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Five lessons learned from being a change agent
The Intricacies and Difficulties of Acquisitions, Integrations & Change Management
Mergers & acquisitions offer businesses numerous strategic benefits ranging from the ability to deepen its technological position, fill a gap, obtain access to new markets/clients and/or to provide access to enhanced cost management strategies.
However, acquisitions and integrations are substantially disruptive to both the acquirer and the acquired employees from an emotional and psychological perspective. This insight seeks to provide insights from the perspectives of acquired employees.
Integrations are a Field of Change Management
Integrations fall into a class of business thinking associated with change management. Many books and articles have been written on these topics and how best to “lead change”. Some of the common rhetoric that surrounds this topic includes:
- Form a steering committee
- Establish a sense of urgency
- Create a vision and communicate it
- Empower others to act on the vision
- Execute
But this process approach to managing change, fails to address a larger need. How best to address the emotional and psychological impact of integrations?
An employee whose company is acquired and is then subject to the integration process has his/her world up-ended. There is significant uncertainty around the future. A large majority of what this person has known is about to change and most people tend to be resistant to change.
In some situations, employees have responded to the integration process as if it were the death of a brand, job or company. While integration management teams often identify a few high-visibility influencers that can serve as “change champions” throughout the integration process, the reality is that integrations are a mixed bag because of the social psychology of change.
Psychology of Integrations (Change Acceptance Curve)
The first phase of the integration process starts with the announcement of the acquisition. When this occurs, employees of the acquired firm often have a sense of trepidation. “A change is coming, what does it mean?”
As the official close of the acquisition draws near, some of that trepidation may have turned into tempered optimism. “Perhaps it’s not going to be so bad, we will have blank that we don’t have now.”
After the close, there is an excitement and general hum of enthusiasm as employees realize that the change is official and at this point, there is really nothing that is going to unwind the clocks and reverse the decision. So why not see what comes of it. Note, throughout this process, natural attrition will occur as those who are uncertain what the change will bring will start to actively seek alternative employment options.
This feeling of enthusiasm persists for a time, until whatever is personal to those employees slowly changes as part of the integration process. At this time, to lessen the impact of the brand changes, many organizations start to make brand changes.
This is about the time where most employees start to resist the pending change, because love it or hate it, the employer brand is part of the employee identity. And when that starts to change, it causes a certain unrest across employees. While many may not have liked the color or a certain logo or a piece of the old brand, when it comes to making changes to the brand identity, there is a strong unification that occurs among the acquired employees.
This part of the employee identity struggle tends to be a bit challenging. It takes communication and time to push through to the next level in the integration process for employees to feel that they’ve arrived at a new normal.
Some employees may struggle to accept this “new normal” not quite reconciling the way things were with the way things are, while the job is largely the same and the co-workers are largely the same, there is something different that just doesn’t sit well with that employee and he/she decides to leave. The technical term for which is “Cognitive Dissonance”.
Overall, this process of change and acceptance for employees that have gone through an integration often takes place over 2-3 years.
Lessons Learned from Integrations
- Integrations are political beasts with strong undertones of how best to maintain the balance of power. The question of who drives is a big one that always comes up and but the answer infrequently appears to be the right one.
- Winning loyalty is a key to driving acceptance. Demonstrating benefits and other employer perks will help towards changing employee loyalty, but it is not an easy feat.
- Often, HR organizations are not trained to handle the scale that an integration presents.
- For technology companies, the engineering culture has a heavy hand in defining the overall company culture.
- Capturing the idealism early to help drive acceptance may help to lessen the resistance later on.
- Identify what can go wrong early (ie. areas of tension/conflict). For example, who owns customer relationships? Which manager will survive?
- Smaller isn’t always easier. The same challenges persist, the same cycle persists, simply on a smaller scale.
- Do not overlook the elements of the employee identity, which is closely associated with the tasks, work location, manager and company.
- Do not wait too long to integrate the acquired company – doing so will create a sense of bravado among the acquired employees and make the change that needs to happen incredibly difficult. These people will never buy-in to the corporate culture.
However, there are tools and tactics that can help accomplish these goals faster. You just need to know what they are and how to effectively leverage them.
Insight
Integrations are messy.
While processes exist to handle the integration of technology, teams, products, facilities and operations. There is no clear approach to merging and blending cultures to ensure that people who come out of the integration process are happy or at the very least, content.
The leadership skills required to lead organizations through these types of disruptive changes are not those of someone skilled at financial analytics, operational efficiencies or strategic growth initiatives. Rather, the type of leaders that are needed to drive these kinds of change are those that have a high emotional quotient and soft skills, which are difficult to quantify (ie. employee motivation, understanding). Unfortunately, one of the challenges of integrations is that those are not the types of leaders who are short-listed for these types of projects.
The integration environment is ripe with examples, processes, best practices and not so best practices of how to manage organizational change that transforms two companies into one (often considered the largest change management undertaking). Core to ensuring organizational acceptance (or cultural adoption) of the changes as they are proposed or implemented is ensuring not only the timely execution of activities but also the management of the communication with employees and customers. Taken from experience, it is essential to understand where the organization is in the life cycle of its change in order to maximize organizational support for the undertaking and minimize potential backlash or cynicism.
The best way to do that is to understand that the change management process occurs on an emotional roller coaster and that success is dependent on the ability to recognize when perceptions are shifting in order to align activities and communications to maximize adoption of the change management plan.
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