When an acquisition or merger is announced, employees who have become inured to such changes often just shrug their shoulders. There may be no immediate response, but what certainly does happen is an explosion of informal, indirect communication. The initial instinct of many managers is to attempt to control communication. They monopolize the formal media, parcel out information only when they are sure it is safe to do so (which usually means it is vetted by committee, cauterized by lawyers and far too late to have any positive impact) and expect to influence employee opinion and emotion by ex cathedra statements. All these instinctive reactions have exactly the opposite effect to that intended.
Informal communication and dialogue between all those involved in or affected by the changes are in reality the cornerstones of effective M&A communication. People need space to air their concerns, to come to terms with what the change means to them and their colleagues, and to feel that they are being listened to. The more that top management encourages and participates in this informal debate, the more easily people will get behind the change and focus on helping to make it happen with least pain.
The informal debate takes place in a wide arena, much of it beyond the reach of top management anyway. For example, speculation in the press will fuel discussion about the wisdom of an acquisition, or the strategy behind it. Formal denials may help, but they may equally be seen as confirmation by the cynical, unless there is a strong track record of veracity and openness from top management.
The structure of M&A communication with employees there- fore needs to be built around a number of key principles:
䊉 The role of the internal communication function is to inform discussion, not to manageit.
䊉 Integration of messages to stakeholders inside and outside the organization is essential.
䊉 The communication team is everybody, although a core
Top management as a whole
Top management information champions
The change team The communication team
Employee communication
champions External Internal
communication team is essential to ensure that information is available (not just from the company to the employees, but vice versa and between employees of the two organizations).
Figure 8.4 illustrates how a typical good practice M&A commu- nication team is structured.
Although their attention may be heavily focused on the
financial and logistics aspects of the deal, top management have to be visibly and actively involved if the communication process is to have credibility. While the communication team is only part of the larger M&A team, top management must at the same time see themselves as part of the communication team. One way of dealing with this complexity is to make two or three executives, including the CEO, spokespersons for top management as a whole. However, it is essential that every member of the top management team is fully briefed and emitting exactly the same messages as the spokespersons. Communication issues therefore need to be on the agenda whenever they meet. It may also be appropriate to provide a daily bulletin on communication issues so that they are all acquainted with what should and should not be said, and so that they understand the immediate concerns of each of the key stakeholder audiences.
The change team (or merger management team) will involve people from a variety of disciplines who may not have worked together on a high-pressure task before. They will almost Figure 8.4 Structure of M&A communication
certainly have communication issues between the members, so there is a significant role for the communication function in helping them manage these. (There will probably not be enough time to work through all the stages of forming, storming, norming and performing during the lifetime of the project.) It is essential to have at least one experienced employee communica- tion professional in the change team.
The M&A communication team is where internal and external messages (both to and from top management) are aligned. There is inevitably some conflict here, especially when the company is quoted on the Stock Exchange. Stock Exchange regulations may make it difficult to inform employees before shareholders, yet the last thing the company normally wants is for employees to hear such news through the media. Good practice seems to be have a small core team, some of whom also take responsibility for communicating to other colleagues in the communication func- tion. The communication plan is developed in this group and fleshed out in detail in the separate public affairs and internal communication teams.
Employee communication champions – typically managers across the business, who accept the responsibility to be the local mouth, ears and eyes for the communication function – are also an essential part of the structure. They need frequent exposure not just to the facts, but to the broader thinking of top management and the change team. While constant e-mail briefings may help, they also need face-to-face meetings (in person or by video- conferencing) to absorb the flavour of change.
How extensive the internal communication team needs to be will depend upon the impact of the acquisition. A large company acquiring a much smaller entity, which it intends to leave pretty much alone, does not need much of a communication structure at all. A merger of equals, by contrast, will need a great deal.
The protracted nature of negotiations and establishing the integration plan often means that two, parallel merger commu- nication structures emerge – one in each company. The sooner these can be integrated, the sooner the uncertainties will be tackled and the smoother the acquisition or merger will proceed as a whole. Two cases, both from the financial services industry, illustrate how notto do it.
Case one involved the merger of two large financial retailers.
One had a very stiff, bureaucratic culture; the other a more entrepreneurial, open culture. As merger talks progressed, and once the initial announcements were made, employees in the more bureaucratic culture found that they could learn more about what was going on by calling friends and acquaintances in the more open company, than they could through any form of
internal communication. Although the bureaucratic company was the larger partner, the emphasis its top management placed on ‘need to know’ was one of the factors that eventually resulted in many of them losing out in the jobs race as the merger was consummated – to the extent that it almost became a reverse takeover.
In the second case, top management in the acquired company was so paranoid about maintaining their independence, that they made it a punishable offence for staff – even at a fairly senior level – to contact their opposite numbers in the acquiror without specific permission. As the top team were not particularly good conduits of information from the new parent company, relatively little information made it through to employees and rumours multiplied unchecked. When top management did make state- ments, they were regarded with suspicion. Motivation and performance plummeted. All of this got in the way of the broader acquisition objectives, making it more difficult to obtain the investment the acquisition needed. The downward spiral con- tinues at time of writing.
Initem’s experience, the process for integrating the two teams needs to be established from the start. Key issues to consider are:
䊉 Who are the counterparts in each area and how can they best work together? (Job roles are unlikely to be exactly the same in both companies – for example, what is a full-time internal communication role in one may be a mixed IC and public relations (PR) role in another.)
䊉 How will the combined team reach a consensus on the messages it sends out?
䊉 Who else has to sign off those messages (e.g. the two CEOs) and how will the team ensure that it does not get caught between conflicting views of what should be said?
䊉 What is the procedure for reacting to queries or concerns in a specific area?
䊉 What media can be shared and what need to be created/used separately?
One company undergoing a merger provided an excellent opportunity to begin integration, by sending teams of employees from each company to brief a group within the other company.
The briefers were trained by the PR department and had prepared answers to all the anticipated questions. When unan- ticipated questions arose, they consulted top management in order to provide an authoritative answer. In addition to improv- ing relations between the two companies during the merger, the process improved managers’ communication competence and
resulted in improvements in their own job performance as well as employees’ morale.