Merger Anxieties during a Pandemic
Human nature abhors change and at the same time is weary of uncertainty about the future. A merger between two companies brings out both uneasy feelings to the forefront. Mergers are not new and have been happening since the “Greater Merger Movement (1893–1904)” of the nineteenth century, yet those most affected by these mergers always undergo conflicting emotions. On the one hand there is the heady excitement of a dynamic and expanded business with new possibilities, ideas and synergies while at the same time there always lurks a fear of the unknown, countless what-if scenarios and fear of failure.
An acquisition creates more anxiety than a merger but in both cases its always the fear of ‘us’ versus ‘them’. In any merger secrecy is key, yet it inevitably creates a deficit of trust amongst the employees of the merging companies. Not knowing the specifics of a deal can be frustrating and worrying. All companies some more than others provide details about the proposed merger and its future direction — yet there is a tendency to assume negative connotations by reading between the lines. Even when the respective company cultures are known there is a disposition to regard them with a weary eye. Companies that have gone through successful mergers (T-Mobile — Sprint) have one thing in common — ‘us’ versus ‘them’ dynamic was minimized by both. C-suite executives of both T-Mobile and Sprint demonstrated ironclad commitments for the success of the merger and thus played a critical role in minimizing us versus them thinking.
Trust is always the first causality of any merger — even successful ones. High level executives have the unenviable task of walking a tightrope between expectations and realities. Being transparent in such cases is sometimes not allowed legally or perhaps no one knows how things will play out. What makes sense on paper may not translate exactly in real life situations. Best way to reduce the trust deficit is to emphasize ‘continuity’. Merger induced organizational changes including reorganizations, technical changes, changes in hierarchy, business expansions will be supported more by employees if leadership communicated a vision of continuity despite the uncertainty and unforeseen changes in the future. Studies have consistently shown that mergers between companies were more effective in collecting employee support when leadership was more decisive in harnessing employee collaboration for the change, measured through employee surveys and supervisor ratings of employee behaviors.
Culture compatibility is another roadblock to a successful merger and yet it is not high on the to-do list of companies in pre-merger negotiations. A cultural assessment by the leaders of the merging companies is seldom done thereby kicking the can of issues stemming from incompatibilities further down the road. Most famous example of this is the merger between Amazon and Whole Foods some years ago. On paper it was a win-win situation for both players — leveraging Amazon’s vast distribution network to put Whole Foods organic groceries in hundreds of stores while collecting shopper data. As Whole Foods CEO John Mackey famously opined about the merger, ‘love at first site’. The love relationship soured quickly when the competing cultures of Amazon (tight structure and unwavering precision) and Whole Foods (loose structure and high profit margins) couldn’t coexist. This scenario was completely predictable and could have been avoided if efforts to mitigate this culture clash were discussed beforehand. Companies that are cognizant of differing cultures and spend time on finding solutions proactively do have successful mergers. For every unsuccessful merger due to cultural incompatibility (AOL/Time Warner, Office Depot/Office Max) there are ones that succeeded (Exxon/Mobil, Disney/Pixar) when a ‘cultural prenup’ was worked out in advance.
Mergers can create competition or stifle it; depends on the viewpoint you subscribe to. According to Professor Benjamin Gomes (Brandies University) there are multiple kinds of competition that necessitate a merger — Horizontal, Vertical and Disruptive. Horizontal mergers occur when firms compete in the same market (Staples/Office Depot, Hughes/Haliburton) and are most common. Vertical mergers are the ones when buyers and suppliers get together — these are few and far between. A rare type of merger is due to disruptive competition. In view of Professor Gomes this kind of competition is considered good for consumers and employees as the resulting business model upends the existing order in an industry.
T-Mobile and Sprint’s recent successful deal is a prime example of a merger designed for creation of disruptive competition. It can be argued that this merger falls into the horizontal competition bucket but due to T-Mobile’s image as a disruptive ‘uncarrier’ in the wireless industry it unquestionably is a disrupter.
Anxiety felt by employees during a merger is natural — good or bad it will not do any good to suppress or deny it. People should focus mainly on what the merger means for them. I have had countless discussions about merger anxiety and fear, but one simple and enduring advice has remained foremost in my mind. Employees who are anxious will focus on whether their basic needs (job, health, supporting a family) will be met (Maslow’s Hierarchy of Needs). While it is natural for any employee to be feeling this way, yet it takes their focus away from work hence production suffers. Management’s role should be to emphasize the importance of focusing on what they can control and to stop worrying about things not in their power.
Anxiety if harnessed correctly can be a useful tool during mergers and acquisitions. Employee focus should be on things that can be controlled and within their power. Its easier said then done but following the suggestions below can make an employee feel in control of his or her path forward.
Invest in multiple ‘selves’ — When you are uncertain about the future and do not know where you will be; explore different ‘selves’ instead of sticking to one. Learn to excel in multiple things instead of focusing on just the work you were doing. Multiple selves can give you confidence and a diverse portfolio of options instead of just sticking to one (your-self). It will not be an easy endeavor to develop multiples selves, but this will be the time to do it by exploring, asking around and thinking. One advice I remember vividly was given to me by my manager some years ago, he told me to develop my brand. I did not understand it fully then, but it makes a lot of sense in this anxiety prone merger period. Jennifer Fondrevay (DAY ONE READY founder) is very clear when she advises, ‘when experiencing a merger or acquisition, know your values; do not wait for the company to tell you what it is’.
Do not do Us versus Them — Do not let ‘us’ versus ‘them’ thinking ruin you, this is a rabbit hole best not visited. If you go down this path you will in effect be showing a distinct lack of teamwork and overshadowing your personal achievements until now. Most probably you will stand out as a person who has not or will not accept what has been done while most others have already moved on and embraced the change. Not a good position to be in when management comes looking for individuals who can provide leadership and believe in the power of teamwork and most importantly adapt quickly. Job losses typically occur in mergers and acquisitions as companies try to streamline efficiencies and reduce redundancies. This causes great consternation within the employees of both companies; trust is eroded as a result because earlier communications about the direction of the merger may not play out exactly as envisioned in the end. In employee’s perspective this is akin to a game of musical chairs between ‘us’ versus ‘them’.
Who will have a chair when the music stops? This kind of thinking is counter productive and should be avoided. An employee should direct his or her focus on being part of a successful ‘merged’ team and how they can contribute fully.
Talk It Out — Networking has never been more important than now in the uncertain times of Covid-19 pandemic. Networking is not only with the people you know but also with those you do not. Relationships with people you do not know very well will maximize your chances of learning things you otherwise would not find out. It is difficult for a single person to have a flash of insight but talking it over with people who respond, sympathize, question and provide advice is one way to find the right way forward. Nowadays in the context of social distancing it is tough to meet people but with a bit of creativity it can be achieved (online, outdoor walks, patio meetings, barbeque weekends).
A simple act of talking to others does wonders for your anxiety and apprehension for the future. It will reduce stress; you will gain valuable information that you did not know before and will possibly open new avenues which can be promising.
Seek Advice — Simple as it sounds yet surprisingly a lot of people do not seek advice when they find themselves in a difficult spot during a merger; this can be due to ego, misplaced self-confidence or simply embarrassment of asking for help. It is also human nature that when you are in a vulnerable position at the risk of losing your job, clear thinking is not an utmost priority. Now is the perfect time to seek support of people who can provide timely and trustworthy advice about your career options. Create a smaller group of advisors from your broader network of contacts to advise you. Reach out to your smaller group without any hesitation and do not hold back any information about your skills, capabilities and other characteristics that will help you during this transition. Be as honest about yourself as possible and clearly describe what you want to do and where you would like to end up. Never consider the possibility that you know all there is to know — you do not. By seeking advice, you are also signaling that you are open to change and can adapt wherever you may find yourself when the music stops.
Always keep a sunny and optimistic demeanor, project positivity and never broadcast pessimism about the future. Think of mergers as an exciting adventure full of opportunities and new career paths. Thinking otherwise will only make you miserable about the events you cannot control.
