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The 4 C’s of

COMMUNICATION

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Merger & Acquisitions (M&As) are a valuable growth strategy for businesses looking to expand and acquire new capabilities.

But M&A isn’t without its challenges.

A 2015 report from Harvard Business Review found that between 70% and 90% of M&As fail. The reason why is largely down to integration between the two organisations. And, when you consider the IT, business and cultural factors at play, it’s not hard to believe.

The engagement and happiness of employees can have a significant impact on the success rate and there are four key areas that impact on this.

We call them ‘The 4 C’s of M&A engagement’.

The 4 C’s ofM&A Engagement

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Get your story straight The story you tell the outside world about your M&A may not be the story that your employees want to hear. Always bring it back to them – what impact will this have on them? How will they benefit? What do they need to do?

Quick example:When Daaichi and Sankyo merged they told employees they wanted to become a mid-size company in the U.S. pharmaceuticals market. That might have worked for the industry, but an employee survey showed that it didn’t hit the mark internally.

Instead, an employee brand was built around “adding to the balance of life”. This was reinforced by extensive communications, internal leadership initiatives and events.

CommunicationCommunication with employees during the M&A process is the most important of the 4 C’s. If employees feel out of the loop this will create a feeling of unease and uncertainty and it will be hard to regain trust.

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We hope you find this

document useful and if you’d like to speak to us about your M&A employee communications please

contact Gemma McGrattan on

gemma@synergycreative.co.uk or call +44 (0)20 3828 7600

Tell the truth, the whole truth and nothing but the truthRegulatory issues can mean that you simply can’t share information at a certain time, even if you wanted to. Make sure you let employees know this, and that you will tell them as soon as you’re able to. And of course – stick to that promise, and always make sure they know important news before industry.

Take a long term approachSimply announcing the highlights of a transaction to employees isn’t going to cut it. They will have far too many questions. Put a communications plan in place for pre, during and post M&A, which keeps going until there is a seamless integration between the two organisations.

Shut up and listenThis isn’t the time for one-way communication and it is important to have channels in place that allow employees to share their frustrations, ask their questions and discuss their challenges in a supportive environment. Managers will most likely be the first point of call, but why not open the conversation up with employees on your ESN too.

Quick idea – a live FAQ:Why not create an FAQ that can be added to throughout the M&A journey? Have it in a centralised location such as your intranet or Enterprise Social Network (ESN). It could even be a live TV show broadcast at the same time every week. Look at tools like Periscope or Facebook live video for sharing.

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Keep the communications consistent and regular. Even if you have nothing new to add,

reiterate what’s been said in your previous update and give timeframes for the next

round of decisions.

Remember!

Quick example:There was a feeling of mistrust amongst HSBC’s employees, and the internal comms team wanted to open up a communications line between employees and the senior management team. The HSBC Exchange Programme gave employees (in groups of no more than 10 people) access to leaders to discuss anything and everything from compensation structures to the staff canteen.

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A visual roadmap of key dates worked well for the NHS when Primary Care Trusts were abolished and staff moved to new Clinical Commissioning Groups.

During critical times at BA, they had huge scribble walls that people could write on called Back BA. Worked well for remote airline crew.

Inspiration!

Inspiration!

Culture

Think about culture from the get goThe culture of an organisation encompasses many elements; decision-making processes, leadership style, hierarchy, departmental structure and of course, company values. These are likely to vary drastically from one company to another, so it’s important to start considering them early in the M&A negotiations.

Diagnose the differencesInterviews with senior leaders and managers, customer focus groups and employee surveys will help to establish what the culture is in each business and where the gaps are. Ask, what works and what doesn’t? What do people love? What do people want changed? Position it positively – because ultimately you want the best of both cultures combined to create one cultural super power. Talk about this openly – we’re creating something bigger and better.

When culture hits the spot – Disney Pixar:Mickey and Nemo. Pinocchio and Buzz Lightyear. Cinderella and Lightning McQueen. The merger of the legendary Walt Disney and Pixar was a match made in heaven. Disney had released all of Pixar’s movies before, but with their contract about to run out after the release of “Cars”, the merger made perfect sense.

Quick idea – power to the people:Recruit culture champions from both businesses who can help lead the cultural change element of your M&A. Let them be the voice of your employees. There could even be a voting process to recruit them.

One report suggests that 91% of failed M&As are the result of culture shock when the companies finally merge. This shows just how important it is to put culture firmly on the agenda.

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Actively manage the process

Have a clear schedule in place for the different elements of your cultural change programme. Make sure that it’s aligned with your communications plan so that employees know what’s happening.

Focus on the ‘why’ not the ‘how’

It’s easy to get bogged down in the tactics of culture and the ‘how things are done around here’. But it’s more important to focus on the ‘why things are done like this’. It’s the ‘why’ that your employees will be attached to and it’s the ‘why’ that you’ll need to address when any changes are made.

When culture clash wins – Daimler Benz and Chrysler:When Mercedes-Benz manufacturer Daimler Benz merged with Chrysler in 1998, the world thought it had a car-making powerhouse on our hands. But the company sold just nine years later for $30b less than the merger was worth. Why? Because corporate culture clash reigned supreme and it is said that Daimlers holier-than-thou attitude didn’t go down well with Chrysler’s employees.

Smooth sailing – Gillette and P&G:One of the often-cited successful mergers. Why? One reason is because P&G adopted some of the processes from Gillette that were seen as superior to its own. This is a true example of finding and keeping the best parts of both businesses.

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Your employees will have plenty of ideas and motivation – use

their insight and contribution.

Remember!

CascadeYour managers are integral for a successful M&A because they are often the ones in charge of cascading information. They’re also your most valuable assets… your managers are the people who really know your employees. They know what motivates them, what they respond to and, essentially, what will work.

Get them involved from the beginningIf your change is to succeed, your managers must be part of the process right from the very beginning. Managers play a vital role in an ongoing ‘up and down’ dialogue from the board to the front line staff.

Engage managers with the visionBegin with a clear vision of where you want to get to and don’t let this vision get diluted as it filters its way through the various levels of management. Take the time to involve managers and help them understand what the vision really means and how it can be turned into reality with their teams.

Quick idea – be visual: Your vision for the M&A will have more impact if it’s presented visually and creatively. Roadmaps, infographics and creative maps work well to explain the company direction and simply aid understanding.

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According to research, employees are more likely to trust their direct line manager than senior leaders. But fewer

than 50% of managers are able to effectively motivate and engage employees in

times of change.

Did you know?

The right tools for the jobProviding your managers with a comprehensive kit of communication tools is essential for boosting their confidence and allowing them to talk with confidence and gain trust from their teams. At the very least these packs should include project plans, help guides, communication activities for teams, best practice sharing case studies, FAQs and fact sheets.

Get into trainingChange, whether technical or cultural, often brings with it a sense of uncertainty, frustration and even resistance in employees. This is where training managers in the art of having constructive conversations can really make the difference. Use manager forums, focus groups and coaching to help them handle not only their own feelings, but those of their teams, giving them the guidance they need to answer difficult questions confidently.

Quick example – Cadbury and Kraft:Mixed messages can cause apprehension.

Look outside for inspiration Try bringing in an external speaker. Hearing from somebody else who has been through a similar challenge and succeeded can really invigorate your managers’ sense of purpose.

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Celebration

Look backwardsEncourage conversations that share and reflect on everything the team has achieved – looking back isn’t a bad thing.

A quick case study – SAB Miller and AB InBev:

1 Insight: How people are thinking and feeling. Evidence gives us a seat in the boardroom and SAB Miller is checking this monthly, through pulse checks and qualitative feedback.

2 Conversation: Meaningful conversations between managers and employees, based on their concerns.

Although M&A is a time of change and looking forward, it’s also a chance to celebrate what’s been achieved. This helps to clear the emotions and allows people to focus on what can be created together in the future.

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3 Stories: SAB Miller launched a new online platform to share its company story, which outlined company history, values, vision and most importantly, where the future is headed and the strategy to get there.

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Look forwardsEncourage two-way communication between the employees in both businesses and share what they’re most excited about for the future. Set goals and milestones. Celebrate when they are achieved (three months, six months etc. Think 60 day and 90 day plans which everyone can focus on).

Say thank youRecognise great work that has been achieved so far by thanking everyone that has helped the business to arrive to where it is today.

Say goodbyeGive employees the chance to say goodbye and gain closure, through creative campaigns, conversation starters and – why not! – a goodbye party.

Quick example – BG CEO says goodbye after Shell mergerBG’s CEO recorded a video to say goodbye to colleagues and celebrate the success of the business. Read more about what BG did here.

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THE BONUS ‘C’Don’t forget your C-suite! Your CEO and the rest of the board need to be visible throughout the M&A process.

Goodbye

+44 (0)117 962 1534

If you’d like to speak to us about your employee communication please get in touch on

0117 962 1534 or email gemma@synergycreative.co.uk

www.synergycreative.co.uk