5. Strategies to manage change during M & A
Companies should follow the below mentioned strategies during merger and acquisition:-
5.1. Integration Plan
First step should be setting up of project team comprising of senior executives from both the organization. Instead of focussing on daily routine activities, they should be responsible for carrying post M&A activities smoothly. It is advisable they communicate employees early, immediately. They can do it using webcast, intranet or group meetings. Informing all the employees at the same time will minimize the potential for gossip and spread of misinformation. They should make employees realize the benefits of this marriage. After the announcement of merger, Cisco always has its executive owner present and involved.
5.2. Clear Vision
Senior executive in both the organization should create goals, values, vision and policies of the new company. It should be clearly communicated to the organization. Mary Hiland, CEO of Alliance for Community Care was responsible for carrying out the merger of three agencies in 1997. She received the award of excellence in Non profit Leadership Award on 10th May, 2001 and in the interview she said that her mantra of success was clear vision and the communication of this vision to the employees.
5.3. Understanding Cultural differences
Culture plays an important part on the success and failure of new structure especially in the case of cross broader M&A. Culture difference was largely responsible for the downfall of merger between Chrysler and Daimler. Daimler and Chrysler employees have different views on important things like travel expenses and pay scale; even they have a different approach towards life; Daimler favoured a more formal and structured style while Chrysler favoured a more relaxed and freewheeling style. This cultural conflict played a big role in the failure of merger of Daimler and Chrysler. So Leaders should be able to inspire people to come out from their comfort zone and accustomed norms and accept the new ones. And to achieve this, leader must be in constant touch of the employees. Spending time with them, knowing more about them, what irritates them, what excites them will help leader in making people accept the new culture.
5.4. Employees Involvement
This gives an opportunity to both sides of employee to build their knowledge of other’s organization. When they interact, they share knowledge about their respective process, systems, budget, headcounts and operations. Building trust is integral to building knowledge. Until the two sides trust each other, they will not reveal details.
5.5. Customer Focus
In today’s competitive world, it is very important that company share future roadmap with the existing customer and promise to the customer they will continue providing service, personnel support and sales people will continue to serve as they were doing earlier. This will make customer safe about its purchase order. And if required, the merged unit can create helpdesk also. This will reduce the number of unsatisfied customers and thus increases customer base and profitability. Cisco does that. Whenever Cisco acquires company, it immediately shares the product roadmap which keeps the customer goal in align.
5.6. HR Restructuring
Again important part in M&A. M&A have the potential of changing the below things:
- Change of geographical location
- Change in perks
- Change in salaries and compensation packages
- Change in Career paths
- Changes in job – new roles and assignment
Employees are always concerned about the carrier opportunities, new roles they will be assigned or will they be transferred to new location post merger. It is very important that HR discuss the aforementioned issues with the employees properly. This might involve HR conducting management training, individual counselling, and providing other professional help to employees. They need to clearly communicate for what reasons these changes are taking place and why these changes are vital. Retaining good employees from both the companies is always crucial. A team can be build with human resource representative from both the organizations, whose main task is to identify valuable resources only. This will create loyalty and commitment to the new company and it will also give employees of the acquired company a feeling of equality.
It should be considered the last option. In downsizing, severe stress can be prevented by developing the proper plan. We can use any of the below mentioned technique depending on case:
• Severance package will motivate low commitment employees to leave.
• Outplacement: Helping employees to get job in some other company through the help of consultancy or personal contacts.
• Redeployment: Transfer employees to sister company or other business unit.