From long meeting with legal counsels to very spirited ones with investment bankers, accountants, and valuation experts, negotiating a business merger is no walk in the park. With so many things at stake, there are chances that you might forget to factor in as a significant part of your business – employees.
Granted, they are not equity partners who stand to lose or gain a great deal from the mergers. However, it’s their hard work, loyalty, dedication, and sacrifices that helped your business achieve its set goals. Many have invested long hours, some at the expense of their personal lives. The fate of your employees should factor into your negotiations because they matter too!
Doubtless to say, the coming merger will herald in a lot of changes that will affect them. For those that do not get laid off, they will have to deal with significant work culture changes. When not handled properly, these changes could affect employees’ productivity and ultimately that of newly-merged companies.
To avoid this, here are 4 tips which according to Harvard Business Review can help employees stay productive as they adapt to the imminent changes they are bound to experience:
Prepare to negotiate culture
In addition to negotiating price and other financial terms, organizations discussing a merger need to negotiate culture. Leaders should start by conducting a cultural assessment to understand how people, practices, and management reflect tightness or looseness in both companies. They should determine the pros and cons of their current levels of tight-loose, as well as the opportunities and threats posed by merging cultures. How might sacrificing some discretion for structure, or vice versa, enhance or harm each organization? Above all, they should identify areas for compromise: Tighter organizations need to identify domains where they can embrace greater looseness, and looser organizations need to think about how they can welcome some tight features. We call these flexible tightness and structured looseness, respectively.
Construct a prenup
Once merging organizations better understand the strengths and weaknesses of their company cultures, they should develop a cultural integration plan that articulates which domains will be loose and which will be tight. Mutual input about how each company will change — and a formal contract documenting those changes — can help ensure long-term success. When Disney bought Pixar in 2006, Disney CEO Robert Iger agreed to a set of ground rules for safeguarding Pixar’s looser culture. For example, Pixar employees weren’t required to sign employment contracts with Disney, were free to choose the titles on their business cards, could decorate their cubicles and offices as they wished, and could continue their annual paper airplane contest.
Everyone across both organizations needs to be informed about the integration plan. Simply explaining what the changes will be is not enough; people need to know why they will be implemented. Communicating openly and gaining broad acceptance for changes will help minimize the threat people feel from new ways of doing business. People in tight organizations might feel their control is being threatened. People in loose organizations might feel their autonomy is being threatened. Leaders need to be culturally ambidextrous — or demonstrate the value of being both tight and loose, and work to address employees’ underlying fear of change.
Embrace trial and error
Finally, organizations need to be prepared to reevaluate their original integration strategy. No matter how foolproof the plan may seem, issues are bound to arise.
For instance, after its acquisition of Whole Foods, Amazon increased its standardization and employee surveillance at Whole Foods which had positive business outcomes — prices dropped as much as 40% on certain items — but it was also hard on the company culture.
Amazon now has an opportunity to learn from these results, and possibly incorporate some of the looser cultural elements that Whole Foods employees value. For example, Amazon could create a better balance between the time people spend on logging inventory and organizing store shelves and the time they spend interacting with customers. Likewise, there may be more domains where Whole Foods can relinquish some of its unstructured business practices. For example, using Amazon’s expertise in data science and logistics, Whole Foods has an opportunity to gain better customer insights and provide its clientele with services that are not only personal but also customized and consistent.
Negotiating tight and loose in organizations takes work, but patience and a willingness to make sacrifices can help merging organizations overcome some of the most difficult challenges. How will the Amazon–Whole Foods partnership pan out? It’s too soon to say, but spending more time on integrating their cultures could help.
Without having to think about the imminent changes, the mere thought of your business being merged with another is enough to send employees into panic mode. Before it gets down to this, get proactive at ensuring that the process of transition and adaptation is seamless. Your employees can still maintain their productivity. A business merger can be a win-win for everyone.