Part 1 - Identifying the Conflict
There’s at least a 34% chance that an investment in an organization will be adversely affected by destructive conflict within the team. The statistics – and stakes – can go even higher when the investment is in the form of a merger or acquisition.
The human aspects of post-merger implementation of M&A deals have been studied thoroughly in recent years, and what they find in a large number of cases is that the merger, a good match on paper, fails in the transition process. Many companies focus on the financial and business systems transition, but don’t pay attention to the human factors until it’s too late. Cultures clash, employees leave, production declines, shareholders are unhappy, things fall apart. This has even been dubbed a “merger syndrome.” A study by KPMG found that “83% of all mergers and acquisitions (M&As) failed to produce any benefit for the shareholders.” The overwhelming cause for failure that was reported? People and cultural differences.
Why do M&As fail in the transition phase?
Think about it: Out of two separate companies, you are bringing together two sets of people, cultures, missions, roles and responsibilities, work styles, team dynamics, and it’s happening on every level of the organization. Some employees are going to stay, some are going to go, and paychecks are likely to get adjusted up or down. Everyone is going to be required to make some shifts, and they don’t know when, how or, sometimes, even why.
These are some of the issues that come up for employees as well as leaders, cited in the studies and that we see in our work with client teams:
● Lack of trust in the leadership, their new boss, or their new team
● Feeling out of alignment with the ‘new’ common mission and purpose
● An ‘us vs. them’ sense as one aspect of a company culture competes with the other for survival
● Anxiety over their security and future: Will I still be vital to the company?
● Resentment as they face changes they don’t like, ways of working they’re not used to, or training they feel forced to take
And so…Conflict arises.
Conflict is the underpinning of change
Make no mistake - Conflict is the underpinning of any type of change. When change happens, emotions and stresses get stirred up and overflow in a potentially destructive way.
And the extent to which a company facing their M&A transition manages that conflict and the culture of the new organization determines how – and if – it will succeed.
This is why we at Resologics are giving focus to M&A transitions and other forms of change management. Because we know conflict and we know this: It’s not good or bad, or something you can guard against like you guard against the flu. Conflict is something that naturally occurs, and when it can be perceived as a normal consequence of daily work, then it can be expected, addressed and managed before it becomes destructive.
Beating the odds of merger failure - embrace conflict
Clashing cultures and trust issues running rampant do not have to derail a merger transition or change process. Here is a quick outline of what needs to happen for a smoother process and successful result:
1. Start with a shared vision for success and the right guidance.
2. Bring together the leaders who are responsible for the post-merger implementation effort early on in the process.
3. Task them with creating a plan that 1) shows sensitivity and understanding of the cultures that will be brought together and the effect this may have on everyone involved; 2) aligns leadership around the plan; 3) listens to and communicates with employees, and engages them in the process.
4. Essential throughout the process: Face, address and manage conflict in a constructive, productive way.
In an upcoming blog I’ll share three powerful ways to prepare your team for change. Whether you are involved in a merger transition, change in your department, or improving your team dynamics, these practices will engage your team to build trust, interact more constructively, and align around a common purpose.
If you would like to know more about managing conflict for your team, check out our Team Diagnostics and Assessments page.
Leave us a comment below on your experience with change in your organization – successes? Challenges?