Years ago a corporate lawyer in London said this about acquisitions: “Just do it and sort out the people issues afterwards.”
In the past once a deal was officially signed the acquired company was “dumped” on HR/Compensation to handle the integration. There was no time to plan for it, retention plans for key employees were delayed, employee engagement and productivity plummeted and most importantly there was no communication plan. Employees had questions and HR/Compensation had no answers. Bottom line -- integration was a disaster.
This is sad news because studies in the past 10-15 years consistently show that as many as 40% of acquisitions fail mainly due to people issues.
I can think of no other times in a company’s life when communication is so important to employees than during a layoff or an acquisition. And since everything we do in compensation is communication, Compensation professionals need to shine.
Regardless of how compensation will be structured between the two companies after the acquisition is final, employees on both sides will be concerned about what is happening. To ease their uncertainty, there must be a communications strategy -- and that means taking a proactive stance. You have to think ahead and have a good communication plan already mapped out before the deal is done.
The plan should include what information will be delivered at what times and how at various stages for the first 12 months of integration.
Letter of Intent (LOI)
Communication between the LOI and official closing may be legally limited. Information Compensation needs to conduct a due diligence will probably be the only communication allowed.
Between LOI and closing
In addition to analyzing compensation of the company and making recommendations, prepare a communication plan for after closing. The plan should include what materials to use in town hall-type meetings, small group meetings, website FAQs, mailings to homes, e-newsletters and other communication channels.
Immediately upon close
**Hold compensation training sessions for all management at the new company to enable them to answer employee questions.
**Hold employee meetings to communicate details of new compensation/benefits plans and policies and timing of any changes.
**Show employees “before and after” differences in plans/policies and provide rationale for decisions.
**Communicate individual pay packages in one-on-ones with the manager.
For instance at Cisco, a high tech company in Silicon Valley, Compensation has a job title, salary, bonus/commission/stock (if applicable), benefits and intranet access ready for every employee in the acquired company on Day 1.
**Insure consistent information. You don’t want managers giving conflicting information. If this happens it will cause confusion, distrust and the belief that the company doesn’t know what it’s doing.
**Conduct monthly/quarterly small group meetings with randomly selected groups of employees to identify concerns/problems that need clarification.
**Appoint trained "champions” in each department to answer employees’ questions if they don’t feel comfortable asking a manager.
**Update FAQ’s as needed on intranet.
**Work with executives from parent company to prepare a schedule of site visits/employee meetings -- one Director/VP visit to each location each month for 12 months.
**Distribute a "who's who" directory of HR/Compensation contacts for managers of the new company to use if they have questions.
It is important to understand that communication cannot take place just once. It needs repeating on an ongoing basis throughout the first year to insure that everyone understands his/her compensation and believes it is fair.
One last pearl of wisdom: The “four no’s of communication” are: no secrets, no surprises, no hype and no empty promises.
Have any readers “survived” an acquisition? What did you learn about the importance of communication?
Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career. Her true love is working with local national issues. Jacque has the following certifications: CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA. She belongs to SHRM, Human Capital Institute and World at Work. Jacque has been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.