Your organization has just merged with another company, or has been acquired. In the wake of this event are duplicate jobs, lost cohort members, layoffs and relocations, and overall change. Moving forward, employees from different teams, locations, and possibly even countries, are being brought together, usually with expectations of greater productivity and overall synergy. Instead, most organizations will face angst and anxiety before they can think about reaching these lofty work goals, and face a whole new set of issues as the two different companies and cultures collide.
This scenario is not uncommon. Mergers and acquisitions are happening across the world every day, and particularly in the realm of healthcare, with transactions taking place all the time in the pharmaceutical and biotech industries. Yet companies that forego the details, such as how to bring the two organizations and, perhaps more importantly, the people, together may suffer with disengagement, disgruntled employees, a collapse of conversations and a strong rumor mill. To avoid or at least soften the issues that will arise when two companies and cultures merge, create a plan and strategy that addresses the organizational and people issues in addition to the financial and legal issues.
Allaying M&As Fears Among All Employees
Initially, it’s important to keep in mind that simply the prospect of a merger or acquisition automatically stirs fears among employees on both sides of the consolidation. Both companies need to think about messages that address and allay those fears. To accomplish this, the organizations’ leadership needs to be proactive and transparent, by holding town hall meetings, video conferences, or HR roundtables to communicate with employees and alleviate some of the fears and anxieties of the unknown.
Once the merger or acquisition is a done deal, the responsibilities of creating new teams or bringing teams together will fall to leaders and managers within the organization. Their focus will be rebuilding new or existing teams that have been pulled apart through reassignments, mergers, or layoffs. Particularly in these industries, teams or cohorts are a crucial part of the organization and potentially involved in projects such as readying a new drug for FDA approval or creating new sales pipelines.
After a restructuring, the more accurate description of the new “team” is really a group of individuals. Employees will be coming into these groups most likely angry, fearful, frustrated, and confused—a terrible environment for both the managers and the team members. A team leader should also be cautious of being lulled into a false sense of complacency—conversations among members may start out at first respectful and polite, but could soon tank into uncomfortable exchanges that reflect mounting frustration and distrust. Cultures are colliding, people are confused, and trust, which is the bedrock of any team, is eroding or does not exist. The team leader will need to rise to the challenge of bringing these individuals together, and the organization’s leadership cannot risk underestimating the import of these efforts.
Create a “Team Charter”
One way to help make this transition work is by creating a “Team Charter.” Team charters help to define the purpose of the team, create the structure of the new team, and articulate the expected team outcomes. In this way, a team charter acts as a roadmap by which team members can see where they are headed, how they want to get there, and what directions they need to take. It can be a great way to integrate two separate teams or a group of individuals into one cohesive unit, all focused on the same goals. The team charter and process for creating the charter will not only help to answer the questions that result from a merger or acquisition but will also begin to build trust among the team members, which in turn will ultimately alleviate many of the lingering questions and concerns that may arise as the two organizations become one.
The precise format of team charters varies from situation to situation and from team to team. And while the actual charter can take on many forms, much of the value of the charter comes from the process of creating the charter—thinking through, discussing, and agreeing on the various elements, as a team.
That said, what follows are some elements to consider when developing a team charter to help the team get focused and moving in the same direction. The team leader should have everyone plan time over several days to discuss and work on the components, while helping the group understand what’s really behind their differences. By doing so, the charter can be used to pave the way for the team to create its own path and direction that blends the best of both cultures and organizations, and brings a group of individuals together as a team.
Managers should adapt the following elements to their team’s specific situation. These eight initial ideas will start the process:
1. Our Vision: Have the team discuss the purpose of the team, and reflect on why this grouping exists.
2. Team Values: Talk about what shared values the team needs to guide how it approaches shared work and work with each other.
3. Our Objectives: As a result of becoming a team, think about what will be accomplished, and how these accomplishments will be measured.
4. Composition and Roles: The team leader should encourage a discussion on how the team will organize itself to accomplish its objectives. Identifying the core members of the team and each member’s primary areas of expertise is also helpful.
5. Operations: The team should determine how it will operate efficiently, and what process(es) will be used. Additionally, consideration of who needs to be involved is useful.
6. Communication and Coordination: This is especially important if the team is remote or made up of people from different locations (and even more critical if the locations are spread out over the globe). Points to cover might include how the team will communicate and what ground rules might need to be implemented. Be sure to consider time differences in this coordination, and think about if the team might want to use one specific location as the “team time zone” when referencing specific times of day.
7. Authority and Accountability: This is a great opportunity for a team leader to better delineate responsibility. Identify to whom the team is accountable, and whether individual members of the team are also accountable. Also determine how decisions will be made and who will be involved with which decisions.
8. Resources and Support: Look at which stakeholders the team needs to work with or communicate with, and determine the how and why behind this. Also think about the best way to access additional expertise if needed.
To ensure the success of this newly emerging organization, the team members of both companies need to work well together. The only way team members will be enthusiastic about collaborating is by openly talking through their cultural differences, as well as their respective organizations’ values and beliefs. While this discussion can begin in earnest during the team charter process, this will not be an easy conversation—and it won’t be a short one either, given the number of differences standing in the way. But through being consistent, proactive, and transparent, a newly formed team—and a newly formed organization—will quickly become much more than the sum of its parts.
Sidebar: 10 Tips to Keep in Mind during a Merger or Acquisition
1. Ensure transparency. Throughout the entire process, executive leadership should set the example to be clear and explanatory.
2. Constantly communicate. People feel reassured and more at ease when they feel like they have information. If possible, determine a communication schedule so employees can know when to expect updates.
3. Pay attention to people managers. Ensure they stay updated and are proactively keeping their teams informed, and encourage them to seek out information when they don’t know an answer.
4. Be clear about change. Everyone should understand that there will be change. Set this tone as early as possible, and emphasize the positives as much as possible, while also being honest about the negatives as appropriate.
5. Be ready for a change of culture. The merger or acquisition will create a newly formed organization, which will undoubtedly have its own new culture. It will take time for this new culture to emerge, so the first year will be uncertain.
6. Offer the “Three Answers.” The Harvard Business Review article, “Three Answers Every Employee Needs,” provides some advice on this topic from Betty Jane Hess, the former head of Arrow’s acquisition integration team. “When we make an acquisition,” she said, “every employee has just three questions: 1) Do I have a job? 2) Who do I report to? and 3) How will I get paid? Until they get answers, nothing else matters.”
7. Prepare for layoffs. If layoffs are expected, HR managers need to be prepared to carry out these layoffs in a positive manner. Whenever possible, offer other job opportunities, retraining, or outplacement.
8. Remember the impact. A merger or acquisition not only affects the individuals of both organizations, but also vendor and customer relationships. This new structure may be happening internally, but it absolutely affects external relationships as well.
9. Keep the consultants informed. Although easily overlooked, it’s helpful for consultants, and other external partners like vendors or suppliers, to be kept as informed as possible—not only can they potentially provide help, but this communication also fosters the foundation for positive long-term relationships.
10. Welcome questions. Creating an environment in which employees feel safe to ask questions is important; providing honest answers will go far to instill trust and cultivate loyalty.