Over the course of my career I’ve had the good fortune to have been involved in several mergers. At first, I was fascinated by the process of identifying a compelling rationale for combining companies, negotiating the deal, planning the integration of people and systems and then executing the plan. The dizzying array of tasks that must be accomplished to complete a merger is challenging to say the least. In time, however, I learned that even greater challenges arose after the investment bankers and lawyers had packed up their briefcases and moved on to the next deal.
Building trust, cooperation and esprit de corps among the members of the newly combined organization is far and away the most underestimated challenge of mergers. The failure to plan and address cultural differences is why most mergers fail to meet the expectations of the parties going in. Unless leaders learn how to avoid the inevitable post-merger traps their efforts will be too late to repair the damage that has already been done.
Post-merger traps emerge when behaviors thwart the meeting of universal human needs for people to thrive, individually and collectively. These needs are respect, recognition, belonging, autonomy, personal growth and meaning. When these needs are not met in legitimate ways, people have a tendency to seek illegitimate ways to meet them. As individuals focus more on self-interest, they lose sight of the organization’s interest. In time, the downward performance spiral accelerates as individual performance declines, communication is stunted, decisions are made based on incorrect assumptions, financial performance suffers, and so on until survival is threatened.
The good news is that post-merger traps are largely predictable. Here are a few to be on the lookout for and what leaders can do to avoid them.
The Unfairness Trap. Where there are overlapping or redundant positions in two organizations, one person’s position is usually eliminated. Leaders need to take the time to assess the talents and experience of the employees they have not previously worked with and they need to be as objective as possible in making people decisions. Communicating the process you are going through to make people retention decisions helps employees see that you made an effort to be fair. Being fair meets the human need for respect. If the process is perceived to be unfair and people are selected for positions based on anything other than merit, trust will be broken with the remaining employees. As a result, some employees will be less engaged in their work and a few may actively sabotage leaders’ efforts as a form of retaliation.
The Urgency Trap. When a merger first occurs, managers want to immediately hit the ground running. Task lists are generated and off to the races everyone goes. Part of this comes from anxiety. When we are anxious, cortisol, the fight or flight hormone, surges in our brains. Managers are nervous and want to quickly feel that they have proven themselves worthy of a seat on the ship. Far too often the urgent crowds out the important. If time isn’t invested in building relationships among the new team, trust, cooperation and esprit des corps never develop. Absent the bonds of relationship, the inevitable challenges faced by every organization will rupture weak relational links. When this happens, people become disengaged and stop putting in their best efforts. As in the Unfairness Trap, the leader who gets snared in the Urgency Trap will see the employees he is responsible for leading put less effort into their work or work against the organization’s objectives as a form of retaliation from feeling devalued.
A better approach is to make certain the leaders involved in a merger are aware of this feeling and that they understand it is necessary to think before acting in haste. The best antidote for post-merger stress is to engage in conversations with a trusted colleague or two about the decisions you must make. It actually reduces cortisol when you connect with other human beings and it will help you act with greater prudence.
In the first year following the merger, leaders need to take the time to help the organization’s members build relationships. This helps meet the human need for belonging. In the movie “Remember the Titans,” based on a true story, the head football coach played by actor Denzel Washington had to merge his African-American team with a cross-town Caucasian team. At the newly combined team’s pre-season camp, the coach paired up as roommates African-American players with their new Caucasian teammates. He also assigned them the task of learning each other’s personal stories so that they could relate them to the rest of the team at mealtimes. As the players got to know each other as human beings rather than just human doings, trust and cooperation begin to take root. Like the coach, corporate leaders need to find ways to bring the members of the two former teams together so that they get to know each other as human beings and begin to function as a new team. Dinners together, corporate retreats, Friday afternoon keggers, pizza parties, bowling or golf outings all help build the relationships so that the foundation of trust and cooperation will develop that is necessary for every team to play at the top of its game.
The Superiority Trap. In all mergers, one party usually feels superior in status and reputation to the other. The subordinate party’s employees are likely to be hypersensitive to this status gap. Managers from the dominant organization who act the slightest bit condescending will offend employees from the subordinate organization. These employees will be less likely to cooperate with members of the dominant organization. On the other hand, managers from the dominant organization who look for ways to affirm their new colleagues and show that they have confidence and high expectations for their future performance will be rewarded when their new colleagues live up to their aspirations.
The Exclusivity Trap. Too many leaders fail to keep all the employees they are responsible for leading in the loop. Instead, they tend to keep a smaller, more exclusive group involved in the conversations about important business issues. The problem is that most individuals want to be informed about issues that are important to them, have a voice to share their opinions and ideas, and be certain that their input is considered before decisions are made. When people are in the loop, it helps meet their needs for respect, recognition and belonging. When they are not in the loop, they are naturally anxious and tend to fear the worst.
Leaders are wise to regularly meet with all the employees they are responsible for leading to share information about issues that are important to them, ask for their ideas and opinions, and then consider them before making decisions. Obviously leaders will not be able to do this with every issue. The leader who keeps all employees in the conversation about issues important to them, however, will be rewarded when employees put more effort in their work because they feel a sense of ownership in achieving the results.
The Unfairness Trap, The Urgency Trap, the Superiority Trap and the Exclusivity Trap are just a few of the post-merger traps that leaders need to avoid in order to be successful. There are others such as the “Star Trap,” the “Indignity Trap” and the “Them Trap.” Too few mergers succeed financially because leaders fail to navigate past these obstacles. It does not have to be so. Leaders who wisely avoid post-merger traps realize one of the most rewarding and memorable experiences of their careers: helping to nurture the trust, cooperation and esprit des corps that every organizational community needs to thrive.
