“Everything changes and nothing stands still,” according to Heraclitus, a Greek philosopher. Buddhists promote a similar idea with their doctrine of impermanence, which states that all existence is transient, evanescent, and inconstant.
Even if you take just a cursory look at the news today, it becomes clear that these concepts of change and impermanence could never be more relevant. We certainly see it in politics. How do we move forward with such polarized views in the United States and abroad?
We also see it in the business world. Even as the U.S. presidential election approached, The Wall Street Journal reported that October 2016 was the busiest month ever for mergers and acquisitions, with megadeals becoming much more common. At the end of the month, Qualcomm Inc. agreed to buy NXP Semiconductors for $39 billion; it is the second largest technology deal ever.
All of this change is highly disruptive, and has the potential to generate either opportunity or risk.
Culture is Key
Many companies focus on tangible assets during a merger or acquisition. Yet according to Ocean Tomo LLC, intangible assets – like culture, brand, customer loyalty, and employee engagement – can make up 75% of a company’s value.
It’s no wonder, then, that the ` most deals fail is culture clash. While most companies are well adept at managing the operational aspects of a merger/acquisition, they typically underestimate how important it is to get people on board with organizational change.
Alan Smith, CEO of the M&A consulting firm Bay Pacific Group, advises, “The danger time in a corporate culture clash is in the very beginning when employees on both sides feel threatened by the combination.”
Here’s some data to back that up:
- The percentage of highly engaged employees is cut in half during an M&A event (Aon Hewitt)
- The percentage of highly engaged employees dips to 5% a few months after a merger or acquisition, and does not recover to the baseline for another two to three years (Aon Hewitt)
- During a CEO or leader change, employees who feel the company is able to retain high-quality employees is 27% lower (Korn Ferry Hay Group)
The Process of Integration
So the potential for disengagement, lower morale, and lost productivity makes it even more critical to get ahead of a culture clash by facilitating cultural integration as soon as possible.
Bain advises that there are three important pieces to building company culture:
- The behavioral norms exhibited by everyone from senior leaders to frontline employees
- The critical capabilities and decisions about where and how to compete, as defined by the company’s strategy
- The operating model of the company — the structure, accountabilities, governance mechanisms and ways of working that make up the blueprint for how work gets done
When executives define what they want their new culture to be, they must identify specific employee behaviors, along with the measures and incentives that will be used to encourage those behaviors.
One way to encourage the right behaviors is through social recognition mapped back to core values. In the 2016 SHRM/Globoforce Recognition Survey, 88% of HR professionals agreed that values-based recognition helps them to instill and reinforce their corporate values.
Connection & Positivity in Uncertain Times
The Aon Hewitt study referenced above compared employee engagement drivers and how they differ significantly during times of change. Specifically, employees undergoing change are looking for more connection:
- Connection with leaders — Employees want more two-way dialogue with organizational leaders (data from the Employee Experience Index found employees who feel their ideas and suggestions matter are more than 2x as likely to report a positive work experience)
- Connection with co-workers — Employees need to see their co-workers pulling together with discretionary effort, providing reliable support and making personal sacrifices during these stressful times
Rather than leaving a vacuum of feedback during times of change, social recognition is a continuous source of connection – with managers, colleagues, teams, and executives. It creates a groundswell of positivity across an organization through an internally visible newsfeed of awards where everyone can add their congratulations.
Findings from Globoforce’s 2016 WorkHuman® Research Institute survey showed that frequent recognition is critical to helping employees feel optimistic about change:
- Employees recognized in the last few months are 2x more likely to be excited or happy about change than those who were never recognized
- Workers recognized in the last month are nearly 50% less likely to be nervous or afraid of change
Those optimistic workers then turn organizational change into huge opportunity for your business. Specifically, they are:
- 38% more likely to recommend working at your company
- 25% more motivated to work hard
- 40% more likely to believe your company is a best place to work
So even in uncertain times, remember that optimism remains a key piece of the fabric that helps our organizations and businesses run more smoothly. Recognition and appreciation act as protective shields against pessimists, which, according to psychologist Martin Seligman, “tend to give up more easily, feel depressed more often, and have poorer health than optimists.”
Has your organization recently gone through a merger or acquisition? How did you reinforce values and promote optimism during change? We’d love to hear from you in the comments.
The Secret Sauce to a Successful M+A
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