Mergers and acquisitions (M&A) represent significant milestones in a company’s journey. However, with this comes a period of uncertainty and change for many employees. Maintaining employee engagement, motivation, and involvement throughout the M&A process is pivotal to ensuring a smooth transition and sustaining trust and commitment as a new entity emerges.
The importance of employee engagement during M&A
Employee engagement refers to the emotional commitment and involvement employees have towards their organisation as an employer, towards delivering a great customer or client experience, and towards the ambition, vision and strategy of the company. Listening to your people throughout the M&A process is pivotal in ensuring a smooth transition, sustaining trust, and maintaining or improving employee engagement. This is crucial for several reasons:
Productivity: engaged employees are more productive and committed to their work, ensuring that business operations continue smoothly despite the changes
Retention: high engagement levels reduce turnover rates among your top talent. Our data suggests that newly acquired employees who are engaged are twice as likely to want to stay with the firm after a year than those who are disengaged
Morale: engaged employees contribute to a positive work environment, which is essential for fostering collaboration and innovation during the transition period. Our research shows that nine-in-ten newly acquired employees challenge themselves to innovate and actively look to collaborate with different people across the firm if they are fully engaged
Trust: engagement builds trust in leadership and the new organisational direction, which is critical for successful integration. Our data from one client organisation told us that 92% of engaged employees from the newly acquired firm also reported high levels of trust and confidence in their leadership team following the merger; this was nearly twice as much as the disengaged population
Customer or client service delivery: highly engaged employees will continue to focus on the end customer or client, even during a period of significant change. This is vital to retaining customers and clients for the future success of the newly formed entity
Common challenges in maintaining engagement during M&A
Sadly, many organisations struggle to maintain levels of engagement among their people while in the midst of M&A activity. Our data shows that engagement levels can drop by between five and fifteen percentage points during any integration process. This can be for a number of reasons.
Uncertainty and anxiety: employees often experience anxiety about job security, changes in roles, and shifts in company culture during an M&A
Communication gaps: ineffective or inconsistent communication can result in misinformation, rumours, and a lack of clarity about the merger’s impact on employees
Resistance to change: employees may resist changes brought about by the merger, feeling attached to the old ways of working and sceptical about the new entity
Leadership misalignment: differences in leadership styles and practices between the merging entities can create confusion and erode trust in the new leadership. They can also cause tensions and a drop in engagement among leaders themselves
Loss of identity: employees may struggle with a sense of loss as the identity and culture of their original company change, affecting their connection to the organisation
Five strategies for maintaining engagement
Our work has identified a number of ways organisations can maintain and improve engagement levels among their people as M&A activities are happening. The thread running through all of these is simple: active listening. Leaders need to be very intentional about implementing the kinds of activities outlined below to ensure that, as they move along the integration journey, employees are fully engaged with what the organisations are jointly trying to achieve in the future:
- Continuously assess the level of employee engagement through surveys, feedback, and other metrics. Use this data to identify both areas of strength and improvement, taking corrective actions promptly. Regular check-ins and pulse surveys can provide insights into employee sentiment, the main drivers of engagement, and how these might change at various phases of integration
- Involve employees in the process: invite employees from both organisations to contribute to integration planning and execution. Create cross-functional teams to work on integration projects and gather input from employees on how to merge best practices. This involvement fosters a sense of ownership and reduces resistance to change
- Foster a unified culture: work towards building a cohesive culture that integrates the best aspects of both organizations. Engage employees in defining the new company values and behaviours which will, in turn, shape the new, combined culture. This inclusive approach can also help in creating a shared identity and vision
- Set clear expectations for leaders and help them align: many integrations fail at the top of organisations. Without clear expectations and efforts to create alignment amongst the top teams, leader engagement can also fall and impact on business continuity and growth. Leaders will need to get to know each other, learn how to build trust and agree common ways of working to help the integration succeed
- Empower managers: equip managers with the tools and training needed to guide their teams through the transition. Effective management is crucial for maintaining engagement and motivation deeper into the organisation. Managers (as well as leaders, of course) should model the desired behaviours, communicate effectively, and provide support to their teams.
The route to success
Maintaining employee engagement during mergers and acquisitions is critical to the success of any integration process. By prioritising transparent communication, involving employees, providing support, fostering a unified culture, empowering leaders, and monitoring engagement levels, organisations can navigate the complexities of M&A more effectively. Engaged employees are more likely to trust in the new entity and contribute to its success.
At ENGAGE, we specialise in helping organisations maintain high levels of engagement during transitions, ensuring that your M&A efforts lead to a high performing workforce. We work with senior leadership teams, HR teams and your people right across the organisation to enhance engagement.
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