While M&A activity dropped in 2020, experts believe it will ramp up as the world emerges from Covid. That’s when many companies will try to capitalize on the opportunities that arise after such a sustained period of volatility. Fortune will favor those with clear strategic objectives, who are both informed and ready to make their move. But true success will belong to those leaders who understand that addressing people issues first is crucial to delivering promised value.
When a company merger or acquisition is announced, anxiety is felt at every level of an organization. There are hard truths everyone must face: team changes, office culture alignments, new protocols and procedures, and the list goes on. Employees are left to decipher what ‘increased synergies’ and ‘streamlined efficiencies’ really mean, in terms of their day-to-day.
In fact, leaders often make the mistake of focusing on the business impact ahead of the people who will help to make the deal a success.
Here are three people-centered strategies for leaders when managing M&A:
1. Understand the psychological impact of M&A
‘Anticipatory anxiety’ is the result of not knowing what to expect or when. This happens when people hear vague or inconsistent language from leaders, creating ambiguity about what is happening. People begin to fill the blanks with rumors they hear. Too easily, they imagine worse-case scenarios that can quickly spread, further compounding confusion, mistruths, and anxiety.
That’s why it’s important for leaders to set the tone and own the narrative for the ‘why’ of the M&A, from the very beginning. Consider how you talk about the reason for your merger or acquisition. Typically, it’s about increasing market share, eliminating the competition, or reducing dependence on external suppliers. But too often, the reason is framed as a cost-cutting exercise, rather than a more positive story of strategic growth and expansion. This small nuance makes the world of difference.
Being honest about the overarching reasons will always bring some pain points. But, these can be overcome by tying everything back to why changes are in your employees’ best interests. It’s important to acknowledge that while the journey might be challenging at times, the destination will be an organization that is better suited to your people’s needs and your shared mission.
2. Don’t just articulate your vision – visualize it
Most businesses are great at communicating their brand story. Everyone knows Apple started with two guys in a garage with a dream. Starbucks’ story started in a coffee bean shop in Seattle. Your founding story is often the best way to convey your reason for being, your mission, your values, and your ‘true north.’
Then, change comes along. Now what? It’s time to figure out your change story. Nailing the spoken and written message is important, but visuals are key when it comes to getting employees on board. According to the Social Science Research Network, 65% of people are visual learners. That’s why investing in imagery and visual experience is vital.
Years before our client at a large Japanese biopharmaceutical company acquired another biotech business, we helped them visualize their company story. The image, which centered on a cherry tree in a lush garden, was meant to signify the company’s rich Japanese heritage and expanding global presence. It was also an enduring image of the organization’s corporate philosophy and values.
When the ink was dry on the acquisition, it was easy to update the image to reaffirm our client’s mission to existing colleagues and help newcomers understand how they fit into the company narrative. The beauty of this was that it could be used in a variety of ways, from onboarding presentations and company events to virtual reality experiences.
3. Show empathy and avoid sterile, robotic language
Imagine telling your 12-year old son who is anxious about attending a new school: “These changes will streamline efficiencies in your education.” It’s unlikely this will trigger a cooperative response. Instead, you might take a moment to put yourself in his shoes. How much better might the reaction be if you give him reasons to be excited about such a big change? If you can make this his focus while also being honest that this transition might seem scary or difficult at first, it’s more likely that you’ll get the cooperation you need.
A good methodology for handling difficult transitions is the SCARF model. It’s a framework developed by David Rock that identifies our inherent motivations for how we might react in a social situation. Rock says there are five domains to consider: status, certainty, autonomy, relatedness, and fairness.
For example, suppose a middle manager senses their team might feel their status at the company will be threatened after the merger. Choosing to be transparent and upfront in a proactive way can help them to quell any fears or accept the new reality.
Being human pays off.
During major transformations, it’s important for leaders to not hide behind meaningless jargon or go silent when employee anxiety starts to spike. Taking a human approach to change doesn’t cost companies anything. And in fact, it brings great rewards. When thinking about the financial value of your deal in the long run, make sure to invest in providing leaders with the right resources and behaviors to smooth the transition. This will create higher productivity and less anxiety during a time of uncertainty – leading to a more lucrative deal and future success for your business.