Making Company Mergers Successful

“When you have mergers and acquisitions that improve the quality of your product, the ability to grow and bring better efficiency, it’s good for all.” – Roger Agnelli

Company mergers are not much different from a marriage between two individuals. Both the ‘relationships’ require commitment and a zeal to make the association work. We will however, be focusing on company mergers only! J Company mergers when not handled well could inevitably lead to power struggles, upset the employees of both companies, cause a clash of the company cultures and all of these factors soon cause a ‘melt down’ of the association. Company mergers most often are decisions made by the top brass forcing the rest of the company to remain in a state of uncertainty and can actually become disconnected from the whole process. This is a sure sign that the merger is heading for trouble – the whole process must be smooth and seamless and driven by values so as to enhance loyalty right from the start.

Company mergers can have a significant impact on the growth and even survival of certain companies – especially given the new breed of companies and their thought leaders who are not risk averse and aggressively go after their goals and dreams. To combat these external ‘forces’ certain companies look to each other to regain profitability, market share and also reignite innovation and new perspectives and this is how company mergers come about. Again, if company mergers are not handled well they could have a seriously negative impact. A merger is a humongous step for companies and research is able to confirm that when company mergers are successful, looking back one can see that the process followed was meticulous, all-inclusive and seamless. The leadership of both companies would have had a similar vision, their energies focused in a single direction and they would have ensured that at every step the employees were kept informed so as to enhance engagement and ‘participation’. Involving employees in this manner ensures that both sets of employees are able to accept the ‘new company’ and the vision and culture of the other. This in turn translates to employee loyalty and commitment to ensure the long-term success and sustainability of the company mergers.

Any problems that emerge with company mergers are mostly because post the merger the leadership is unable to sustain employee engagement – on either side. It is a given that companies come together when they believe that they each have a set of skills and resources that can complement the other and lead to greater success for both companies. However, forgetting to sustain the effort of sustaining a common vision for the ‘new company’ would lead to the employees becoming confused and disassociated, translating to lowered productivity, customer service levels and commitment. We have discussed in detail that employees play a major role in the success of a company and it is a tedious but fruitful task to keep them engaged, happy and successful. Imagine the situation of company mergers where employees suddenly feel like they are being ‘taken over’ or outsmarted by the employees of the other company – such feelings could lead to disastrous results. The error lies in the top management focusing ONLY on the integration of financial aspects and other business operations. Of course these hold the key to ensuring the success of company mergers, but to only focus on these is where the error lies.

It is a given that when people have little or no knowledge of the happenings of their company they feel ignored and belittled and soon enough look for other opportunities outside the company. In the case of company mergers, if the management does not provide proper information to their employees, it increases the risk of hearsay. Ignoring the human capital of the company is probably one of the worst errors that happen during company mergers. By the time the management is ‘ready’ to divulge all and involve the employees, most of them have either left or lost their passion and commitment for the company. This kind of employee behaviour is a clear indication that company mergers will not work and it is often too late to salvage the situation. This kind of employee ‘alienation’ and feeling of a loss of identity will cause other issues. Since employees begin to feel like they must wait before doing anything and making minor day to day decisions, the company begins to crawl and ultimately stop unless the ‘bigwigs’ provide the next set of directions. This in turn intensifies the feeling of not knowing and feeling lost in their own company – employees feel threatened and become insecure about their job. This is natural since the ignoring on the part of the management would have left them feeling like they were not a vital or important part of the company. With such feelings of stress and dissention the next side effect is lowered productivity and a drop in work quality, reduced attention to customer needs and hence lowered levels of customer service. The employees of the ‘other’ company begin to appear like a foe from whom one should protect oneself – this takes on the form of a power struggle where egos are inflated and fears are unreasonably magnified resulting in an utter state of confusion. People begin to question their very survival in the organization and soon find alternative employment – sometimes there is ‘mass exodus’.

The fact is that the success of company mergers is highly dependent on proper – consistent, on-going and fluid – communication at all stages. The more time elapses and more periods of non-communication, the lower will employee engagement be and will soon become another challenge that the companies must deal with, taking away from the main focus of ensuring the success of the merger.

Employee dissatisfaction soon becomes a wave that sweeps over and begins to affect the ‘mood’ and behaviour of customers, investors and other stakeholders. Each set of the company’s partners then begin to look out for other possible companies to partner with leading to a loss in business and reputation. As a result, some key people would need to be engaged in containing this ‘fire’ which in turn would detract from the effort and momentum required to ensure the success of company mergers.

The main drivers or catalysts of successful company mergers is the ability of the companies to sustain a sense of belonging, empowerment and motivate their employees. As the companies come together, the employees must be able to identify with the newly formed set of rules, guidelines, culture, values and their ‘new’ co-workers. A synergized environment will reduce the stress and uncertainty and pave the way for success and profits in the ‘new’ environment as well.

It stands to reason that even post a few months of successful operations, company mergers can go horribly wrong especially because people are still emotionally charged and with time new developments come around that could unsettle and disturb the peace of the company. Not everyone is equally capable of handling change which is why some employees and other partners would seem more comfortable while others would be completely unsettled and nervous – change is bound to take place as the merger reaches new stages and goals in its path. This leads to higher stress levels, frustration and exhaustion which would most certainly have some of the company’s ‘partners’ leave or look for other quick fix solutions for themselves rather than remain attuned to and aligned with the company’s goals.

For company mergers to remain successful, the companies involved should be able to guide their employees and be able to clearly define and share the ‘successful future’ with them. The focus must be drawn towards increased opportunities, new ideas, a more vibrant and an uplifting culture and they must be constantly reminded that the company depends on their performance and cooperation to move ahead. Ensuring collaboration, focused leadership and proper alignment between each one involved are major stepping stones towards the success and longevity of company mergers.

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