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Research & Surveys

Change Agents Wanted

Author(s):

RaeAnn Slaybaugh


September/October 2011, eSide Supply Management Vol. 4, No. 5

A report shows most organizations are overlooking a major resource for easing employees' pain during an M&A: their front-line managers.

When corporate mergers and acquisitions (M&As) happen, some employees — especially top talent — choose to jump ship before they understand the opportunities the new organization can offer.

To combat a mass exodus of talent in the wake of change, a recent Towers Watson report, Using the Power of Managers In an M&A, recommends honing an often overlooked tool: front-line managers.

The findings are based on the input of more than 700 managers worldwide. Overall, these managers believe their roles are insufficiently defined or focused to meet employees' needs in the event of an M&A.

Better Late Than Never? Not So

As Towers Watson researchers point out, a noticeable gap exists between the range of tools provided to managers and the perceived effectiveness of these tools when an M&A is on the horizon. Whereas senior managers have the most direct and visible roles in M&A transactions in the beginning, the only activity in which supervisors took the lead was informal employee coaching.

Further, researchers point out that it's often too late to truly combat negative attitudes about impending M&A activities by the time mid-level managers and supervisors do get significantly involved. Nearly one-fifth (18 percent) of supervisors didn't start formal dialogues with employees until three to six months into the M&A process. Another 15 percent didn't get involved for six to 12 months after the deal had closed.

Keeping Talent On Board

Among the 700-plus managers surveyed, about one-quarter indicated their organizations did nothing to address staff retention in the wake of a corporate shift. The majority, however, said their organizations did focus on post-M&A retention, most commonly in the forms of job enrichment — new roles, different work locations or involvement with an integration team or task.

Effectiveness of Retention Tactics

Figure Out Who Does What (and When)

According to the report, driving successful M&A-based change management relies heavily on increased differentiation in the roles of senior managers, middle managers and front-line supervisors, as well as the nature of their interaction with employees. "In other words, [it requires] determining what each management level needs to do, how to do it and at what point during the [M&A] transition," it states.

Broken down, Towers Watson researchers recommend a "stabilize, secure, sustain" model for leading M&A-based change management. They contend these core goals define the role of managers at all levels during a corporate shift:

Stabilize the organization. During the early stages of an M&A transaction, these actions lay the groundwork for a more steady state. In this model:

  • Senior management paints a very clear picture of what the new organization will look like over the next few years.
  • Middle management clarifies changes in the division's goals or roles.
  • Supervisors help direct reports understand where to go for information, or get information for them.

Secure people's engagement in the new culture. The process of helping employees feel confident and part of the new, post-M&A organization includes informing, communicating and paying attention to signs of problematic behavior. Tactics include:

  • Offering change management workshops
  • Identifying key managers and influencers to help maintain employee engagement and encourage retention
  • Taking the pulse of the current organization with surveys, focus groups and one-on-one interviews.

Sustain performance and energy over the long term. As the M&A process progresses, and managers' focus begins to shift to culture, communication and rewards, Towers Watson researchers contend that companies must consider the types of communication most appropriate for each management level. The most important step, they say, is to determine the tasks — communication, reductions in the work force and conversations with key talent at risk of leaving, for example — and the management level best suited to handle them.

"Throughout at least the first year, employees will need frequent updates and assurances that the merger or acquisition is going well, and a place to get their questions answered," they advise.

Get HR Involved

According to the study, the most successful M&A transitions are marked by an HR organization that plays a key role in program redesign, roll-out and communication, and has early involvement in the process at a strategic level. In ensuring that managers are equipped to provide necessary support during an M&A, the HR team can be instrumental in a range of ways. These include:

  • Developing and conducting staff engagement surveys
  • Defining criteria for identifying key managers and influencers
  • Working with the business to define top talent and develop assessment criteria
  • Working with leadership to develop and implement change management courses for managers
  • Helping define the new role for managers in the merged organization
  • Establishing appropriate retention tools (bonuses, for example) and determining competitive bonus levels
  • Acting as a catalyst for various management groups within the organization to facilitate communication, develop a decision matrix and trouble-shoot integration problems
  • Determining the future strategy for HR in the new organization.
The Bottom Line for Corporate Transactions

Regardless of the change — acquisition, merger or otherwise — Towers Watson's research shows that a corporate transaction weakens employees' ties to the new organization. At the same time, the demands of the manager's job, and the skills needed to do it well, increase.

"Without a clear understanding of what people need from management during the M&A change management process, companies risk putting money, time and energy into activities with less than optimal results," the researchers conclude. "A tiered and targeted approach to managerial intervention is the right recipe to help stabilize, secure and sustain work-force performance and engagement."

A downloadable PDF of the study is available on the Towers Watson website.



RaeAnn Slaybaugh is a writer for the Institute for Supply Management™. To reach this author, send an e-mail to author@ism.ws.

For more research and survey findings, visit the ISM articles database.

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