Challenges and pitfalls abound for HR professionals during M&As

Share information early and often to quell fears and rumours

Although between 50 and 70 per cent fail to live up to their expectations, mergers and acquisitions continue to be a key growth strategy for companies. According to a KPMG study released last month, Canada played host to 1,064 M&A deals in the first 11 months of 2005, an increase of 22 per cent over the previous year.

Certainly, not all mergers and acquisitions are alike. However, among those M&As that require employee integration, one common predictor for success is the success of the human resource and communications component. According to a recent study conducted by the international consultancy McKinsey, people issues account for nearly one-half of all merger failures. This includes poor communications, cultural clashes and lack of employee support.

What are the communication pitfalls and challenges HR professionals face during a merger and acquisition? Because a merger or acquisition typically means reducing headcounts and downsizing, HR professionals are confronted with hundreds of tasks. These range from maintaining a motivated and productive workforce in the face of employee anxiety and upheaval, to planning for a successful integration. It is not surprising that communications can get lost in the pile, which means management must make it a priority.

Research M&A partners’ history, then plan communications

During a merger, events often move very quickly. There is an urgency to respond to employee concerns and fears — much of it related to the impact of the merger, such as who will stay, who will go and what are the next steps. But first, and most importantly, is the planning and research stage to better understand the cultures and communications process of each company. The plan should include the following:

•Review past experiences. Have there been other mergers? How were they managed? What worked, what didn’t? If there have been previous mergers, the workforce may be cynical and merger-fatigued. HR professionals will need to address those issues off the top in order to gain employee attention and buy-in.

•Review training. What part do communications and HR play during a merger? How familiar are senior management and human resources staff with the communications process during a merger? Have they been trained? Training in M&A communications strategies and tactics prior to a merger is an effective way to ensure senior executives and human resources understand the communications process and will integrate communications into the merger process at every stage.

•Seek out employees who have worked for both companies, who can provide insight into the leadership, corporate culture, communications and decision-making styles of the companies. One company may be proactive in providing information; the other’s leaders may prefer to wait until they have all the answers. A lack of information, however, often leads to a hot rumour mill to fill the void. It will be critical to confront these differences at the planning stage and, if necessary, educate senior management about the importance of communicating early and often. Remember, you will never have all the answers, so don’t wait until you do. Instead, don’t be afraid to say what you know and what you don’t know. When all else is uncertain, communicate which steps will be used to resolve the issue.

•Do a content analysis of internal and external communications, such as employee newsletters, announcements, news releases and websites, town hall meetings and face-to-face meetings. Is information open, honest and frequent? How clearly do the companies articulate goals and missions to employees? Reviewing communications material will provide insight into the key issues and topics within the company, as well as ways issues are addressed. Look for ways management uses written material to respond.

•What are the internal channels of communications and how are they used? Do all employees have equal access to the company intranet? What about downloads? In one company, the sales force had only dial-up access to the Internet and e-mail, so downloads were painfully slow. What that meant was few ever bothered to open attachments, thereby missing crucial official merger information. As a consequence, the sales force took to relying on the grapevine for information and often received mixed messages. If the due diligence had been done, the communications material would have been embedded into e-mails rather than sent as an attachment.

•Update and develop accurate distribution lists so information will reach target audiences. Be ready to fire off the first announcement and subsequent material with confidence that target audiences are being reached.

•What are the communications resources and capabilities of the communications departments? In one so-called “merger of equals,” one company dwarfed the other in size by 10 to one, and employees with the same titles did not have the same level of experience. The communications departments were also unequal in size and experience. This meant it would be impossible for the smaller department to take on equal amounts of work during the merger. Once the disparity was acknowledged, two things happened: the larger department took on the responsibility for developing most of the communications material and additional staff was hired to work with the smaller department to help with the workload.

•Create a cross-functional team of HR and communications professionals or bring in additional resources to assist in pre-planning and key message development. Let the communicators lead the communications process in collaboration with the HR team. Too often valuable time is lost when non-professionals try to craft key messages and information.

Communications and human resources issues need to be given high priority within organizations during the M&A process. According to a recent Watson Wyatt survey, only five per cent of senior executives placed communications and human resources as a top priority — even though 71 per cent stated that communications is a vital ingredient in the M&A process. It is up to HR professionals and communicators to work together to build the case that people make mergers work and communication makes it happen.

Marjorie Wallens is an employee and corporate communications consultant at MJW Communications in Toronto. She can be reached at [email protected] or (416) 961-5924.

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