It can be difficult to maintain high employee morale throughout a major transition, such as a merger or acquisition. Employees are often referred to as the most important assets of a company, and their reaction to change can have a tangible impact on the success of any merger process.
According to a 2020 EY report, 47% of employees typically leave within a year of a merger or acquisition, and 75% leave within the first three years. And Gallup has found that highly talented employees, who are not engaged, are usually the first employees to quit.
Leaders limit their chances of success after a merger or acquisition when they fail to consider the impact that change has on workers. For instance, take a look at the acquisition of Twitter. By not including plans for their workforce as part of their due diligence process, Elon Musk and his team lost up to 50% of Twitter employees across departments, and the company’s value has plummeted.
There are a few integral factors to consider when navigating change. Here’s how to successfully lead a team through any transition—and avoid making the mistakes of Musk.
Recognize the fear of change
Your workforce is made up of human beings, with feelings and opinions. When they know a change is in the cards, it’s common for them to jump to a place of fear. By anticipating the impending change and taking proactive measures beforehand, organizations can mitigate uncertainty and instill confidence among their employees. As you approach a merger or acquisition, you should always keep your employees top of mind. You should even involve them in appropriate decisions to make them feel part of the process. It’s essential to address this fear of change head-on.
I strongly believe Musk failed to address the fears of his workforce. When rumors about cutting 75% of employees were circulating, he exacerbated their stress by demanding personal loyalty. He even went as far as reading, and sharing, their Slack correspondences.
Leaders should look at ways to elevate awareness during any transition by predicting the expected changes within their workforce (including role changes) and putting the correct measures in place right at the start to communicate with their employees.
I had an instance with a strategic buyer where we sold a company to an international player in the medical industry. Ahead of the acquisition, the management team had already identified the roles that were going to be made redundant, so they implemented plans to help find suitable alternate roles both within the organization and externally for the affected employees.
Due to the acquired company being a medical clinic, it was essential to retain the clinic team, so we had to also develop a strategy to keep the workforce highly engaged and motivated for the future. The management team proactively developed a strategy and communications plan to position their new, richer benefits in a positive light.
Develop a robust communication plan
When dealing with employees, there are diverse factors to consider, including cultural nuances, language barriers, pay cycles, and logistical challenges. Clear and transparent communication helps set the tone for your new workforce and fosters ongoing engagement. For instance, amid the flurry of changes during a merger, it’s easy to overlook employees’ individual concerns. However, by establishing personal relationships with team members and addressing their specific concerns you can go a long way in alleviating fear and anxiety while fostering a sense of belonging.
You can make a positive impact by providing transparent communication about the transition, clarity regarding role changes, and assistance in finding alternative roles within the organization. For example, you can offer payment on your employees’ behalf to recruitment agencies to aid in their search for alternate positions if you can’t retain them.
Employees are looking for reassurance that their organization is making informed decisions and pursuing a sound strategy. They want to be integrated into a vibrant culture that embodies a clear purpose and strategic vision.
In the case of Twitter, now X, Musk reportedly instructed his HR executives to downsize the workforce just before their bonuses were due. However, after careful calculations, it became apparent that this rapid downsizing approach would incur significant legal fees. This decision disregarded the organizational culture, and while Musk may have had a clear vision, he failed to present it as an inclusive approach for the future.
Consider your company’s cultures
During a transition, leaders need to understand what makes their company’s culture unique. For instance, when two companies merge, executives often make the mistake of assuming their already established culture is the only way to go. However, you would miss the opportunity to learn from each other and leverage the strengths and best practices of both organizations. You could invite employees to share their opinions about their organizational culture, discussing what has worked well, and establishing a fresh way forward where every employee feels like an integral part of the process.
Instead, Musk attempted to adopt the “extremely hardcore” culture of Tesla and SpaceX for Twitter without preparing, or even consulting, those employees. He replaced Twitter’s old culture with one of his own, instead of a collaborative approach to integrate cultures.
While times of transition bring about uncertainty, they also present the perfect moment to reaffirm the value of the organization and inspire employees to remain committed. For example, by navigating the merger process with empathy, integrity, and a focus on employee well-being, you can emerge stronger and more resilient than ever before. My advice to leaders is to not follow in the footsteps of Elon Musk. Instead, leave a respectable legacy through adopting a compassionate approach to your most important assets.