Mergers and acquisitions are commonplace in the business world, with massive valuations and forward-looking strategies reported as a matter of course. But one area seldom touched on is the people aspect of these deals: what happens to the people whose teams are suddenly bought over, moved around, changed about, or even let go?
People Matters approached Sonam Jain, who heads up the HR team for fashion-focused technology platform Zilingo, for his thoughts on the matter. Prior to joining Zilingo, he was with DHL from 2007 to 2019, dealing with various aspects of people management across multiple departments. The late 2000s were when DHL underwent extensive restructuring, mergers and closures of departments, redeployments, and redundancies, as the company struggled to focus its business strategy and get its losses under control.
Here are the highlights of the conversation.
During the process of an acquisition, what allowances should be made for keeping teams informed and preparing them for the change?
During any change of this sort, whether a merger or an acquisition, two things happen on a very human level. Firstly, as soon as the information becomes public, if there is no clarity as to why the change is taking place, people start to make assumptions. And when there are assumptions, there will be conversations which can lead to a lot of negativity. The second thing is that when change happens, people fear that they might lose something—their jobs, the positions, even the nature of what they do in their role.
And so, it is extremely important for the leaders to come forward and explain why this merger or acquisition is happening. Once employees understand the why of it, and once there is consistent information, the rumor mill stops to a large extent.
People will also ask “Why now?”, and “What’s in it for me?” and these are questions that are very hard for leaders to answer from a strategic level. But you can reframe it: instead ask, “What are the business opportunities we gain from doing this now, and what are the risks we avoid if we do not do this?” That is easier for people to translate back into their jobs, because there are specific examples.
Do companies usually manage to achieve clear communication and provide the necessary information?
That’s where the challenge is. Often, when a merger or acquisition takes place, so much information is held behind closed doors, and people are reluctant to share the information because they fear it will make them vulnerable.
Yes, there is some information that should not be shared at this point in time, but when it comes to the bigger why of what is being done, I see no reason why your employees should not know that as soon as possible. It is only in your advantage to let them know.
Let’s say you need to integrate teams from two different companies that have been geographically and culturally distant. How would you go about doing it?
The ideal way of doing this is to get the leaders of the company to come together physically. Have a town hall, either by gathering all your employees in one location or by connecting them virtually. And have the leaders make a joint statement as to why this is good for the overall business.
What that does is, it shows the employees on both sides that the leaders are together, and they are working towards what is best for the business. That’s an extremely important notional gesture. And if you are already investing so many resources into this merger or acquisition, I see no reason why you cannot afford a flight to bring the leaders together in person. Coronavirus aside, of course—but it is always best for leaders to stand together, and to be seen standing together.
It is about being genuine. You carry out an acquisition or merger because it has benefits for both businesses. And if you genuinely see that benefit, what would stop you from talking about it to your own employees?
The next step would then be to bring the teams together. What needs to be done to help them integrate successfully?
This goes back to the idea of benefits. You need to help the different teams understand the why of it, in a way that they can relate to. One very simple approach would be to hold a workshop for the combined teams and have them consider how, one year or two years down the line, the business would look in an ideal scenario if everything went exactly as envisioned. What kind of customers would they be dealing with? How mature would the products be? What are the margins like? What kind of employees would they have, and how would these employees behave? Ask them to create a very clear visualization of what this acquisition or merger would look like from their own perspective.
When you do that, you have engaged their enthusiasm and interest. And then you can move a step forward and ask them to start building a roadmap that leads from where they are now, to the future they have visualized. Get them to think about what is needed in terms of resources, efforts, systems integration, culture, their own behaviours.
This roadmap will give them a clear understanding of what they need to do jointly as teams: what roles they need to play, what skill sets they need going forward. And it must be regularly tracked and managed by the decision-making layer of the organization, to be sure that whatever the teams have created is well aligned with the wider business goals. Then you will have clear accountability, clear decision making, everybody moving forward together. That’s how I see integrations succeeding.
What is HR’s role in this process?
HR’s role is threefold in this. One, getting the leaders together and determining the tone that they should use for the initial communication to the employees. Two, the facilitation of the workshops that will help people understand what it means to undergo this change: what emotional curves they might be going through, and how to arrive at understanding and acceptance. And three, once everything is settled, to help monitor the progress.
In fact, HR has to be on board right at the very start of any acquisition or merger, when you are just looking for a company to partner with.
Inevitably some people will be redeployed or even made redundant as the result of an acquisition. Any best practices to share for such a situation?
This is always a contentious topic. Let’s circle back to the idea of having a workshop to help the teams understand what’s needed further down the line. This exercise makes HR’s role much easier, because in any merger or acquisition, the big question is always: who are the people to keep and not keep? When you have aligned individual and team KPIs to business KPIs, the decision becomes slightly more transparent, because then people understand what needs to be done. And HR then has the basis to step in and identify the skill sets that are needed, the skill sets that can be repurposed, and the skill sets that might not be needed.
But in all scenarios, at least the employees have part ownership, because they were involved in the development of the roadmap, and it is a more transparent and objective exercise than if the decision were simply handed down from the management team.