Published Articles

Seven stages of grudging acceptance—
The Human Side of
Mergers and Acquisitions
©By Ray LeBlanc

The best-laid schemes of mice and men
Go often awry,
And leave us naught but grief and pain
For promised joy.”
Robert Burns

  These wise words were written more than 200 years ago in Burns’
beloved poem, “To a Mouse, On Turning Her Up in Her Nest With the
Plough.” While the original Scottish verse described plans for winter survival
of a wee mouse and the farmer of a brittle field, the poem and its familiar
quotation are nonetheless profound in the shifting fortunes of corporate
America.

  Shrinking profit margins, competition, and mutable business patterns have
been the impetus for many corporate stalwarts to reorganize, consolidate or
reinvent themselves through merger and/or acquisition. Of course, the
decision to acquire or merge is extremely complex and usually delegated to
the best financial minds in the business. Unfortunately, “due diligence”
presupposes the human element, and graphs, charts, and bottom line
numbers ignore it completely. The goal is synergy; the reality is combustion.

  After more than 30 years as a sales manager in a large Texas
communications company, I had the opportunity to play a major role in its
acquisition of a long-standing New England company. At first glimpse, the
challenge looked like a cinch. The companies were not rivals but
counterparts in their industries with similar histories and corporate cultures.
Both possessed unrivaled reputations for customer service, employee
loyalty, and civic contributions. I’m glad to say that all’s well that ends well,
but the path from there to here was wrought with potholes, rough patches,
and, perhaps, a few turned “plough” blades.

  Change is never easy, and the executives who made the
merger/acquisition decision, I am sure, envisioned a logical melding of the
two entities, but the process was far more psychological. Emotions dropped
and changed daily for employees in both companies. And, while social
scientists may debate the numbers and/or existence of corporate merger
mayhem (I am, after all, a businessman, not a therapist), seven distinct
stages evolved during the so-called period of adjustment. None was more
important than another, and each deserved respect.

  From the outset the parent company in Texas was sensitive to the New
England corporate culture and referred to the transaction as a “merger”
rather than a “take-over.” It retained the geographic name of the acquired
company and kept their headquarters offices as a “regional” headquarters.
All outward appearances were maintained, and very few employee changes
were initially made to keep the transition as seamless as possible, but top
management for each subsidiary arrived from the parent company on day
one, including me.

  1. The first stage in the merger was one of Initial Excitement. The new
management team was greeted with a mix of warmth and curiosity. The
New Englanders enjoyed our accents and colloquial language and seemed
genuinely relieved that we didn’t wear cowboy boots and bolo neckties. They
were excited at the prospect of change, i.e., that everything would improve.
Would they get raises? New computers? Bigger marketing budget?
Unfortunately, this honeymoon period was short lived as the subtleties and
realities of the merger surfaced, first of which was elimination of redundant
operations.

  2. Without intending to diminish the arduous research and brilliant vision
that the decision makers had in going forward with this merger and
acquisition, human frailty can’t be quantified and was neither a constant nor
a variable in the bottom line. Thus, the next phase was a Concern for Job
Security. Duplication in the executive ranks was the most conspicuous
target for elimination; after all, no company needed two chief financial
officers, human resource executives, media relations directors, and such
But, the back office operations and support services personnel who kept the
big machine humming were in a state of near panic. Although these
employees realized that cuts were inevitable, they seldom understood why it
had to be them. What’s worse, several positions that were considered
“management” in the acquired company weren’t so in the parent company,
and several employees fretted about their loss of status as well as their
paychecks.

  By this time, Initial Excitement was a distant memory and trust in the parent
company began to wane. Employees began to refer to the parent company
as “that Texas company.” Thus, I moved with intelligent speed to restructure
the organization while simultaneously ensuring employees that all laws and
labor agreements would be honored, All employees were given the
opportunity to interview and/or relocate for available positions for which they
were qualified. If there were none, the employees had a one-on-one
interview with their supervisor or manager to learn what factors led to their
termination, and, likewise, they were given the opportunity to vent their
emotions as well. While this may seem an awkward, time-consuming step
in the merger process, it proved good therapy for surplus employees, as
well as survivors, in coping with the new complexion of the “reinvented”
company.

  3. Once the dust settled on the new workforce, a period of melancholy
ensued which I call Longing for Lost Friends and Relationships. Some
surplus employees retired, a few took assignments in other subsidiaries,
and others found work in other industries. For the surviving employees,
enduring personal and professional relationships, not to mention carpools,
standing lunch dates, noon workouts, pinochle games and such, were in
flux. Despite resolutions to keep in touch, bonds of friendship that co-
workers developed over years of daily familiarity were stretched to the
breaking point. What’s more, some surplus, albeit disgruntled, employees
found employment with competitors.

  Needless to say, group identification—that comfy, common bond that co-
workers share—changed forever on a designated Friday at 5, and despite
those changes, business and customer services needed to continue. Try
as I might to bolster the self-reliance of the surviving employees, they were
timid, to say the least, in assuming their new roles. Instead of coordinating
functions with a friendly peer in the next building, they interfaced with
faceless names and voices in Fresno or Tulsa.

  4. Their confidence shattered as they grappled with new practices.
Consequently, a Period of Chaos prevailed. The familiar, safe, comfortable
workplace the employees once knew was gone and not likely to return.
What’s more, not all of them were in their equivalent posts—some were in
completely different assignments—and all were trying to learn new policies
and procedures while simultaneously keeping the gears turning on that
erstwhile big corporate machine.

  To confound things further, the computer system was being converted to a
more modern generation. Data was frequently garbled in transfer or lost
completely. Unfortunately, the systems support group was on the opposite
coast, and the three hour time differential gave way to numerous mornings
of unproductivity awaiting start of the west coast workday. Frustration was de
rigeur.

  5. Ultimately, however, stress and exasperation succumbed to skill, but
the fledgling organization nonetheless suffered a bout of Self Pity. So much
change in so little time took its toll on the workforce, and they lamented the
demise of the old company and spoke fondly of its glory days. They weren’t
so generous toward the new company, and, despite the fact that their hard
work was showing great promise, some remained unconvinced that it would
succeed. Some questioned their decision to remain with the new company
and a few resigned.

  I had the benefit of having spent my entire career with “that Texas
company,” and I understood the business model and why the company
conducted business the way it did. I regularly met with work groups and my
management team to explain the whys and wherefores of the practices
being implemented in an effort to expedite their acquiescence.

  6. Once the machine started humming again, the organization was beset
with a level of Passive-Aggressive Behavior, possibly the most challenging
stage of all. By all outward appearances the workforce was compliant with
the new policies and procedures, but there remained, in fact, a void of bona
fide commitment on the part on many employees. This manifested in a
multitude of trivial oversights and shoddy work habits—unintentional or
otherwise. Memos went unread and/or unanswered, deadlines were
ignored, projections had no forethought, and routine progress reports were
incomplete.

  Frequent positive communication and reiteration of the organization’s
mission helped the group move beyond this potentially destructive phase.
Appeals to the employees’ professionalism and concern for our customers
helped them refocus on the needs of the business.

  7. Ultimately the emotional duel between the acquiring company and the
acquired one was a draw as the reinvented company took on a life of its
own. After almost three years, the employees had reached the point of
Gradual Acceptance. The workday once again began with anticipation and
ended with pride. Complaints and comparisons ceased as the new group
identity came into focus. Coffee break chatter centered on kids, cars, pets,
golf scores, vacations, movies, etc. Although some might call it grudging
acceptance, its most notable feature was an inconspicuous return to
normal—and that included unrivaled customer service, company loyalty, and
outstanding civic contributions. ▲