After two years of regulatory limbo, the U.S. courts and regulators recently approved the T-Mobile/Sprint merger, ending years of uncertainty for employees of both companies. Unsurprisingly, within weeks of the decision, the first rumors of the post-merger employee layoffs and heartaches began to surface.
Many mergers face the challenge of dealing with internal restructuring in a way that does not negatively impact employee morale, engagement and commitment, in order to mitigate against potential loss of performance and talent, reduced share price, and damage to brand reputation. Between 70% and 90% of mergers and acquisitions fail, and the most frequently cited reasons are poor people or cultural integration strategies. Human resources (HR) teams charged with planning and executing merger integrations and developing staff are often accused of failing to pay attention to the human experience, instead treating employees like commodities to be moved around or discarded at will.
A recent four-year research study by faculty from Hult Ashridge Executive Education, sheds light on the lessons HR and learning and development (L&D) professionals can learn from the countless number of employees who have had to endure poorly executed merger integrations. Here are nine key insights drawn from the advice and recommendations of people living through change:
1. Respect the Past
A company’s star performers are often the employees who most identify with the status quo — after all, they’ve done well in the current set up. They are also the employees who are most likely to move to a competitor. Organizations should respect employees’ links to the past and plan early change communications carefully. This way, they can manage and address rumors early and ensure talented employees are willing to engage with the changes to come.
2. Create Sense-giving and Sense-making Opportunities
Top-down communication strategies with little opportunity for feedback often leave employees struggling to understand and make sense of the reasons for — or, indeed, the ultimate outcome — of the change ahead. Leaders should develop a mindset that appreciates cognitive diversity and open feedback and cultivate the skills to facilitate safe, generative dialogue and to provide strategic and operational clarity and boundaries.
3. Focus on the “How” and the “What”
M&A processes do not happen overnight, and organizations often focus on the final outcome without paying attention to the here and now. Leaders should provide a clear sense of what will change and what will stay the same and do so in language that resonates with the employees living through the change.
Organizations must look after their people, especially the ones who are leaving, and adopt transparent decision-making processes. They must demonstrate their ability to learn from feedback and mistakes. And they must understand that some employees will struggle more with change than others, so they should guard against change overload and allow time for change consolidation.
4. Deal Well With Emotions
Every employee will be emotionally affected by a transformational change, and if the change involves job losses, the ones who retain their jobs may suffer from “survivor’s guilt,” which will negatively impact their mood and their performance. Leaders need to understand that the way the organization responds, or fails to respond, to individuals’ emotional needs impacts employees’ identification and engagement.
During change, leaders should also be aware of their own emotions and be open to the notion that others may experience change differently, without judgment or prejudice. This awareness calls for leaders to practice empathy and compassion, to treat people with respect, and to create a process to mark endings respectfully.
5. Ensure Significance
To mitigate against an increasing loss of perceived significance, organizations should ensure that employees know they are valued, respected and heard. To do so, HR and L&D leaders should question their own assumptions about who is “valued” and who is “worth listening to” and become mindful of practices that diminish the impact and the voices of the people they lead.
6. Protect Resilience
Major change initiatives invariably result in emotional, physiological and psychological stressors. From an employee perspective, major organizational change initiatives lead to increased demands on them, which, in turn, demands greater resilience and coping skills.
What was particularly striking in Hult’s study was that reports of lack of resilience perceptively increased year after year, even after the leaders deemed the merger integration “complete.” This finding tells us that organizations must take a holistic view of the impact of the transformation on employees, processes, systems and job roles and enable employees to engage in regular, open and frank conversations about their ability to deliver the tasks they are set.
7. Manage Employee Engagement
Organizations must be aware that employees will be making choices regarding their levels of engagement and commitment during transformations, before the announcement and for a long time after the changes take effect. As a result, organizations need to understand the choices available to employees and actively seek to steer the right employees in the right direction.
8. Foster Reframing and Commitment
Leaders must appreciate the power of positivity and good mood, the danger of negativity and low morale, and the need for people to belong to something they respect. HR and L&D teams should focus on establishing processes that will encourage and facilitate collaboration among employees within the wider organizational context.
Seeking ways to remove divisions, real or perceived, between groups, teams and organizational alliances will help foster collaboration and a sense of shared identity at the earliest possible opportunity. It is crucial to ensure that teams operate with a sense of connection to the business’ overarching strategic vision and values, collaborating with others as part of the whole. Finally, organizations should seek to influence reframing through use of language, meaning, symbols and rituals, as they foster a sense of purpose and enjoyment in the work people do.
9. Maintain Momentum and Belonging
Given the long timelines associated with transformational change initiatives, HR and L&D leaders should continue to notice the mood and energy of themselves and others as they persist in fostering engagement while encouraging performance. They should consistently model the behaviors they want to foster in the new culture.
Major change initiatives present HR and L&D teams with a real opportunity to question, challenge and improve cultural and organizational practices and procedures. By adopting an employee-centric perspective and actively gathering feedback and insight from the people living through change, HR and L&D professionals will be able to provide valuable feedback to the upper echelons of power about the potential barriers and pitfalls that could derail change initiatives. The profession has an important role to play in shaping the strategic change dialogue within the business and helping identify the leadership skills that managers need to develop if they are to help their people make sense of major changes.
Stepping up to this challenge, however, will require HR and L&D to adopt a more proactive and strategic role within the change process, which in turn, requires these functions to establish and demonstrate trust across boundaries and throughout the hierarchical levels of the organization.