Mergers & Acquisitions: How Can A Business Support Employees?

Mergers & Acquisitions: How Can A Business Support Employees? 

During a merger, two companies legally, financially, and practically merge into one. Likewise, during an acquisition, two companies become one when one company acquires or takes over another. Although the legal process differs, the ramifications for employees are the same. A merger or acquisition can mean big changes in an organization, from restructuring to changes in the company culture and leadership. Employees understandably might find this a stressful time full of uncertainty about their role in the company. 

At the same time, employees’ experience is crucial to the success of mergers and acquisitions (M&As) and to the smooth unification of two company cultures. One of the most important aspects of an M&A is implementing an effective M&A “change management.” Change management refers to the process of putting in place tactics and approaches to manage the M&A, including for employees. An experienced Naperville, IL business attorney advises companies on best practices to support employees during M&As.   

Communicating with Employees

The first thing companies should do (and keep doing throughout the process) is communicate with employees. Communication encourages transparency and trust and can prevent employee uncertainty. Companies should implement a communication strategy that includes regular updates to employees, opportunities for employees to give feedback, and a dialogue between management, HR, and employees that addresses employee concerns and manages expectations. 

Merging Management Styles

Given the complexity of an M&A transition, a key goal of change management during an M&A should be putting in place processes to merge management styles so employees do not receive mixed messages about the company culture. By doing so, companies can also minimize some of the resistance to new management that employees may have. 

Companies can work to align management styles by hosting leadership development programs, team-building exercises and even offering coaching opportunities to management. The key is to utilize these tools to create a common leadership approach. 

Managing Employee Motivation

Employee motivation and engagement are key to nearly every aspect of a company’s success. Yet employees may lose motivation during an M&A if they feel overwhelmed or uncertain during the process. In addition to communicating with employees, companies should boost employee motivation by involving employees in the transition, particularly top performers. 

The challenges of an M&A transition present opportunities for employees to gain new skills or step into new roles. By giving employees unique opportunities to grow professionally during the transition, companies can manage and increase employee motivation. 

Preventing Loss of Key Talent

No organization wants to lose important talent in an M&A. There are a few ways to minimize the risk of this happening: 

• Identify key employees for retention: Get to know these employees, and offer them clear and unique value in the new company structure.
• Offer a retention bonus and a clear path to promotion: For key talent, companies can offer retention bonuses as well as communicate how and when star employees will be promoted. 
• Get top talent involved in creating a new company culture: This is a win-win for retaining key talent and improving company culture. 
• Utilize the challenges of an M&A to develop leadership: The challenges that are part of an M&A are also opportunities for growth. Offer these opportunities to the talent you wish to retain. 
• Start a mentorship program: A mentorship program is a way to retain key employees and boost the company culture. 

Strengthening Employee Trust

The many changes that are part of an M&A restructuring can cause employees to feel uncertain about their roles and even the direction of the company. This is understandable; after all, sometimes restructuring does mean the loss of certain roles. Here, transparency is the name of the game. By creating a culture of transparency through open and honest communication channels, companies can strengthen their employees’ trust and help them feel less uncertain. 

Making Tough Choices While Managing Layoffs 

An M&A restructuring unfortunately does often necessitate making tough choices and laying off employees. There are ways to do this that are more effective than others. The key is to be as fair and transparent as possible while making these tough decisions:

• Communicate effectively: Let employees know about the layoffs as soon as practicably possible and provide a business case explaining the reasons.
• Provide support: The company can provide job placement support for employees, extend health benefits, and provide severance packages when possible. 
• Take time to make decisions: Get to know employees and their roles to figure out who will fit into the new company structure and who must be laid off. 

Maximizing HR Professionals’ Role

Usually, the department responsible for implementing change management during an M&A with respect to employees will be HR. Management should communicate to HR the goals and strategies for a successful transition and empower HR to lead the process. HR should be the point of contact for employee concerns and communication. 

Coordination with HR should start early in the M&A process, even before the transition. Involving HR in the due diligence can provide it with important information to develop a strategy for merging company culture. After the transition, companies should work with HR to make a plan integrating employees and the company culture.  

Ensuring Compliance with the Worker Adjustment and Retraining Notification Act 

The Worker Adjustment and Retraining Notification Act is a federal law that requires companies with 100 or more employees to provide at least 60 days written notice of layoffs affecting 50 or more employees at a single place of employment. The goal of the law is to give employees time to transition and seek other work. The law applies both to hourly and salaried workers. Companies should ensure that they execute any layoffs according to the terms of the law. 

Contact a Naperville, IL Mergers & Acquisitions Attorney 

As your company completes a merger & acquisition, it is crucial to put in place processes to ensure a smooth transition for employees. The experienced Naperville, IL business law attorney at Gierach Law Firm is here to guide your company to a successful M&A. Call our offices at 630-756-1160 for a consultation today to discuss how to support your employees in an M&A.