In this segment of “Office Optional with Larry English,” Larry shares five best practices to keep in mind when merging remote companies.
According to one study, one-third of acquired employees will leave in the first year of a merger or acquisition. Merging companies can cause uncertainty and stress for employees who must quickly pivot to new organizational norms and policies.
When the two companies are remote, the M&A integration process can be even more hazardous — the lack of in-person work can slow down the absorption of a new culture and leave acquired employees feeling adrift and disengaged. A smart integration plan that focuses heavily on culture training, with an initial prioritization on in-person get-togethers, human connection, and small personal touches, can help the merging of remote companies go more successfully.
In Remote M&As, Culture Integration Is Everything
If two companies have wildly different cultures, the integration period following an M&A is going to be bumpy, to say the least. The study cited above found cultural misalignment to be a main driver of attrition of acquired employees.
To ensure the success of an M&A process with two remote or hybrid companies, leaders should understand the cultures at play, including where values align and diverge. How do both organizations live out their culture virtually? How do they ensure employees remain connected and engaged, even though they don’t spend much time together in person? It’s important to explore these questions when first considering an M&A deal.
For example, when my company, Centric Consulting, started the process of acquiring a cyber risk management firm — Centric’s first M&A — it was clear from the beginning that both organizations had cultures emphasizing flexibility, trust and accountability, and both had mastered collaborating remotely.
M&A Best Practices From a Merger Of Two Remote Companies
Almost a year after Centric completed the acquisition of a cyber risk management firm, talent retention remains high. Below are some additional M&A best practices and lessons learned throughout the process of integrating two remote organizations:
Lean heavily on culture and lifestyle integration in messaging to employees.
When employees first hear about an M&A, their first concern will likely be how the change will affect their daily life and work. Will they still have the same work-life balance? How will they be compensated? Will they be able to retain the same level of flexibility and autonomy? Will there be requirements to show up to an office?
Address these fears as early as possible with transparent, clear communications on how the two cultures align and what will remain the same after the deal goes through. “It makes for a much smoother transition when you can say ‘We know we share a lot of the same values, here’s how we’ll be incorporating that into our new combined organization,” Kelly says.
But also acknowledge any cultural differences. Even companies that seem to have similar cultures are going to have some subtle — but key — differences. For instance, maybe one company is more meeting-heavy, while the other has regular meeting-free days. Or perhaps one company is much larger than the other, which comes with a lot more processes and measurements and a different, often less nimble, way of collaborating. It’s also important to note not all cultural misalignment is negative. The acquired company may benefit from improvements in process and culture.
Remember, the devil is in the details.
Think through the small, less obvious ways the two organizations differ and proactively acknowledge how those differences might impact the acquired employees’ work experience.
To quickly get Centric’s new, acquired employees up to speed, everyone attended an M&A culture training session that outlined working norms and core values and helped everyone understand what would be different and what would remain the same.
Train early on operational processes.
Related to the point above, as much as possible, give operations managers lead time on policies, procedures and cultural norms. Operations managers at the acquired company will be fielding a lot of questions from their team, and the more you can arm them with insight and knowledge, the easier they’ll be able to address concerns and help employees feel more comfortable with merging companies.
For example, one misstep during Centric’s acquisition of the cyber risk group was a lack of communication early on about how the two organizations differed in title structures. As a result, some acquired employees initially felt they were getting a demotion through the deal.
Proactively bring people together as early in the M&A integration process as possible.
For virtual companies, strategic and semi-regular in-person engagements are crucial for reinforcing remote culture and deepening relationships established virtually. During an M&A process with two remote or hybrid teams, it’s important to bring people together early on to help acquired employees start to feel a sense of belonging and build relationships with their new team members.
Kelly notes that volunteer or community events can be an especially impactful way to offer a shared experience to bring people together and strengthen relationships.
“Getting in front of people who aren’t in the office in person sooner rather than later is important,” she says. “During any kind of change, people can feel disconnected or have questions. The more they lack that personal touchpoint, the more they end up filling in the blanks themselves and acting on their assumptions.”
Remember, acquired employees aren’t the same as new hires.
A new hire has a chance to get a feel for your culture and expectations during the interview process and ultimately makes the choice to work for you. An acquired employee does not. In other words, emotions might be high following the announcement of the M&A, and among employees’ first concerns will be how the change will affect their daily work and work-life balance.
During onboarding, make sure these employees have all the same training you’d give a new hire, but make extra space and time to handle any sensitive feelings, concerns and questions. These employees may also be coming into your organization with an already full workload, so it may not be feasible for them to complete onboarding in the same timeframe as a new hire.
At the end of the day, don’t lose sight of the fact that, yes, merging companies — remote or not — can be a chaotic, intense and disruptive process. But the employees involved are humans who mostly just want to do a great job, build a fulfilling career, and live their lives outside of work.
“When you look at M&A from an integration perspective, employees fundamentally have the same needs,” Kelly says. “They want to be treated with respect. They want to have input into decisions that affect them. They want to feel like they can have a career and a manager or somebody that they can trust.”
As in most aspects of business, the human stuff is the most powerful. The cyber risk employees Centric acquired said some of the most impactful parts of the M&A culture integration were the small touches, like personalized handwritten notes.
Bottom line: If you can anchor your M&A integration process with that understanding and keep the focus on culture, you’ll have a smoother integration and better retention of acquired talent.
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