A managerial mantra in M&A

In general, companies understand the importance of managerial involvement in mergers and acquisitions (M&A), but overestimate managers’ skills and preparedness for the role, as well as the extent and effectiveness of their own efforts to give managers the help they need. A transaction puts additional pressure on core management skills and managers need to provide even more structure and support to employees than they normally might.

It becomes more complicated for those who also have to deal directly with employees from the other legacy organization. What’s more, it is common that decisions are made at the top and communicated down the hierarchy, and mid-level managers and supervisors are often operating with little more information than their employees and have similar and distracting concerns about their own job and futures.

However, even in the best circumstances, many managers’ people skills are limited, for managers are typically chosen for their technical abilities and people management training can be spotty or front-loaded, leaving new managers without follow-up education or support as they mature into their roles. Without adequate coaching, it’s no wonder that many of them focus on what they’re good at ― their technical abilities ― and give short shrift to developing their people management skills. The issue becomes even more complex, since the role of managers are changing rapidly due to globalization, a more virtual workplace, increased employee autonomy, a greater focus on teams etc.

There are three core goals in defining the role of managers: stabilizing the organization, securing people’s engagement in the new culture, and sustaining performance and energy over the long term. These are goals for all levels of management, but the path to achieving them differs according to the nature and frequency of a manager’s contact with employees. That’s why it’s so important to define appropriate roles, responsibilities and key tasks for all management groups early on, as well as where, when and how these roles need to intertwine.

For senior levels, it’s about strategic decision making for the transaction and integration process. Mid-level managers need to focus on business planning: How will the broader goals and desired outcomes translate for their division or unit? What activities and behaviors are required right away to keep the organization humming and signal success to the marketplace? Frontline supervisors become the interpreter of these messages, making them clear and actionable to the individuals in their groups or on their teams, and serving variously as problem solver, information source, cheerleader and morale booster.

Within this broad construct, here’s how the different manager roles work together to support a smooth integration process.

Stabilize

The first goal is to lay the groundwork for a more steady state. This is critical during the early days of a transaction and includes tactics such as painting a very clear picture of what the new organization will look like over the next few years (senior management), clarifying changes in the division’s goals or roles (middle management), and helping direct reports understand where to go for information or getting information for them (supervisors). Think about this stage as clearing the obstacles that stand in the way of employees doing their jobs, so the organization itself doesn’t stall and lose competitive or financial ground in the marketplace.

For a manufacturing company, for instance, the initial message to employees of both organizations was all around safety (a perceived problem within the acquired company). Employees heard early and often that they had to achieve consistently high levels of safety across the business and work on that as a top priority. That focus gave both sets of legacy employees a shared purpose, and helped break down walls and encourage more communication.

For a professional services company, by contrast, the focus was on client service. Nothing was as important as continuing to meet clients’ needs, and everything else took second place until joint client protocols were in place and in use.

Securing

Securing is largely one of timing and degree. This is where high-level messages and communication need to marry up with heightened, on-the-ground support. Employees will be turning to their direct supervisors for basic direction in navigating the new organization and dealing with customers, suppliers and others. They will need practical information: Have processes changed? Are there new contracting requirements? Who approves what? How has their role and/or function or unit changed? For managers, this is a time to over-inform and over-communicate, and also pay attention to signs of problematic behavior (e.g., fear or anger) or disengagement (a formerly gregarious employee suddenly withdrawn). Change management workshops can be a valuable tactic in this regard, teaching supervisors what to look for from a behavioral perspective and how to respond appropriately.

This is also the time to begin identifying key managers and other influencers who command enough respect and influence to help maintain employee engagement and encourage top talent to stay with the organization. Often, these people fall outside the bounds of the formal organizational chart. For example, a respected senior practitioner may have more clout with a particular group of employees than their direct manager and, given the right training and latitude, could help those individuals not only by providing informal communication, but also by demonstrating valued behaviors such as a positive attitude and a focus on day-to-day work.

Think of these individuals as deal champions, and ensure they themselves are engaged and understand the deal’s rationale, as well as their role in supporting it.

This period can also be a good time to take the initial pulse of the current organization. Many companies use formal engagement surveys for this purpose, and can then establish an engagement benchmark by region, office, department and employee demographic to track over time and use to determine if programs are working as they should or need modification. Others supplement surveys with focus groups and one-on-one interviews, especially if more serious issues about engagement or productivity are emerging.

Sustain

At this stage, the focus shifts to culture, communication and rewards _ all of the processes and programs, both explicit and implicit, through which companies drive ongoing engagement and performance. This is another point in time when capturing employee opinions and perspectives can be especially valuable, testing progress from earlier phases, and gathering insights to shape new policies and practices, and ensure that employees feel supported and enabled.

Since employee communication is so critical to success, companies need to consider the types of communication most appropriate for each management level on an ongoing basis. For example, senior management might deal with major announcements, such as senior- and board-level appointments, or the new company’s business strategy, delivered through a combination of online newsletters and companywide video presentations.

Middle managers might address mid-level appointments, and provide concrete examples of how the business strategy will play out in their divisions or regions, through a combination of in-person group meetings, group phone calls and meetings with supervisors, who can then cascade the information to their direct reports. Supervisors should be well prepared to share more tactical information about the transaction and address individual employees’ concerns.

The most important strategy here is to determine the tasks ― communication, reductions in force, conversations with key talent at risk of leaving ― and the manager level best suited to handling them.

Timing also plays a role. Before the transaction is finalized, information is limited, and often only top executives have knowledge of strategies and goals. However, employees are looking for any shred of information, especially as it pertains to their own futures, and rumors abound. Even a little information, delivered by a trusted source, can have a big and positive impact. Once integration begins, and through at least the first year, employees will want frequent updates and assurances that the merger or acquisition is going well. They’ll also need a place to get their questions answered and their fears allayed.

A transaction ― whether an acquisition, merger or other deal ― weakens employee ties to a company and makes people more open to leaving. At the same time, it raises the bar on the manager’s core skills and demands of the job. All of the ways a manager interacts with his or her staff are amplified and made more challenging in this period of significant change.

Without a clear understanding of what people need from different levels of management during a change process, companies risk putting money, time and energy into the wrong activities ― with less than optimal results. A tiered, targeted approach of managerial “intervention,” with managers at different levels tackling different types of issues, is the right recipe to help stabilize, secure and sustain the workforce, employee performance and employee engagement ― all of which have significant influence on the ultimate success of the deal.

This article was contributed by Towers Watson.