How to Create a Truly People-Centric Merger & Acquisition Strategy

Strategic business objectives. Expanding market share. Diversifying your product offerings. If you’re a CEO or CFO currently mapping out a merger or acquisition, these are probably the factors that are underpinning your strategy.

But one critical factor can make or break the success of an M&A: your people.

An M&A strategy that makes your employees feel more engaged, listened to, and validated is more likely to succeed.

The cost of failing to design a people-centric M&A is well-documented. Your key talent is more likely to feel disenfranchised, overlooked, and, in the end, more likely to leave the organisation.

If you’re navigating the complexities of a cross-border M&A, then any truly people-centred strategy needs to prioritise employee engagement and compassionate change management.

In this blog post, we’ll walk you through the seven steps to delivering a truly people centric M&A strategy.

Step 1: Establish a Compelling Vision for Change & Get Buy-In

The first building block of a people-centric M&A approach is articulating a clear, compelling vision for the combined entity – one that resonates deeply with employees in both the acquiring and target company.

The key to sharing this compelling vision is transparency. Specifically, it’s a good idea to communicate the following to affected team members.

• The strategic rationale behind the deal.
• The goals and potential long-term benefits of M&A that you foresee.
• How synergies and shared strengths between the two companies can be capitalised on.

But laying out your vision for the M&A is only the first step in building out a people-centric strategy. This proactive, transparent approach to communication needs to be implemented every step of the way. This leads us nicely to Step 2.

Step 2: Design a Communication Strategy That Prioritises Talent Retention

If we haven’t made it clear already, effective communication is oxygen for M&A transitions.

The reason is simple: it helps to ensure talent retention both during and after your M&A.

One recent study found that employees of the acquired company were nearly twice as likely to leave in the aftermath of a merger or acquisition than direct hires. This is corroborated by another MIT study which saw average attrition rates for acquired company employees around 34%, whereas internal employee attrition was 12% (almost triple the rate). These figures may be circulating amongst the target company’s team, and these fears must be addressed.

Employees inevitably have questions and apprehensions about how a forthcoming M&A will impact them and their roles.

These could include anxieties such as:

• Will I still have a job when this merger/acquisition is complete?
• Who will I report to in the new org structure?
• Is my work/role valued in the new organisation?

Being prepared to answer these questions will give you the tools you need to create a proactive change management strategy.

Develop a holistic, multi-channel communication strategy to proactively address employee questions and concerns.

We’d recommend channels and tactics such as town hall sessions, regular video updates, Q&As, internal newsletters, and more to share consistent messaging across all levels. All of these strategies can build trust and lessen the likelihood of rumours eating away at employee morale.

But Step 3 lets you go further than proactive communication. Why not find ways to tap into employee insights?

Step 3. Leverage Your Employees’ Insights

Too many M&As fail because employees are treated as passengers along for the ride. In the long-term, this is more likely to lead to disaffected employees leaving the company.

By contrast successful M&As look for ways to involve their employees in the process. The perspectives and expertise offered by your various frontline teams can help you to anticipate any bumps in the road, and ensure that your HR due diligence is mitigating any and all M&A risks.

Think about how you can empower cross-functional teams at every step of the M&A process. Are there ways you could solicit input from teams in both organisations to identify the operational requirements of the transition and increase the likelihood of cultural alignment in the future?

Empower cross-functional teams with members from both organisations to collaborate on integration workstreams. Task them with analysing potential hurdles and developing solutions that balance operational requirements with cultural realities on the ground.

For example, you could designate "culture ambassadors" from both sides to facilitate integration plans and embed change management.

Step 4: Ensure Fairness and Equity

Few things erode trust faster during M&As than perceived injustice, whether real or perceived. Employees need reassurance that career prospects, compensation reviews, and policies will be applied consistently and fairly across the merged workforce.

So, what does this look like in practice? You’ll need to ensure that, both during and after the M&A you’re clearly communicating policies around

• Role evaluations
• Compensation (salary and sales commissions)
• Salary benchmarking
• Career ladders and professional development frameworks.

Creating consistent policies makes it easier to create a culture wherein everyone feels like they’re working for one, unified team - with a clearly defined direction of travel.

An equitable employee experience emanating from leadership reinforces the company's professed values and underscores its commitment to a cohesive, unified culture.

Step 5: Build a New, Cohesive and Positive Company Culture

Following Steps 1-4 increases the likelihood of you creating a new, unified company culture in the immediate aftermath of your M&A.

Here are some of the ways you can help to engender that culture and make your employees feel a sense of belonging at the newly merged company.

Organise Events

Meet and greets and introductory events are great ways for members of merging companies to interact with each other and develop relationships organically. Even though these colleagues are now part of one team, events help to minimise the awkwardness of new team structures and help employees learn how to collaborate with their new counterparts.

Collect Feedback

Employee input is valuable because your company can’t function without employee support. Suppose your organisation is considering significant changes to its mission statement, core values, or diversity, equity, and inclusion (DEI) initiatives. In that case, conducting an employee survey or poll on the proposed changes provides valuable perspectives from all levels of the company.

Coordinate Leadership

The success of your M&A transaction depends on all members of an organisation sharing a unified vision for success and embodying a positive work culture. Your senior leaders set the standard and examples for their direct reports, so remember to coordinate the messaging your leaders will use to communicate the positive potential of the merger.