Employee engagement during mergers and acquisitions – ignore it at your peril
When mergers and acquisitions happen, employee engagement is usually the last thing on the list to be addressed, but in the long run it pays to tackle this early and aim for a unified approach as soon as possible.
Undertaking mergers and acquisitions (M&A) has long been one of the favourite strategies for organisations looking to expand their reach and resources. While the level of activity seems to have slowed in the wake of economic uncertainty in recent years, the ONS still recorded close to £2bn in M&A deals during the first half of 2019 alone.
When one entity is acquired by or merges with another, there is an immediate mismatch in their approaches to deal with.
M&A can present an excellent shortcut for breaking into new markets or acquiring skills and infrastructure that would otherwise take many years to develop. One often overlooked downside, however, is that constant M&A activity can lead to an organisation becoming a disjointed mess of different systems, processes and cultures.
If the aftermath of M&A is not managed properly, this jumble of legacy systems can create unnecessary work and reduce operational efficiency. This will also present some serious challenges for the HR department with regards to managing engagement, rewards and benefits.
Why is engagement overlooked?
When one entity is acquired by or merges with another, there is an immediate mismatch in their approaches to deal with. Each organisation will have its own set up for items such as pensions schemes and workplace benefits, including childcare or incentive rewards.
This presents a difficult juggling act for the HR department as it handles all the various dates and processes. Furthermore, this situation can also impact staff morale if it becomes apparent that workplace benefits and rewards are unequal due to different locations or sections keeping legacy benefits. For example, resentment can soon manifest if one office location still has access to particularly generous benefit scheme that others do not.
For firms that do look to unify their approaches, a common mistake is to simply impose the structure of the dominant company in the merger or acquisition onto the other.
This issue can also apply to external customers that receive benefits through an organisation’s services. Provisions such as pensions, insurance and life assurance often provide perks such as retail discounts or cinema vouchers, so it is essential that these are aligned across the business for all customers, including those who were brought on board via M&A.
Furthermore, many sectors will be handling provisions for their employees and customers at the same time. Independent Financial Advisors (IFA) that specialists in mortgage and pension advice, for example, will commonly provide private support for their employees as a perk.
Cutting through the complexity
Despite the problems caused by mismatched legacy systems, it’s common to find that little thought has been paid to the issue during the M&A process. In most cases the organisations involved are concentrating purely on the financial and operational elements and ensuring that the deal is closed successfully.
Once the deal is complete, businesses will still often leave things as they are rather than go through the effort of aligning them. This alignment process can sometimes be labour intensive, particularly as people are generally naturally resistant to change.
Decision makers responsible for engagement and reward activity need to be in close alignment with line managers, who should have a good understanding of what employees want.
For firms that do look to unify their approaches, a common mistake is to simply impose the structure of the dominant company in the merger or acquisition onto the other. Not only can this be rather jarring for the acquired company’s staff and customers, but it can also present a missed opportunity. The company being acquired may well have some very attractive and effective systems in place that would work well in the new combined entity.
It is beneficial instead to take a careful look at the approach the acquired company has in place and analyse what elements would be worth keeping. At the same time, the acquiring company may well have some ineffective systems and deadwood that can be cut out.
Once this assessment has been completed, the company can re-launch a new, invigorated approach that is homogenous across the entire operation, hopefully delivering even better results for engagement and morale.
Combining technology with the human touch
Much of the analysis that goes into redefining engagement and benefits is best handled by an automated solution. Ideally the HR team and other stakeholders should look to use a single platform to compare all of the different offerings across the organisation, including various legacies. This will enable them to gain visibility of everything together and gather data on what elements are the best performing and most valuable.
It is, however, a mistake to rely purely on a tech-based approach. A lot of very human diligence and empathy is also necessary to help assess the best assets to put into the new model, as well as how to communicate this with the workforce and/or customers.
Decision makers responsible for engagement and reward activity need to be in close alignment with line managers, who should have a good understanding of what employees want. Similarly, for external benefits offerings, customer leads should also have input. Ideally employees or customers should have the chance to feedback directly as well.
Finally, it is vital that this process is completed before any changes are made to the existing provisions. Launching a new approach to engagement and benefits that is unpopular will cause more harm than good and saddle the HR team and others with the task of getting employees back on side again with future efforts.
Mergers and acquisitions can be a chaotic time for all involved, with the focus primarily being on sealing the deal and continuing operations with minimal disruption. By taking the time to consider the impact on staff and customer engagement early on in the process, however, organisations can not only avoid the difficulty of mismatched legacy approaches, but establish a new strategy that delivers real improvements.
Interested in this topic? Read Company culture: How and why bad HR can bring down a promising merger.
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Since the 1990s, James Whelan has been involved in internet technology, from interactive e-commerce and transactional financial websites to multi-tenanted cloud-based workplace engagement platforms.
At Avantus the focus is on Financial Services and Employee Benefits, which together are improving the employee engagement process for...