Surviving MADness

By Mitchell Lee Marks Jun 1, 2003

HR Magazine, June 2003Here's how to keep your cool during the stress of a merger, acquisition or downsizing.

Mergers, acquisitions and downsizings are difficult events for everyone. In fact, fear of job loss due to redundancy following a merger or acquisition was the No. 1 concern cited by executives in a recent survey of workplace issues. But mergers, acquisitions and downsizings are especially difficult for HR professionals.

From my experience with more than 80 of these events, HR staff members are often overwhelmed by the multiple demands they face during a transition, such as meshing plans and procedures, processing terminations and scheduling outplacement activities. Staff members also know that their own department—a non-revenue-producing staff function—is likely to be one of the hardest hit. So it’s no wonder they stagger under the workload and feel burdened by the line of employees seeking information or just a shoulder to cry on.

Organizational MADness

Organizational MADness refers to the impact of mergers, acquisitions and downsizings on short-term employee well-being and long-term organizational effectiveness. Despite the frequency of such activity, most organizational transitions fail to achieve their financial or strategic objectives.

For example, fewer than 25 percent of all mergers and acquisitions attain their desired results. And most organizations that downsize fail to achieve long-term cost savings or efficiencies beyond the cuts, necessitating multiple waves of layoffs and restructurings. Mismanaged mergers, acquisitions, and downsizings have further negative effects on employee well-being, work team productivity and customer satisfaction.

Certainly organizations need to “rightsize” by eliminating unnecessary work and responding to economic, legal, technological and consumer changes. And many firms can more rapidly achieve strategic objectives through combinations with other firms than through internal growth. If organizations did not change, they would not remain competitive.

A transition also can spark organizational regeneration. A CEO with the right mix of visionary and charismatic leadership skills can rally employees around the competitive benefits of a merger, acquisition or downsizing. A transition provides a rare chance to change corporate culture dramatically and reinforce a new way of doing things. Additionally, individuals can experience personal renewal as a result of company transitions. Although many employees stay mired in maladaptive responses to the stress and uncertainty of a transition, others recognize that in crisis there is opportunity.

HR professionals can play an integral role in helping these events achieve their financial and strategic objectives; however, this requires that HR professionals keep their heads above the waters of organizational MADness rather than get swept under the turbulent currents. Based on my experience working with HR staff in organizations of all sizes and from a wide range of industry sectors, I have seen eight ways in which they survive and thrive during organizational MADness.

1. Understand What You Can and Cannot Control

What really scares people facing a merger, acquisition or downsizing is the perceived loss of control over their work life. Even when people dislike their current work situation, they are acclimated to it and reel at the prospect of an event outside of their control potentially disrupting their status quo. Some interesting psychological research shows that when people perceive their control to be reduced, they assume it is eliminated. When a merger or acquisition puts a company “into play” or a reduction-in-force threatens the jobs of seemingly good performers, employees assume they have no control over their situation.

This is why many talented employees conclude that the only control they have is to walk out the door. And many who remain fixate on matters beyond their control: “Why doesn’t my boss tell me what is going on?” or “Why doesn’t the CEO tell us his plan?” You cannot control what your boss or the CEO does, but you can control what you do.

HR professionals can exert control by seeking information. If your superiors are not forthcoming, schedule an appointment with them. Keep in mind that superiors may be very busy with the dual tasks of managing the transition and running the core business; you may need to suggest a creative time to meet, such as taking your boss to breakfast or for a drink after work.

If your company has been acquired, contact HR counterparts at the buyer. They may or may not be able to tell you much but, at the very least, you will have established a contact in the company. Also, you may have some data that would help them; it is likely that they, too, are overwhelmed with work and will appreciate your proactiveness. You also can contact local business reporters who have covered the acquiring company and business school professors who have studied or worked with it who may be able to tell you how past acquisitions have been handled.

If you fear losing your job, don’t panic. Instead, take control and prepare a personal contingency plan to use if your job is eliminated or you decide that you don’t fit with the buying company. The plan would include everything from networking possibilities to courses or certification programs you might take to enhance your employability.

2. Learn About What Is Going On Around You

At this time, it’s important to stop and think before you act, rather than do things in a hasty or uneducated manner. Talk with people, ask questions, get information and, in general, do a “diagnosis” of the situation in which you find yourself. Organizational MADness is anything but a time of “business as usual,” and you cannot assume you know what others are thinking or planning.

For example, a former client, a senior HR director in a high-tech company, was upset when she learned she was not nominated to participate on an important integration planning team. She called me to vent, saying, “This must mean my career is over here. If they had any respect for me, they would have put me on the planning team.” I suggested she do some investigating before concluding she had no future in that firm. To her surprise, she discovered that her superiors and the HR leaders from the buying company valued her work so highly that they did not want to distract her during this busy period by putting her on the transition team.

When they learned of her interest, however, the head of HR from the buying company made a commitment to engage her in the implementation process. Note that while he did not offer her a specific job (nor could he at this early stage of the combination), he indicated that he regarded her highly enough to assume that she would be around for the long haul.

3. Learn What Is Going On Inside You

Stop and listen to yourself. Ask what emotions you are feeling and what you find fearful or exciting. Determine whether you are in control of your emotions or they are in control of you.

Most people turn inward during times of organizational MADness. Some individuals are afraid to come to terms with feelings of fear, insecurity and even obsolescence. Others are afraid to express any sense of vulnerability, fearing that it may be used against them when the roster of layoffs is drawn up.

You have every right to experience a range of emotions during a merger, acquisition or downsizing. If you deny the potential threat to your job and well-being, then you are in denial.

Find a way to express and get in touch with the emotions you are feeling as you go through the ups and downs of organizational MADness. You may be excited when you learn the buying company is committed to “world-class” HR, but angry when they drag their heels on making position announcements.

Many people say that keeping a journal during a merger or downsizing is an excellent way to understand and control their emotional reaction to organizational MADness. Keep a notebook or tape recorder nearby and record your feelings. Before going to sleep, note how you feel about that day and what you anticipate for tomorrow. While this won’t change your situation, it will help you vent negative emotions and highlight positive ones. Don’t criticize yourself or feel unusual for having these emotions—they are perfectly normal and to be expected in a transition.

4. Be Tolerant of Those Around You

A merger, acquisition or downsizing is an intense time for all involved. People whom you relied on in the past—mentors, superiors, well-connected co-workers—may not have much more information than you. And many people will be going through their own stressful reaction and simply shut down.

Keep in mind that there is no master plan and no one has all the answers. The reality is that most mergers and acquisitions are consummated with a tunnel vision on the financials. Little work is done on planning what the integrated organization will look like until after the deal receives legal and shareholder approvals. This is one reason why so many mergers fail—buyers don’t know what they’ve acquired until after the deal is done.

The same is true for companies anticipating a reduction-in-force. Leaders work hard to meet cost-cutting targets but tend not to consider how to get the same amount of work done with fewer resources. While executives think they are assuaging external stakeholders by making a one-time cut in payroll costs, they are creating a very difficult situation for surviving employees.

And, just when things seem to be going in one direction, they may shift to another. I find that the most successful organizational transitions have made important and beneficial mid-course corrections.

So stay loose and cut those around you some slack. Ask for information, but don’t be surprised if what you receive is incomplete. Find out what direction the post-transition company is headed in, but don’t react negatively if that direction changes. It is better for planners to make a mid-course correction due to competitive, technological or customer changes than to hold on stubbornly to a strategic course that is doomed to failure.

5. Be Tolerant Of Yourself

You don’t have all the answers, either, and need to cut yourself some slack as well. This is especially difficult for HR professionals who pride themselves on providing top-notch service to their internal customers and colleagues. You may have multiple demands in doing your regular activities and contributing to the transition. You may need to learn some new ways of doing things, along with new ways of seeing and thinking about things. Inevitably, something will fall through the cracks—you will miss a deadline, or the high quality that typically characterizes your work may be compromised.

Don’t beat yourself up too much. Talk with your customers and ask if deadlines can be pushed back a bit during the transition period, or if certain tasks can be put on hold until the dust settles. Do indicate that quality and service remain foremost in your mind, but start a dialogue on determining what work now is essential and what work can be postponed. Reach out to colleagues and get support when you need it. Above all, recognize that you will make some mistakes as you embrace new ways of doing things in the post-transition organization; embrace the learning opportunity in these mistakes and move forward.

6. Tell It Like It Is

One of the most common problems I encounter in organizations in transition is the lack of upward feedback to leadership regarding whether the merger, acquisition or downsizing is on course or veering away from its strategic and business objectives. The reason for this is clear: No one wants to tell the emperor he has no clothes.

But without accurate and timely feedback, leadership assumes “no news is good news” and stays the course. Only when small issues have mushroomed into major problems in productivity, profitability or retention of key talent does leadership get some inkling of the problems at hand.

Successful mergers, acquisitions and downsizings require effective upward communication. To achieve this, HR professionals can be role models for the rest of the organization. Contribute to building the best possible new organization and to a culture in which openness and honesty prevail. Speak up, point out problems and suggest improvements. You can be direct without being nasty.

One effective technique for HR professionals is, in the course of their regular work supporting line businesses, to regularly take the pulse of employee viewpoints regarding a transition.

For example, Xavier, an internal organizational effectiveness consultant for the Latin America division of a large consumer products firm engaged in a merger, used multiple opportunities to gather input for upward communication. When asked to diagnose productivity problems in a business unit, he piggybacked questions about the combination’s process and progress onto his interviews. At training sessions, he would carve out 15 minutes from the agenda to talk about the impact of the combination on employee well-being and team productivity. And, in the course of other day-to-day HR activities, he would informally inquire about people’s perceptions of how the combination was proceeding. Xavier consolidated this information and provided periodic updates to his boss (the Latin America HR director), the executives he supported and the corporate head of HR, who used that data to support anecdotal reports when discussing integration issues with the company CEO.

7. Anticipate the Next Transition

Odds are you will go through multiple transitions during your career, so keep abreast of events in your company, industry and the overall economy. If your company’s sales and profitability have been slumping, a reduction-in-force may well be in the offing. If another company in your industry has been acquired, it is likely to set off a series of copycat combinations. The oil industry is just one example. BP’s acquisition of Amoco triggered Exxon-Mobil, Chevron-Texaco, Conoco-Phillips and other combinations.

Some HR departments sponsor periodic workshops that help staff learn from a current transition to better manage future ones. In organizations like Pfizer, Motorola and Intel, I have surveyed HR staff regarding how they maintain both personal well-being and workgroup performance during periods of stress and uncertainty, shared the lessons learned at the workshops and engaged participants in discussing how to apply them to their situations.

8. Take Care of Yourself

All change—even change for the better—results in loss of the status quo. The people who study stress tell us that births and marriages initiate as much stress as deaths and divorces. So, even though a merger, acquisition or downsizing better positions an organization to achieve strategic and financial objectives, you will experience some sense of loss and a disruption to your accustomed way of doing things. Even in the best-planned and most carefully managed transitions, disappointments and difficult times will occur.

As a result you need to manage your situation and your stress. Look out for yourself, eat well, exercise and take some down time. One of the most potent stress-management techniques during a transition is to vent and talk things out with a friend, family member or co-worker. Go out dancing and let it all hang out. Or lose yourself in a great movie or novel.

Finally, try to have some fun along the way. Being in your organization at this time can be a special event for all involved.

It is possible that one plus one can equal three in a merger—with the combined organization being more than the sum of its predecessors. Although most transitions fail to achieve their financial or strategic objectives, give your leadership a chance to make this one work. And do your best to contribute to the transition while maintaining current business commitments. You can contribute by using these eight survival techniques yourself, and by sharing them with other employees wrestling with the transition.

Mitchell Lee Marks leads in San Francisco. His most recent book is Charging Back Up the Hill: Workplace Recovery Following Mergers, Acquisitions, and Downsizings (Jossey-Bass Publishers, 2003).

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