How Company Mergers Affect Employee Morale

- - Innovation

There’s a school of thought that says that the most important asset of any company walks out the door every day at 5pm – the employees. Employers hope they have shown enough respect to their staff with their version of incentive awards, to ensure the employee will want to return the next day and work to the greatest height of their abilities.
One of the most difficult tasks in business is to maintain continuity and productivity in two companies that are merging.  There are so many issues that have to be defined and redefined; a new chain of command, new job description, analysis of departmental efficiency, whether some positions need to be eliminated or some need to be added.  Will the company move into one or the other’s physical operation? Or will both companies have to move to a new location?

All of these unknowns can cause stress, anxiety, and potential for morale problems with employees on both sides of a merger.

What can owners and managers do to ease some of these concerns? There are a number of recommendations from experts of “dos and don’ts”:

  • Don’t deny change is coming. Although new management frequently believes they won’t have to make changes, this rarely happens in reality.
  • If you don’t know what changes will occur, clearly communicate that, and promise to keep the staff informed.
  • Don’t move too slowly. If restructuring is called for, on a micro level by departments, or companywide, it’s best to get to it quickly.
  • Ask employees to participate in the process.
  • If employees give advice, don’t ignore it.
  • Encourage free and open discussion among the employees regarding proposed changes.
  • Make sure employees are constantly updated with accurate information from management.  There is nothing worse than letting a company “grapevine” control the conversation.
  • Open criticism by the acquirers, of past management’s methods and practices is unhealthy.  Don’t forget there is a lot of loyalty built up among the staff of the acquired company, and causing them to believe they were “doing it wrong” is very hard on morale.

Numerous surveys of employees in merger situations have been conducted in the past; Kenexa Research Institute published their findings on

Going forward, look to improve processes and workflow, especially among merged departments like sales and production.

  • Continue to offer learning and development opportunities, providing employees with the idea that they have a future with the combined organization.
  • Make sure that workloads are reasonable. If the merger plan calls for cuts of personnel, make sure that reassigned tasks are not overwhelming, as this can cause ill-will that can spread quickly.
  • Consider offering retention bonuses and incentive awards. Recognizing valuable employees, getting them to stay and continue performing, and providing incentive awards for exemplary effort during difficult times, can go a long way towards you retaining a company’s most valuable assets.

The Birmingham Business Journal has a great article about how you can spot potential difficulties before they occur. Your goal here is simple: create a new blended team of the best employees and management by retaining staff that is productive and enthusiastic about the change. You will accomplish this through the methods above, and other systems and procedures that are unique to your own industry; clear communication, consideration of workloads, and incentive awards will all help you reach your goal.

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