September 24, 2024
Stuart Ducoffe—Founder, e2r
An employee has devoted twenty years of their life to the company. During that time, they’ve worn the company golf shirt to every event, promoted the company over its competition and spent countless unnoticed hours getting the work done. And then, without warning, it happens—the dreaded sale of business announcement.
Practical Concerns
The underlying concerns for employees in this circumstance are typically perceived fears regarding one or more of the following:
- Loss of job
- Who their new leaders will be
- Whether their position will change or they’ll move to a different team
- Whether their compensation/benefits/pension will change
- Whether company culture will change
How To Mitigate
It’s said in real estate the most important consideration is location, followed by location, then followed by location. In the same way, the most important consideration in an acquisition is communication.
Although there are sensitivities that surround any potential acquisition including legal, financial and market considerations, the company should seek to communicate as much information, in as fulsome a manner as possible, as soon as possible. Unfortunately, many acquisitions prioritize the corporate/business/legal aspects of the deal to the exclusion of employee considerations. This failure can give rise to uncertainty that leads to resignations, poor morale, reduced productivity and absenteeism due to mental health conditions.
The Town Hall Meeting
Organizations that recognize the importance of employee communication will elect the methodology that works for them. Typically, companies implement some form of “town hall” meetings where impacted employees meet representatives of the purchaser, together with their leaders, and have the opportunity to ask questions. This approach signals to employees a unified direction for the organization together with a willingness to be transparent. These town halls can lead to more individualized meetings, which build on disclosure and further the objective of transparency.
Key Employees
In certain situations where the organization is committed to the nondisclosure of the transaction until closing or immediately prior to closing, it’s typically preferable that, at a minimum, certain key employees receive advance notification. In doing so, the organization is signaling to these key employees that their contribution is valued and will continue to be valued following the acquisition. It also signals to these employees that the organization fully trusts them with this highly confidential information.
The Employee Ask
Although employees constitute a fundamental part of any acquisition, the understandable genuine perceptions of target company employees are often sidelined in the frenzy of the business deal. Given the importance of employee perceptions, however, it’s fundamentally important vendors and purchasers ensure they prepare and implement a robust employee communication plan.
Post Closing/Career Pathing and Training
Although employee concerns immediately after an acquisition remain focused on perceived fears, typically there’s an additional concern which gets added to the mix—career pathing. This refers to an employee’s opportunity for growth within the organization and the organization’s allocation of resources in support of that growth. It’s widely recognized that employees are more engaged if they perceive the organization offers the opportunity for individualized career growth and provides relevant training to achieve that growth.
Since employees are operating with these perceived concerns immediately following an acquisition, the acquiring organization should promptly articulate the fulsome opportunities for career pathing within the organization, and related training. This goes a long way towards allaying worries and establishing a positive optic about the acquiring organization going forward.
For employees, acquisitions can introduce a lot of uncertainty. But when approached carefully, it can be a great opportunity to articulate the potential the situation presents for everyone.