This allegedly occurs because the transaction constitutes a mechanism for stimulating additional investment in human capital and promoting “skill upgrading” of the work force. The integration leader is also well placed to update top executives or the steering committee as these leaders and leadership bodies direct and role model the changes. In any case, the merger usually has advantages for the company. In an annual survey of 10,000 U.S. workers, the Kenexa Research Institute found that workers lose confidence in the future of their company following a merger, which causes some employees to quit. Our approach to managing change systematically involves four stages: setting the direction, energizing the organization, hardwiring the changes, and driving execution (Exhibit 2). tab. While these moves may seem straightforward, they are usually hard to execute. The main objective of the research is to present, compare, and discuss the results of employees’ interpretations of their experiences of the change in the merger of the two consulting firms. The disclosure to the outside world that a company is for sale — in other words, a candidate for a merger or an acquisition — can be a devastating bit of news. The merger itself has not yet occurred but our Executives, Committees and Stewards are still working closely together. A company merger may mean doubling or tripling positions, which may mean either a change in some employee job titles or some employees. Business reorganizations, such as mergers and acquisitions (M&A), can raise issues for employers and their employees if certain factors are not adequately considered and addressed. In other cases, the cultural workstream isn’t a priority, so when the new company rolls out the new operating model, the integration-planning team scrambles to understand which aspects of it represent the biggest change to current management practices and working norms. At this point, companies should hardwire new processes, policies, structures, and governance into the combined organization, focusing on levers such as new appraisal and performance-management systems, decision rights, and cross-functional business processes. The advantage here is that you might find yourself eligible for a position you may not have expected quite so soon. A Gallup survey found that companies with a highly engaged workforce outperform their peers by 147 percent in earnings per share. To work effectively after the deal closes, employees must fully understand these changes. The message has to be consistent with the deal’s strategic rationale, as well as modular so that executives can tailor it to the needs and outlook of different groups of stakeholders, both internal and external. The basic problem is that companies often can’t announce these changes early in the merger-planning effort. 14. Amsterdam Center for Corporate Finance: Evaluating the Effects of Mergers and Acquisitions on Employees; Siegel & Simons; 2008, MPS Insights: Effects of Mergers and Acquisitions on Staff; Amanda Hutchins; 2010. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Thus, the new company can gain a monopoly and increase the prices of its products or services. Southeast Asia’s super apps Grab and Gojek have made significant progress towards a possible merger, Bloomberg reported this week. “Ideally, the HR and management teams will have been able to assess the skills, capabilities, potential and motivations of key employees involved in the merger or acquisition.” To figure out where these redundancies lie and who to let go, managers need to perform various performance reviews and spend time workforce planning. For this reason, it is important to carefully examine the rights and obligations existing between the employer and its staff well in advance. Mergers create vast organizational anxiety about the future: in most cases, the operating model and culture will change dramatically for one or both merging companies. After all, it takes ages to adapt to a company’s culture and environment. A merger can have a positive impact on employees if their company was in trouble and there was already a fear of job loss. Once the merger or acquisition goes through, you’ll need to do the same with the employees of the other company. Even small tactical changes, like new expense policies or cafeteria options, can rattle employees. During a recent merger, for example, the new organization’s leaders put enormous effort into designing core business processes that hardwired the changes they wished to see. In the same way a merger could eliminate the need for some jobs or departments, it can create positions that may fall under your skill level. A merger can have a positive impact on employees if their company was in trouble and there was already a fear of job loss. An effective, proactive communication plan is therefore critical to ensure that employees understand the process … Linkages between the core metrics and the key change themes help ensure that the effort fully embodies the deal’s business objectives. Meanwhile, processes must be redesigned and communicated in a way that illuminates the fundamental issues, such as how roles will interact and decisions will be made. Human resources (HR) should play a prominent role through every stage of the merger and acquisition (M&A) lifecycle from due diligence to integration planning and realization of synergies. The second task in mergers—adapting to changed operating models, such as new structures, processes, and governance—poses some of the most visible and difficult issues for employees. New procedures can be a disadvantage to employees because it means re-learning a job they've already grown accustomed to doing. Senior leaders not only actively helped to redesign these processes but also tried out and stress tested them prior to implementation. Here are three fears your employees may be having as you approach or are in the midst of either a merger or acquisition. It may therefore have the best position to identify change agents and to develop initiatives appropriate for the existing cultures of the merging organizations. The IMO, for example, has a bird’s-eye view of the whole organization’s pulse, including the risks associated with the planned changes, their supporters, and the pockets of uncertainty. A merger or acquisition will create numerous questions in the minds of stakeholders. Delivering these messages early is critical, since employees will absorb the key points only after several attempts, with varying approaches. Employee benefit plans are sometimes overlooked in corporate transactions, but as we’ve discussed, an acquisition or merger has significant plan implications. One basic problem is management’s tendency to focus mostly on changes that would directly help to capture a deal’s value targets while largely ignoring those required to maintain and enhance the company’s health. Failing to anticipate and address them can lead to poor business performance, a loss of critical talent, and the leakage of synergies. The next normal arrives: Trends that will define 2021—and beyond. As early as possible in the integration-planning process, it is critical for the new top team to agree on the operating model, cultural priorities, and integration architecture. But oftentimes, leaders focus on items like: Financial projections; Org charts; Contracts; The majority of mergers and acquisitions fail because leaders ignore the emotional needs of their employees. Never miss an insight. Employees and staffing: When corporations merge, there are usually instances of redundancy. Select topics and stay current with our latest insights, Managing and supporting employees through cultural change in mergers. Companies as successful, only one-third did another company often creates a more stable,... 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