication. Leaders of both Buyer and Seller should conduct all-hands video calls for their respective organizations, smaller department/team conferences where employees are encouraged to vent their fears, and plenty of one-on-one conversations should be happening between leadership and individual employees as well. These individual conversations should focus on the importance of the employee’s role within the new firm and the career path leadership envisions for this team member. A side-by-side comparison of healthcare, benefits, and incentives between the old firm and the new, combined firm, along with the employee’s new title, will go a long way.
When the time is right, calls should start to take place with employees of both organizations getting to know one another and sharing their respective expertise as combined working groups begin to emerge. Leaders should stress how new technology will improve everyone’s day to day experience by eliminating manual work, and new workflows will streamline processes and reduce the time needed to complete tasks. One of our clients calms employee fears by repeating the phrase, “Nothing is going to change, but everything will be different and better!” Some of our clients have also conducted “Ask Me Anything” townhall Zoom meetings where employees can ask direct questions to leaders of both Buyer and Seller.
We’ve learned that working from home is doable, with many RIAs reporting success over the past several months, but leaders of those successful organizations have all admitted that they’ve committed a larger percentage of their day to internal communication. Brandon McKerney, Director of Operations at Columbia Pacific Wealth Management stated in our recent white paper, “In any environment, morale depends on employees feeling valued and connected to one another. In a (work from home) environment where those connections are happening in different ways, you have to be that much more intentional about demonstrating appreciation and fostering meaningful interactions.” When it comes to mergers, the root of employees’ fears revolves around the question, “Will I be valued at this new, combined organization?” Leaders cannot start soon enough in proving that fact to their employees, and in a work from home environment, leaders will need to work even harder to make that message not only heard, but felt by all employees of both organizations.
Related: The New Financial Advisor Workplace