How Change Management Creates Challenges - and Opportunities

by Rosie Powers on Sep 19, 2018 8:00:42 AM

Mergers and acquisitions can be an exciting change for companies, as these opportunities can create innovative growth at almost every level of an organization if executed properly. But change is difficult - especially change management.

The challenge is no secret. Mergers have a failure rate of almost 70 percent, according to McKinsey, as they are especially high-risk due to the fact that they tend to span longer lengths of time.

Yet with each of these challenges is an opportunity for cultural, managerial and organizational growth. Here’s how.

 Side view of executives shaking hands during a business meeting in the office

Challenge: Employees Feel Left Out

A popular challenge with change management is transparency. Data from our Engagement Study shows that transparency is the number one factor contributing an employee’s satisfaction with their job.

If employees feel as though a large-scale merger or acquisition was largely conducted by C-suite executives behind closed doors, they may feel as though they have no influence over their role or the direction of the company at-large.

 

Solution: Communication and Collaboration

As with any challenge relating to transparency, communication is the first step that managers can take to ensure that employees feel up-to-date with the direction with their department or company at-large. As we discuss in our Beginner’s Guide to Great Leadership, use team meetings and one-on-one check-ins as an opportunity to communicate relevant updates to staff. This also provides time to hear out and address any concerns they may have about the change.

Create a communications plan with leadership to determine how the change will be communicated both internally and externally at your organization. Ensure that all staff members clearly understand the meaning and impact of the merger or acquisition. This can be done via a series of town hall-type meetings, or published as a series of blogs and internal e-newsletters. If the change is public and large enough, work with leadership and your marketing team to create a marketing kit that articulates the move as well as additional resources for staff who may be communicating with the public about it.

There should also be a process in place for handling internal and external questions or concerns about the change. Who should be accountable for answering these questions? If this involves leadership outside of your marketing or PR teams, ensure that those leaders know their responsibility to respond, and provide them with guidelines for how they can discuss the change.

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As Charece Newell writes for Forbes, an acquisition committee is another essential for change management. Newell recommends including at least one representative from Human Resources, Information Technology, Finance and Operations, and an employee advocate or team lead to ensure that all departments are included. This may be even larger depending on your company or industry.

This committee is essential for two reasons. In line with keeping transparency, it allows each department a voice during the transition. This enables clear communication of changes ahead of time through this representative, and also gives employees a channel with which to express questions or concerns. This is also effective in boosting transparency and morale because this line of communication gives departments a role in the change. By answering questions and soliciting feedback, this committee gives employees and managers an opportunity to feel ownership over the change - and thus more emotional investment in its success or failure. According to McKinsey, when people are truly invested in an initiative, it is 30 percent more likely to stick.

 

Challenge: Change Fatigue

A merger or acquisition that is poorly planned can end up taking many unexpected turns, causing employees to grow weary of the change as a whole. According to a survey by Strategy&/Katzenbach Center, 65 percent of respondents reported this as a problem during a large-scale company change they witnessed. Perhaps timelines are extended, or certain crucial parts of the merger were not thought out. This adds fuel to the fire of bad morale for the employees who may already oppose the change as a whole. But even for employees who support it, a convoluted transition - and a lack of management over it - can lead to burnout.

 

Solution: Share Responsibility

Slip-ups happen. But with a more structured planning process, your organization can be ready to hit the ground running in the event of a problem. For every stage of the change, plan not only for what will lead to the successful completion of that stage, but also an alternative plan for if things go wrong during implementation.

Responsibility is also key. Leaders should not be the only people in your organization with responsibilities tied to the change. Ensure that employees and managers at every level are aware of their role in the transition as well as the company at-large. According to the Strategy&/Katzenbach Center survey, 44 percent of participants reported not understanding the changes they were expected to make during a company merger. Ensure that employees understand the impact of their role as a part of the whole transition, also honing in on specific action items that should be completed as milestones throughout the change.

Additionally, the acquisition committee mentioned above helps with implementation by allowing leaders an ongoing status update about how the integration is working at the department level. Regular committee meetings give leadership an opportunity to spot integration problem areas and quickly propose solutions.

 

Challenge: The Change Isn’t Sustainable

According to the Strategy&/Katzenbach Center survey, 48 percent of respondents said initiatives floundered because the company lacked the skills to ensure that the change could be sustained over time.

Three people discuss data points on paper at a meeting

As Charece Newell writes for Forbes, these failures in change are often the result of poorly planned integration approaches, incorrect target identification or delayed implementation.

 

Solution: Leadership Honesty

When evaluating a possible merger or acquisition, ensure that multiple members of leadership are involved with its inception. Is the proposal just a pie-in-the-sky idea by one executive? As Strategy + Business reports, a well-aligned group of executives is paramount for ensuring that leadership agree on the case for change as well as how it will be implemented across the company. Although an idea may sound great to one leader, others should feel comfortable expressing their concerns over it.

This is important for ensuring buy-in from management working with these leaders as well. According to a study by The Economist Intelligence Unit Limited, 21 percent of respondents cited a lack of commitment by senior management as a reason for change initiative failure. If an executive is not in favor of a change, it is likely that this sentiment could be shared by managers and employees they work with. This poses a challenge for transition within that department.

Use the pre-planning stages to determine milestones for staff, and more importantly, how the success of those milestones will be measured. The Economist Intelligence Unit Limited study found that 31 percent of respondents cited a lack of clearly defined or achievable milestones and objectives to measure progress during a change initiative failure. Utilize frequent check-ins with employees to ensure that they understand their responsibilities during the change, and that managers and leadership have a method of measurement for the completion of those tasks.

 

Challenge: Cultural Resistance

Here at TINYpulse, we’ve written about the importance of culture in such areas as employee satisfaction and staff retention. It turns out, culture is just as important when it comes to change management. According to the Strategy&/Katzenbach Center survey, 84 percent of respondents said that culture was critical to the success of change management. What’s more is that 64 percent felt that it was more critical than the change’s strategy or operating model.

Why does this have such an impact? As we’ve written previously, peer relationships are crucial to company culture and staff retention. Thus, the sentiments about a merger or acquisition between peers can have a domino effect. If the change also seems to lack a presence of some of the company’s core cultural values, managers and employees alike may be uninspired to support it.

 

Solution: Begin With Culture

Begin any large-scale implementation planning with culture. A lack of connection with these elements may cause employees to question the change, as well as the future direction of the company as a whole. In the planning stages of the initiative, leadership should ask themselves: Does this change connect with our organization’s overall vision or values? Ensure that your company’s internal and external communications plans elaborate on the initiative’s connection to organizational values. This will help guide a more seamless integration into company culture.

 

Conclusion: Think Ahead When Possible

While it is impossible to plan for every unforseen problem along the way, the more pre-planning that leadership can do when considering a merger, the better. By considering all possibilities, leadership is forced to look at the initiative outside their viewpoint, evaluating how these changes will impact other managers, employees, and even the company at-large.

 

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This post was written by Rosie Powers

Rosie is a digital marketing strategy consultant and freelance writer focused on helping nonprofits, socially-minded startups and small businesses engage with audiences. She is passionate about environmental justice and loves nerding out about space exploration.

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