M&A in the Age of Employee Disengagement

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Scope Mergers & Acquisitions are initiated to transform a company.  This requires initiating a culture transformation.

Tracy Levine, CEO, Advantage Talent, Inc. Tweet

Disengaged employees will find a way to leave.

Scope Mergers & Acquisitions are Used to Transform Companies

In 2018 Mergers and Acquisitions flipped from majority scale to majority scope deals. (Bain & Co.)  Corporations are actively taking steps to transform their businesses in order to stay competitive in a Global Economy.

The new filter for Mergers & Acquisitions includes the question, ‘how will the transaction transform the business and create expanded revenue opportunities?’

Scope mergers & acquisitions are used by companies for the following reasons:

  • To gain access to new markets
  • To expand capabilities through expanding resources
  • To expand geography
  •  To introduce new products and services that complement current offerings
  • To introduce new products and services that are outside their current industry or wheelhouse
  •  To improve their company brand to be more in line with employee, customer, client, vendor and consumer demand for socially conscious companies
  • To increase cultural diversity and inclusion
  • To acquire Top Talent and Next-Gen Leaders 

Scope Mergers & Acquisitions Require Creating a New Culture NOT Integrating Cultures

Scope Mergers & Acquisitions are initiated to transform a company.  Successful transformation requires initiating a cultural transformation.  A McKinsey survey found that 92 percent of business executives felt that past M&As would have “substantially benefited” from a more rigorous culture due diligence process.   Even more troubling, various studies have observed that between 60% and 70% of key leaders and top talent leave within the first year after a Merger.

In the age of employee disengagement, M&A culture due diligence is critical for evaluating how to create a new culture that is first-class.   A first-class culture is an Add Value First Culture™.  Every employee wants to work for a first-class company.  A successful scope merger is dependent on the new company’s ability to present an easily recognizable first-class culture, to develop Leaders that act on sustaining a first-class culture, and to get C-Suite buy-in that having a first-class culuture is critical for protecting EBITDA.

A First-Class Culture is an Add Value First Culture™

The traditional way of approaching culture due diligence and culure integration does not work in the age of employee disengagement.  The most recent research from Gallup shows that 91% of employees who switch jobs do so to “leave their employer” not because of a better career opportunity.

Implementing an Add Value First Culture™ framework is critical to protecting EBITDA outcomes.

Find the Systems Leaders.

It takes Systems Leaders to create an Add Value First Culture™.  Authoritarian Leadership is out.  Selfless Leaders are in.  Successful merger inntegration is dependent on training or hiring Systems Leaders that proactively use resources to create a first-class culture. 

What makes System Leaders different?  “Like many leaders, they tend to be smart, ambitious visionaries with strong skills in management and execution. Unlike traditional leaders, they are often humble, good listeners, and skilled facilitators who can successfully engage stakeholders with highly divergent priorities and perspectives.”  (World Economic Forum)

Systems Leaders will execute on creating and maintaining a first-class culture that is a magnet for Top Talent and Next-Gen Leaders.

Plan a culture that improves your employees' professional brand.

Best steps for planning a culture that improves the employees’ professional brand.

  • Include your intention to create a culture that adds value for all stakeholders in your vision and values statement.
  • Create S.M.A.R.T. Goals for measuring employee stakeholder success that is included in every leader’s KPI review.
  • Clearly define the resources available for employees to upskill so they can create a Professional Brand that keeps them relevant, influencial and in-demand.

Communicate the intended culture early in the process.

The majority of employees are not key players in the discussions that precede the merger.  Most of the information that trickles through to employees is secondhand and thirdhand knowledge.  It is the equivalent of the childhood game of telephone.  Even a great messsage gets distorted when dissemination is not communicated in the right way.

Best steps for communicating your culture plan include:

  • Be transparent with what resources, time and money, have already been allocated to execute on the plan.
  • Be transparent about who within the organization is responsible for execution, including what S.M.A.R.T. KPIs will be included in their employee performance review.
  • Use data insights to determine a customized message to each group of employees based on their values and the way they like to receive information.
  • Use marketing experts to create the customized and targeted messages and materials that get to “yes” and “buy-in” of the new culture by top talent.

Opportunity for Building A First-Class Culture

A Scope merger is a great opportunity for building an engaged and high-performance culture.  Left unaddressed, disengaged cultures will destroy your M&A outcomes.

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