acquisition

Effective interdepartmental communication is paramount for high-level executives seeking to drive organizational success. Strong communication between departments fosters collaboration, expedites decision-making, and enhances overall business performance.

There have been many instances in which a manager has required something of another department, and due to difficult communication channels, has either been forced to go through an arduous process, or having to refer the matter to senior leadership. This creates a chain of inefficiencies which should be addressed to allow for a more streamlined business experience. Here are a few tips on how to establish this clear horizontal chain of communication. 

Please note that the phrase “horizontal communication” is used throughout this article. This is defined as lateral communication, which describes communication between departments, teams, and people who are all at equivalent levels.

High-level executives play a crucial role in improving interdepartmental communication. By establishing clear expectations, cultivating a culture of open communication, leveraging collaborative technologies, supporting cross-departmental training, cultivating communication champions, implementing feedback mechanisms, and leading by example, executives can facilitate effective communication and collaboration among departments. By prioritizing and investing in interdepartmental communication, high-level executives create a professional and productive work environment that propels organizational success. 

Mergers and acquisitions present opportunities for companies to streamline their operations, develop economies of scale, create synergies, and establish various other growth opportunities. Despite all these beneficial changes a company may experience, mergers and acquisitions can be a stressor for employees as there are many uncertainties. 

Undergoing mergers and acquisitions can create structural and cultural changes for organizations, leaving employees unsure of what to anticipate. Organizational changes and redundancies within the workforces of both companies can lead employees to have serious concerns about their job security. 

Even minor changes that result from mergers and acquisitions such as cultural shifts, slight process adjustments, or changes in communication channels can enhance the anxious environment and threaten psychological safety. Recognizing the emotions arising from these changes is essential for a smooth transition and continued team success. 

Here are some ways to create a more people-focused approach to navigating a team through a merger or acquisition: 

When conveying the news of a merger or acquisition it is important to consider how to best articulate the intentions of the decision. Communicating the overarching vision, company beliefs, and future of the company that led to the decision can help employees better understand the motivations for undergoing such changes. Presenting an optimistic vision for the company will encourage employees to support the new direction of the company. 

Lack of communication or poor communication can lead to the spreading of misinformation and decreased employee engagement. To prevent issues from arising with employees drawing inaccurate conclusions about future steps, ensure that there is constant communication as the process evolves. Immediately when information is allowed to be shared with direct reports, communicate the information to demonstrate that all employees are valued and informed. 

2. Ensure Transparency

Simply communicating updates to the team isn’t sufficient during uncertain times. Honest and frequent updates are most suitable for ensuring all members of the team understand how the changes will personally impact them. 

When permissible, communicate as much detail as possible about the deal's implications. Although it may feel obligatory to reassure team members that everything will work out and they won’t be negatively affected, it is important to communicate the truth. If there is a risk that the team will be impacted by layoffs or structural changes, communicate that uncertainty and work with them to develop action plans. If the team does experience negative changes as a result of the deal, it is best to avoid a complete blindside. 

3. Positive culture 

Continuing to celebrate team successes can help to improve team morale and motivation. Amidst these big changes going on within the organization, recognizing the achievements of individuals or the team as a whole can help empower the team and reinforce a positive future outlook for the team. 

Connecting these celebrations to the core values of the merged company. Aligning the celebrations to organizational values reinforces their importance within the organization. Drawing these parallels will ultimately help reassure the team that their efforts are valued and key attributes of the entire organization. 

4. Involve and Empower Team

During times of uncertainty, it is crucial to allow direct reports to be involved wherever possible. Opportunities to share concerns, feedback, or other insights will allow employees to feel heard. Providing such opportunities will allow for a smoother transition to the new organization since adjustments can be made to best support the team. 

Team involvement develops a sense of ownership. During times of uncertainty, employees may begin to search for outside opportunities. Allowing employees to make an impact on the organization through their input and inclusion in the decision-making process, will increase their sense of commitment to the firm. 

5. Provide Resources

As a manager, providing ample resources for team members to navigate these changes is a necessary step. Mentorship initiatives, training programs, or external professional development opportunities can help employees prepare for potential future steps. 

Directing team members to consult with human resources or other applicable internal resources can serve as a good reminder of the readily available options they can contact. Continuing to identify various resources that can support team members will help ensure that they feel more in control of their future and can make more informed decisions. 

6. Lead by Example 

Increased stress is inevitable when transitioning through a merger or acquisition, however, employees look to their manager as an example of how to handle these unpredictable times. Remaining composed and adaptable will encourage the team to exemplify these characteristics as well, and embody the vision of the organization. 

Exemplifying other characteristics such as prioritization of work-life balance is another key way to guide a team to stay on track. During periods of change, ensuring all team members take care of their well-being and not overworking themselves can help to prevent additional stress. When direct reports see their manager balancing their personal life and their work obligations, they will feel more comfortable making balance one of their priorities which will ultimately lead to a more sustainable work environment. 

As a manager, it is important to continue to advocate for the team and take steps to support their best interests. During these periods of uncertainty, managers serve as a guide for their team to help them understand what is going on around them. 

Determining the best method to navigate these organizational changes can be incredibly difficult. Utilizing horizontal peer mentor groups can be a powerful tool to gain insight into how others in similar situations manage their teams. Within these groups, peers can share strategies they found to be successful and advice specific to the situation at hand. 

Remember that managing a team through large organizational changes such as mergers and acquisitions is specifically difficult for managers as they must balance personal stress resulting from the changing environment along with team concerns. Strategies on how to best lead a team depend on the team dynamics and the changes the organization is experiencing. Keep in mind that big changes are stressful and personal mental health should be prioritized. A sound-minded manager will be most suitable for leading a successful team through mergers and acquisitions. 

In 1998 Daimler Motor Company Group (now Mercedes-Benz) attempted a merger with Chrysler Corporation. On paper, Daimler-Chrysler was a perfect combination. Daimler and Chrysler brought price points for different target audiences and their respective leaders had high hopes for a successful merger of the companies. Internally, Daimler had a vertical structure with enforced hierarchical roles while Chrysler used a horizontal structure with less formalities. The two entities split shortly after because they could not find a mutually beneficial culture or compromise the two hierarchical structure approaches. 

Finding the perfect team culture is challenging as is. Combining with another entity only creates additional battles for managers to face. Finding ways to maintain team or group culture through organizational changes puts a further burden on executive leadership and team managers within companies. 

In learning to deal with this new, unique workplace challenge, here are ten tips for managers in leading their teams through organizational changes:

Using the four normative stages of team development, leaders should allow teams to autonomously develop and grow into a culture that fosters specific team values. Allowing teams the time to go through the stages of forming, morning, storming, and performing to find the best-fit roles can be a daunting challenge for hands-on leaders going through organizational changes. However, by enabling new teams to flow through these changes, they will develop a productive team environment that allows a team to be efficient and effective.

2. Practice Effective Communication

Effectively communicating in times of change enables leaders to collect feedback and grow from two-way communication with their direct reports. Leaders practicing active listening will be able to voice employee concerns throughout the process of organizational change. On the flip side, leaders effectively communicating with their direct reports will provide clarity and reduce resistance to changes within a company. 

3. Use Inclusive Decision Making

In management decisions, allowing direct reports to voice concerns and opinions whenever possible will improve adaptability and allow for creative solutions that will satisfy all levels within an organizational hierarchy. Ensuring that team members feel heard and valued will foster a team culture that is beneficial to employees and executive management. Inclusive decision-making empowers company leadership to adapt from direct reports' experiences when undergoing an organizational change in addition to whole team efforts to creative problem solving that will be most beneficial to sustaining the organization's culture. 

4. Develop Employee Support Programs

If managers find that certain employees struggle with organizational changes, they should consider developing an employee support program. This may be as simple as having a point person for employees to direct questions to or creating a guide of all expected changes and how the firm will adapt. Unexpected changes create anxiety for team members that some may struggle to overcome. In dealing with anxiety in crucial conversations and organizational changes, managers need to practice caution and 

5. Prioritize Psychological Safety

In addition to developing employee support resources, a necessary concern for management should be the psychological safety of all professionals in the organization. Psychological safety can be a largely impactful aspect of an individual's ability to adjust to organizational changes and to maintain the most beneficial culture for the company. To maintain an environment of psychological safety, managers should focus on clear communication and allowing individuals a safe environment to grow and learn with the company. 

6. Foster Cohesion

In going through a merger, acquisition, or general organizational changes, establishing an environment that fosters cohesion and camaraderie can make a drastic difference. Facing changes as a united front will communicate support and community to all direct reports, especially those struggling with finding their place in organizational changes. A cohesive group also creates a safe environment for direct reports to voice concerns, opinions, or opportunities for growth. 

7. Set SMART Goals

A smart goal is specific, measurable, attainable, realistic, and timely. Managers setting team-wide SMART goals will provide realistic and effective areas for professionals to concentrate on when undergoing hectic changes that frequently disorient teams' progress. Setting SMART goals with continuous feedback is essential for the stable growth of an organization undergoing foundational changes. 

8. Celebrate Success

Celebrating successes through an organizational change brings a variety of benefits to the team working to maintain their group culture. Specifically, celebrating success at all levels will boost team morale and work to reinforce the best practices before and throughout big changes. The ability to reinforce best practices will highlight values, behaviors, and achievements that are best for the organization. In addition to moral support, acknowledgments of individuals' hard work and dedication throughout the process.

9. Collect & Utilize Continuous Feedback

The collection and use of continuous feedback is crucial to sustaining an organization's culture through large changes, mergers, or acquisitions. In collecting this feedback, consider using a platform such as AIM Insights that will aid in setting SMART goals, finding measures of feedback, and collecting the feedback year-round to provide opportunities for continuous growth across all hierarchical levels in an organization. 

10. Seek Guidance

If a manager feels that they need additional support for guiding a team through a foundational organizational change they should consider finding additional support and guidance. First, leaders should consider joining a horizontal mentorship group that will create an environment for executives and managers to speak to other professionals at their level for collective feedback and learning. Additionally, if managers feel that they need additional guidance in aiding their team, they should reach out to their company's human resources department. The HR professionals will likely have developed guides or tools that will help teams practice flexibility and adapt to continuous changes within a firm. 

Addressing organizational changes is a unique challenge with unique experiences for every team. Although a daunting challenge, managers have the tools necessary to sustain organizational culture throughout times of change. It is crucial to collect and use feedback from direct reports as the most impactful tool for determining a team's next steps, growth areas, and opportunities for learning or development. In supporting teams through organizational changes, leaders can boost employee engagement, hopefully improving job satisfaction and commitment. 

Nearly every individual will at some point in their career face an ethical dilemma. Whether that question comes from a superior or direct report, these decisions take a significant toll on mental health, psychological safety, and burnout in the workplace. 

Ethical concerns can take place in a variety of ways. Every ethical question is not as extreme as fraud or lying on financial statements but, ethical dilemmas can be seen in everyday workplace experiences. For example, consider Kelly, who is a senior manager at a large sales firm. Executives of the firm are expecting to be acquired by a much larger company and thus, are pushing for increased sales and revenue from Kelly’s sales team. Because of this, Kelly’s team members are pressured into making one-time sales so the acquirer notes better results for the firm rather than the more accurate, transparency of the expected revenue. How do these decisions affect the health and psychological safety of these parties?

To begin, these employees are now subject to immense stress to make sales, which will likely negatively impact psychological safety and contribute to burnout. Additionally, these individuals' psychological safety and mental health may be negatively impacted if they have to confront their manager or miss a sales goal. If there are pay differences due to falling short of a sales goal during this time, these individuals may become significantly dissatisfied leading to impacts on mental health, psychological safety, or even turnover. On the other hand, Kelly is now stressed and concerned that her team will not meet these sales goals and, she is concerned about what the acquirer will find once they are bought out and the sales decrease. 

Once the firm is bought, many parties may see an adverse effect from the inauthenticity of the sales revenues. For example, the purchasing company may move forward with laying off or letting go of employees because the sales projections based on the perceived recurring revenues right before the sale of the company (which turn out not to be recurring and therefore shouldn’t be in the projections) are not met. Additionally, the purchasing company may potentially alter the compensation structure of the employees, negatively impacting their motivation to work if compensation is based on inaccurate data, these sales goals may be challenging or unachievable for these employees. For example, sales and performance quotas based on projections that aren’t based in consistent results.

If Kelly approaches Michael with this ethical concern, she may see unfavorable effects, especially moving into a merger or acquisition with the firm. In discussing this sensitive matter, it is crucial for professionals to be extremely cognizant of the surrounding environment to find the right time and manner to discuss a concern without becoming accusational or placing blame on superiors. Here are 5 tips for discussing an ethical concern with a superior:

In bringing up concerns about a sensitive topic, it is crucial for individuals to maintain objectivity and avoid placing blame on the superior. For example, in the aforementioned situation, Kelly may ask to schedule a meeting and begin by saying she is concerned about how sustainable the sales are. This statement does not place blame on Michael or suggest that he is acting unethically. Rather, this statement brings up a sincere concern. Additionally, this statement does not bring up the variety of negative effects that may be possible in the situation but just focuses on the one main concern to be addressed. Kelly may also not realize the pressure Michael is under and that he might not have been the person that decided to fluff up the sales numbers but was instead following orders.
2. Propose Solutions

Continuing in the meeting with a superior, leaders should be cognizant of their attitude and propose potential solutions to move forward with. These solutions should be constructive and should directly address ethical concerns. For example, Kelly should consider offering solutions to the situation of sales data representation. Perhaps Kelly can head a new and sustainable marketing campaign for current clients or, suggest a different way to encourage sustainable sales in this situation. 
3. Highlight Possible Consequences

If Michael needs additional convincing to approach this ethical concern, Kelly should consider bringing up possible negative consequences, backed by data. For example, Kelly could share that if sales are to drop after the acquisition, her team may be downsized or, brand reputation or morale may have negative effects for the team moving forward. In this area of the conversation, individuals need to bring concerns that are sincere possibilities with adverse effects and, avoid blame placing. Being empathetic to the superior will always help both parties better understand the other and how to best move forward. Kelly could also acknowledge who benefits from having inaccurately boosted sales numbers, their proximity to everyone else at the company, and who may face consequences after the sale is completed.
4. Encourage Open Dialogue

In these discussions with a superior, managers should be considerate in finding a comparable solution for the superior's objectives to be met in a more ethically sound manner. In Kelly's case, suggesting possible solutions and then asking for feedback or other ideas to find a compromise of the way the problem is approached and the objective solution that is best for the company. Managers in this situation should also listen carefully to the superior to find any other information or data that could help find an ideal solution to move forward with. 
5. Seek Guidance

Finally, managers should consider seeking guidance in moving forward with an ethical concern. To find help, managers can consider a variety of methods. First, the manager could reach out to the firm's human resources. But, leaders should be conscious that these individuals may be required to report potential problems or concerns within the company. If an individual is seeking some mentorship outside of the firm, they should find a horizontal mentorship program or an executive mastermind group. These programs focus on building relationships with peers in other organizations at similar levels or, with more experience. Being able to privately discuss concerns with other professionals is a fantastic resource for effectively approaching sensitive topics. For example, Kelly may benefit from a horizontal mentorship by speaking with a sales manager at a different firm and learning more about how to best approach the situation from an outside perspective. This method also works to reinforce psychological safety that promotes open discussion and conversation. 

Although challenging, voicing concerns about ethical topics is crucial for companies to maintain their cultures and positive work environments. And, as leaders, managers have a responsibility to represent their direct reports and work in their, and the company's best interest. In this pivotal role, individuals can become stressed and overworked so, it is necessary for leaders to maintain clarity and thought processes in decision-making processes that will affect a whole team. 

Layoffs are an unfortunate aspect of a business’s lifecycle.

Whether a company over-hired during a period of steep growth in anticipation of potentially continuing that growth.

Or a company had a client that represented a large percentage of their total revenue leave and is trying to figure out where to come up with the revenue to pay for everyone’s salaries.

Or a company has gradually fallen on harder times and has decided that restructuring how the organization looks and operates is critical to being successful in the future.

Or a company could have had an informal layoff where they decide to not backfill positions after someone leaves and just ask those who are left to take on additional work.

They are part of a business’s natural ebbs and flows. One could argue that if a company isn’t putting themselves at risk of having a layoff (e.g. hiring to pursue new opportunities), they aren’t effectively preparing themselves for opportunities for high growth when they present themselves.

But what happens to those who are left?

Those who are left oftentimes feel a sense of survivors guilt – as if they are the lucky ones for not getting fired.

This is oftentimes quickly followed by burnout because they are now being asked to do the work of multiple people after growing accustomed to doing the work they had been doing.

Once burnout occurs, people start to formulate their own assumptions about what is next for them and the business. This narrative people create about their future fate is oftentimes way worse than the reality of the situation because the news of the layoff in the first place was likely a huge surprise and has tarnished their belief in the business long-term.

As a leader of a company, here are 3 things you can do to help build back morale after a layoff:

1.      Control the narrative

If leaders don’t control the narrative after a layoff, their people will come up with their own narrative. One leader I interviewed 3 months after a layoff her team decided to pursue shared that she heard from one of her team members that the company was about to go through a merger or get acquired. She had no idea where that news came from. As the second largest shareholder in the company, she reassured her team member that a merger or acquisition was not going to happen, but she couldn’t help but wonder where this rumor came from and how many other rumors might be flying around that she has no idea about.

To minimize surprises around a layoff, some leaders will practice open book management or sharing the financials of a business with all of the employees.

The challenge with the assumption that employees who know the financials will be less surprised if a layoff happens is that the employees don’t know how an executive team will react to multiple down revenue months in a row. Multiple down revenue months could mean no bonuses this year or it could mean layoffs. Knowing how an executive team will react to multiple down months in a row is not the job of the employees.

Companies also often face the challenge of leadership happy talk. This is the act of a charismatic leader (oftentimes the founder or CEO) who say things like “we have been around for 25 years and aren’t going anywhere!”

This talk, when times are good, boosts morale and makes people feel secure. But when a layoff happens, it completely tarnishes morale and the trust employees have in the company moving forward is severely tarnished.

Therefore, if leaders are to control the narrative for those employees that are left, they need to explicitly share why their performance justified keeping them and how that helps the business grow into the future. Leaders essentially need to reassure employees why their job is safe or else employees will assume their job isn’t safe and starting looking for jobs elsewhere.

2.      Make people feel heard

There was a prison study in which inmates were to submit feedback on the state of the cafeteria food. This suggestion box had always existed in the cafeteria but the results of the dining experience never seemed to change. Leadership in the prison wanted to get Likert scale feedback on the quality of the dining experience in the prison and to little surprise, their scores were very low.

Eventually, a leader within the prison decided to do something different. He decided to read all of the suggestions out loud in front of all of the inmates. Regardless of how feasible the suggestion was, he read them all out loud in front of everyone.

Then, something interesting happened. The scores for the quality of the dining experience at the prison improved on the Likert scale. The prison didn’t in fact do anything to improve the dining experience for the inmates, but they let them know that they were heard. 

The same holds true for employees.

I am not advocating for gaslighting the employee experience (e.g. listening to what they have to say and doing absolutely nothing about it), but what I am writing is that helping employees feel heard, even if the leader can’t do anything about their concerns, is much better than ignoring employee concerns altogether to avoid the hard conversation. 

3.      Elaborate on the why to the nth degree and repeat, repeat, repeat

Too many leaders assume that all employees are privy to all the information that the leader is and should therefore understand why certain decisions were made.

Too many leaders assume that explaining why a decision was made once is sufficient for employees to fully digest and understand moving forward.

These are toxic assumptions because employees are not aware of the information a leader has at their disposal, and although the leader may have explained the situation once to the employee, the leader needs to go further to explain the why behind the decision.

For example, a leader could share “We have decided to layoff 5% of our workforce. We made this decision because we over-hired the year prior. We were on a major upward trajectory and wanted to be prepared if the market continued to climb. Unfortunately, that didn’t happen and we let go of these employees for the sole fact that we don’t have enough business to justify having them on the team moving forward. Moving forward, we believe we have right-sized our business to be commensurate with where the market is now. As long as we are able to achieve xyz profitability, we should be able to grow a steady growth rate moving forward. When our company is able to achieve xyz profitability, it allows us the freedom and ability to grow our business in a stable way. When we are below that profitability, it puts the business at risk of going under. If the business goes under, nobody has jobs and we won’t be able to work together anymore.”

This may seem like overkill, but by being abundantly clear about how the business operates and the numbers the business needs to achieve to thrive, it empowers employees to know where they stand with the business. 

Then repeat, repeat, and repeat some more. And when you feel like you have shared this message a million times, share it one more time just to be safe. 

Oftentimes, employees will need to hear a message multiple times for them to become conscientiously aware as to what the message means and the ramifications it has on them.

Overall, building back team morale after a layoff is hard. It is the companies that can control the narrative, make people feel heard, and explain the why with enough repetition that are able to achieve success after a layoff.

 Situation: A software company that has historically served large, enterprise clients has decided to begin the process of pivoting towards implementing AI into their service offering and targeting small- to medium-sized businesses (SMBs). 

Their first order of business was acquiring an AI company that has already been focused on SMBs and hiring a Chief Marketing Officer to focus on this new avenue of growth.

Prior to the acquisition of the AI company, the company had around 500 employees - all focused on the legacy enterprise business model. After the acquisition, the company sits at 550 employees, with some of the acquired executives being let go and around 30 of the legacy staff being transitioned over to the new AI initiative targeting SMBs.

The CEO and leadership team have held multiple offsites and roundtables to redefine their new core values, mission/vision, 10-year plan, marketing plan, etc., and all of it points towards this new AI focus.

Issue: The new CMO is all about this new plan, as she was brought on board to drive this initiative, but the team assigned to her is split. Some are part of the acquired company, some are new hires, and some are legacy team members. The acquired team members and new hires, for the most part, are fully on board with the new plan, but the legacy team members are really struggling.

“If we implement AI into our processes, what if someone from our legacy client management team accidentally inputs one of our large clients’ data into an AI system, causing us to be in breach of our contract? I wouldn’t feel comfortable with endorsing or participating in anything that could present that sort of risk,” a legacy team member would share.

When presenting the CEO with this dilemma, the CEO responds with:

“We are definitely transitioning from enterprise mode to startup mode, so I am all in on these new initiatives, but our legacy initiatives are what pay for these new initiatives, and I wouldn’t want to do anything to potentially jeopardize that.”

Almost like a giant bucket at a waterpark that is filling up, waiting to dump out over a water playground, the CEO is waiting for the bucket to get a little fuller (e.g., give him more confidence that this new direction will work) before dumping the bucket out and fully embracing the new strategy at the potential risk of inhibiting the work of the enterprise clients.

The unintended consequence is that it is unclear as to when the CEO will be ready to make this decision, and everyone in the organization, no matter what side of the aisle you are on, believes that they are right. Some legacy team members think the AI acquisition was a waste of money and a flash in the pan that won't materialize. Other legacy team members are jealous they aren’t on the new AI initiative and feel they are being left behind. Some legacy team members who are on the new initiative are confused as to why this work is being done and are culture-shocked at the idea of asking for forgiveness instead of asking for permission. 

This leaves new hires questioning, “Why was I even brought in here if we aren’t actually going to commit to this work?”

In the example shared in this article, the CEO neglected to align on the problem to be solved. Instead of saying:

“Our growth is stagnating in the current market conditions targeting our current client base, and I fear we may not be able to continue growing if we continue down this path.”

He says:

“We are acquiring this new AI company that will help us target small to medium-sized businesses, and we believe that this will help us grow into the future.”

Can you tell the difference between these messages?

The first one is the hard truth, informing everyone that this change may or may not work, but that if we continue along our current path, we will be left frustrated and potentially out of business.

The second one paints a vague, rosy picture that everything is okay and that we are going to try to give something else a shot. 

The issue with the second statement is that it doesn’t provide clarity to the team about the best course of action, what the main priority is, and what the expectations are moving forward. 

It is like a secret the CEO has with all new hires that the legacy team isn’t a part of, but has heard rumors of it and doesn’t believe it is true because they have no evidence to support it is true.

Therefore, if we want to effectively lead through growth without breaking the organization, we need to be clear about the problem we are solving by initiating change, be open that the change we are espousing may not work but that the current path forward is no longer viable, and that if we all don’t get everyone to buy into this change, the consequence could be that the company doesn’t exist anymore and we all lose our jobs. Until we are upfront with our people about these things, it will be incredibly painful and difficult to lead through change without breaking the organization.