It is a typical scenario. It doesn’t matter if it is an industry roll-up of smaller competitors or a “merger of equals,” the deal team tends to be completely focused on the financial and operational potential of the combined entities. Once the deal is closed, the realization sets in – different cultures still need to be brought together under a united vision for the future.
Employees are worried for their jobs and feel they have been left in the dark. Their allegiance is now tested as the company they’ve fought for has become something else overnight. People take pride in their work and often their identity is very connected to who they work for – but the company and the people they work for have all changed without their involvement or consent. The future is uncertain, worry sets in and productivity slows.
Here are six best practices to consider during a merger so that yours can be one of the success stories. To benefit from a client point-of-view, I’ve included quotes from a conversation with Michael Moore, Chief Experience Officer for a recent industry roll-up: Private equity had acquired four Verizon Premium Dealerships – each with approximately 300 stores. Newly merged together, the potential of the 1,200 locations was impressive. The CEO who developed the acquisition strategy became the interim group CEO and the newly merged companies were to use his brand name. That is where the cultural conflict started.
This happens far too often. The terms of a business deal are decided upon, but the strategy to actually combine two (or more) companies and cultures has not been clearly outlined. And this larger-than-life task is left to newly assigned “interim” executives to bring folks together. As the statistics support, this is always more complicated than anticipated.
1. Recognize the need for urgency
Defining the new company, its purpose, vision, and mission, needs to start right away. Each of the merged organizations had their own values and established company culture. Determining who and what this newly formed entity will be must be the first step. Providing direction is critical so all employees understand where the company is going and how they fit into the big picture.
In Moore’s words, “Look. We know from experience that culture truly does eat strategy for lunch. And no matter what we do from a strategic roadmap standpoint, if we don’t address who we are and who we intend to be as a company going forward, we won’t get the success that we expect and deserve.”
2. Business must go on
Financial results and expectations begin on day one of an announcement. The need to move forward with sales goals and the overall business strategy is obvious, but there needs to be a team (group) dedicated to defining the brand for the newly formed organization. The creation of a separate ‘Brand Council,’ a cross-functional team of leaders to own the outcome, is crucial. This brand council is responsible for creating the company’s guiding statements, internal and external value propositions, and the brand launch plan. This group becomes the critically important brand champions: those who teach team members to understand, believe and live the brand.
As Moore explains, “We knew we couldn’t slow down from a business acceleration standpoint. We had to actually do just the opposite. We felt very strongly that we had tons of upside with the new entity, but we knew that we needed a partner who could guide us through the process so we can start driving accelerated results.”
3. Get input from the right people
Internal and external perspectives are critical in making informed decisions in order to have a well rounded understanding of the gap between the current perceptions and where the new company is going in the future.
From an internal perspective, a company-wide cultural assessment from all employees to understand what issues need to be addressed gives clarity and insight in the combining of cultures. This also helps alleviate employee concerns by including them in the process and hearing their concerns, values, and opinions.
Insight from key audiences outside the organization provide direction for areas of distinction from competitors and to learn exactly what customers expect and need from the organization. External research provides insights about what each of the merged companies does best so you can find areas of opportunity that help guide the brand strategy.
As Moore puts it, “We have to start with the data… to engage our employee base to understand their perspective, benchmark our brands versus competition, define our strengths and opportunities. Getting these key insights were critical to guide strategic scenarios and the positioning platform that we wanted to create as a brand.”
4. Clarify a meaningful new vision for employees
During the M&A process, people are worried for their jobs, uncertain of their new roles and unsure what the merger means to the future of the company. Now is the time to provide clarity on future direction. Even if all the answers haven’t been finalized, it is critical to communicate – and include employees in the journey. It’s only human nature for people to desire fulfillment in their work. Tell them where the company is going so they know how they fit in and how they can make an impact.
“77% of our current employees said they see the benefit of a unified company – feeling connected to a compelling purpose and clear vision really drives empowerment. And if people are connected to an outcome they care about, they enjoy their job and in turn, it has a huge impact with the customer. Fortunately, we had a CEO who understood the benefit of these guiding statements, and we ingrained them into our culture.”
5. Create a compelling brand promise
Customers are also concerned during this time of uncertainty. Business as usual has just changed. To understand customers’ current perceptions and identify their future needs, now is the ideal time to reconnect with customers. As a baseline, voice of the customer research is particularly important to develop a brand that will be relevant to key audiences and differentiated from the competition.
“We had a pretty clear strategic roadmap in mind, but we didn’t know how it would be accepted by the customer. The research helped us validate some of our assumptions and also informed us on what was additionally important to the customer. This information gave us the confidence to position the brand in a differentiated manner knowing it would resonate.”
6. Make your internal audience a priority – train before launching
The biggest mistake organizations make is rushing to introduce the brand to customers – after all, brand positioning is a customer focused initiative right? Yes, but it is critically important to launch the brand internally first – and make it a big deal. The reveal can and should be exciting, but there needs to be a certain amount of rigor behind it as well.
Employees should hear, understand, believe and live the brand. That’s when there is a true and lasting impact.
“Folks need to feel a part of it. They need to feel like they’re vested in the process and they’re vested in the decision. And I think the approach that we took together really blended itself to people feeling like they were the drivers behind the decision because frankly they were. And I think it was the combination of not only the surveys and the internal research, but the creation of a Brand Council.”
In a merger or acquisition, business strategy usually gets the focus, but culture is equally, if not more, important. By following these guidelines, the success rate can dramatically improve.
“Being connected to a purpose statement and having that alive and well inside the company is more important, frankly, than pay. And that’s been proven through exit interviews and results. And so, getting the purpose statement right, which is all about the heart, was absolutely critical.
“Since some time has passed since we launched the brand, I can tell that this is a place where winning and teamwork is celebrated. It’s alive. You can feel it. The energy, the excitement, the enthusiasm, the comments that I see on LinkedIn, the comments that are coming back through the company through our company surveys, are all extremely positive. Victra is the perfect name for us.”