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Mergers and acquisitions (M&A) are on the rise in 2011, and industry analysts predict more than $3 trillion in global M&A activity for the year. Too bad that most of the deals will fail.
By all accounts, 70 percent of M&A deals fail to create value. And, according to one recent study, half even destroy value. An abysmal record.
So, why do the majority of M&As fail? Simple: the people side of the deal—so critical to success—is too often ignored or overlooked. Executives focus on the business and financial issues but not the human issues. As a result, employees—who, at best, feel marginalized—lose trust in leadership. An us-against-them mentality ensues, and workers withhold the talent and energy required for a successful merger.
The good news is that merging executives can circumvent the most common mistakes—trust-busting failures of leadership during M&As. Here are seven such failures and how to avoid them:
1. Failure to acknowledge what’s happening.
Pay attention to red flags—the warning signs of broken or eroded trust. Are workers disengaged? Are teams missing targets? Are business units operating in silos? Also, acknowledge, preferably in a public way, that you know that the situation hasn’t been easy, from untold uncertainties to clashing cultures. Tune in to how people respond, and show them that their views matter. A little acknowledgment can go a long way in helping employees feel better.
2. Failure to hear people out.
Provide employees with nonthreatening environments to express their feelings so emotions don’t go underground. Regular feedback sessions at all levels can help people reflect on where they’re at; how they lost their confidence, commitment and energy; and what it will take to regain it. Additionally, employee surveys and focus groups can be beneficial.
3. Failure to provide information.
Make sure no one is moving ahead blindly. Help employees feel involved and in the know by sharing as much information as possible. Also, by tuning in and really listening to people, you’ll be able to communicate in ways that are most relevant to their primary needs and concerns.
4. Failure to put the situation into a larger context.
Help workers see the bigger picture by sharing the business reasons behind the merger or acquisition—why it’s happening, what makes it the best course of action, and how the company will be better as a result. In addition, encourage people to look at how their individual choices can help—or hinder—their own situation.
5. Failure to take responsibility.
Own up to your mistakes and, by creating a safe, open environment, help employees do the same. Acknowledge lessons learned. As an organization, commit to concentrating on problem solving, not blaming.
6. Failure to help people move on.
Challenge employees to buy into the company’s future, starting with the new opportunities it offers them. They might not forget the present perils and pitfalls, but, with some encouragement, they can choose to look forward rather than stay stuck in the past. A key ingredient here is engagement—helping people re-energize and recommit.
7. Failure to walk the talk.
Finally, successful M&As demand artful, authentic leadership, and that starts with consistently walking your talk. If your actions and behaviors don’t match the vision and values you claim for yourself and the company, your credibility as a leader is lost, and, especially for employees, the merger’s mission is nothing more than meaningless words.
Dennis and Michelle Reina, Ph.D.s, are experts on workplace trust and co-authors of Rebuilding Trust in the Workplace (Berrett-Koehler) and Trust and Betrayal in the Workplace (Berrett-Koehler). They are co-founders of the Reina Trust Building Institute, a global enterprise specializing in measuring, developing and restoring workplace trust. Contact them at reinatrustbuilding.com.
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