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The Human Side of Mergers

August 15, 2002
Related Topics: Mergers and Acquisitions, Featured Article


TO:    Managers and Supervisors

FROM: Vice President of Human Resources

DATE:   During any Merger or Acquisition Process 

RE:        “The Human Side of Mergers”

A merger is viewed by most individuals as a major life change similarto the loss of a job or loss of a loved one, which may negatively affect staffbehavior. The purpose of this paper is to: 1) more specifically define whatstaff members’ feelings are likely to be during a merger; 2) what are someresultant behaviors that you would expect to see; 3) and finally, what are somepossible actions that we can take to minimize the disruptive aspects of themerger. The goal would be not only to have our staff accept change brought aboutby the merger, but also to readily participate and initiate change in a positivesense. 

What Feelings Are Your Staff Likely to Have During this Period?

“Hardinessin the face of a major life change is a result of high self-esteem.”Unfortunately, the announcement of the merger coupled with many of the traumaticexperiences that have gone on in the last nine months have worn down themajority of our staff members’ “hardiness” and many are experiencing doubtand lowered self-esteem. More specifically, many of the feelings that they maybe experiencing include: 

Violations of Expectations:

Each of our staff hashad future plans that have been actually or potentially thwarted because of thecurrent situation and the merger. These plans included expectations on jobadvancement, salary progression, use of stock, retirement, profit sharing, etc.An example might be the bitterness of a staff member who had been using stockpurchase as a savings account for the college education of hischildren. 

Fear of the Unknown: 

Not only have staff members’ futureexpectations been shattered; there is a chasm that has not been filled as towhat the future holds. There is a strong desire to fill this information gap andto gain more control over one’s destiny. This often sends staff outside of thecorporation to look for a job, any job, just to ensure that they have morecontrol. 

Loss of Autonomy:

Staff members have had a great deal of pride of ownership and belonging tothe corporation. This belonging has been highly prized as an aspect of their ownpersonal worth. In spite of assurances to the contrary, it is perceived thatcorporate autonomy and, therefore, self-worth, have been significantly reducedthrough this proposed merger. 

Fear of Streamlining: 

In some cases thismay be a well-founded fear over the possibility of continued employment, atleast as it is now defined. 

Animosity Toward the AcquiringCompany: 

Another logical outcome of some of the bitterness created by theother feelings is to strike out at an easy target and often this is theacquiring company. If these feelings are not refocused in a positive direction,they can have a significant, negative impact on the integration of the newcompany. (This bitterness may also be directed at our owncompany.) 


Again, as the result of the above fears,depression is likely to set in and a feeling of a significantly diminishedself-worth is a real possibility. In essence, our strategic plan had been to bea “swallower” as opposed to a “swallowee” and those tables have turned.For our highly talented staff who have been consistent winners, the impact of“perceived loss” can be especially depressing. 

What Behaviors Can WeExpect During This Period? 

The attitude of an individual has a profoundeffect on his/her behavior. The following are several behavior traits that youcan expect to see and have probably already seen in your staffmembers: 

Ineffective Performance: 

  • Procrastination 
  • Absenteeism 
  • Wandering around the floor and chatting 
  • Excessive gossip 
  • Long coffee breaks 
  • Avoidance of customer 
  • Unwilling to take appropriate risks

Loss of Perspective: 

  • Usually decisive staff become unsure
  • Dwellingat length on minor issues
  • Small concerns blown into major problems
  • Withdrawal from the job, hiding, not getting involved, keeping a low profile


  • Impatience
  • Irritability
  • Critical of management/other staff
  • Problems with personal relations
  • General burnout characteristics


  • Apathy
  • Avoidance of dealing with unknown problems
  • Looking for another job, either inside or outside the company

What Can We Do? 

It seems almost trite to say that communicationsand strong, empathetic leadership are the necessary ingredients to overcomethese problems that staff are feeling. If you view a merger as a process and notan event, one can see that the process does not respond to planning andpreventive action. 

That process can be divided into two basic phases: 1)the merger announcement and immediately following, and 2) thetransition/integration period. Employee needs for communication are different ineach of these phases. Communications are needed to reassure and steady our staffat the time of and immediately following the merger announcement. Communicationsthat direct and organize our staff are more relevant during thetransition/integration period. More detailed suggestions on what types ofinformation to communicate and how to communicate follow for each of thesephases. 

However, common themes throughout should be: 1) be an empatheticlistener in your dealings with your staff, 2) significantly increase thepersonal contact between you and your managers and key staff, 3) put change inthe context of being beneficial to your staff, and 4) be orderly and have a goodplan of action during this period. 

Communications That Steady (CurrentPhase) 

Major Themes:

  • Expect change.
  • Stick to your knitting -- to the extent possible, keep businessas usual.
  • Reassurance -- stress the fact that the acquiring firm needs good people justas much as our company did and it’s in their best interest to retain ourstrong performers.
  • Praise -- catch your staff doing the right things and give immediate positivefeedback.
  • Minimize, to the extent possible, disruptions during this period.

 Actions to be Taken: 

  • Stress one-on-one personal contact foryourself and your managers and their key staff. 
  • Find ways to have small group,personal interactions with your key staff members.
  • Be empathetic.
  • Listen--listen carefully, and be open and honest in addressing staffconcerns. Good listening skills involve two basics: 1) paying close attentionand concentrating on the speaker, and 2) interacting with the speaker byreflecting, probing, supporting or advising. Remember, your staff isn’tnecessarily expecting answers but they are expecting you to listen to theirconcerns.

Communications That Organize and Direct (Transition Period) 


In this phase, staff members are over this emotionalism and arelooking for fact-based information. They ask questions such as: 

  • “What kind of company will we be?”
  • “What’s our mission now?”
  • “How do they treat their staff?”
  • “How do benefits and pay plans compare? Will they be impacted?”
  • “What is their culture, management style, etc.?”

 Actions to be Taken: 

  • Since many of the issues your staff membersare concerned about are out of your direct control, concentrate on those areasthat you can control: 
  • Now is the time to ensure that our work is well organized, roles are welldefined, and again, people are sticking to their knitting.
  • As information becomes available, the timeline and any other informationconcerning the merger should be well communicated to all staff.
  • This is a prime time for team building, through the involvement of staff inthe issues that are affecting them and in the determination of how integrationwill impact their functions.
  • It is extremely important in this phase to share whatever information isavailable very openly and in a non-manipulative, non-games-playing manner. If anindividual’s job will be discontinued, he/she should be told as soon aspossible and a plan of action for eliminating that job and moving him/her into anew position should be laid out.
  • Finally, to set the stage for positive integration, we cannot condone anynegativism towards the acquiring firm. We must recognize and deal immediatelywith any anger and bitterness that comes to the surface and redirect it in apositive fashion. 


To the extent staff members believe thatchange will benefit them personally, they will much more readily accept change.We will greatly increase the probability of a very positive transition period ifwe capitalize on the employees’ “what’s in it for me” syndrome. We cando this by: 1) pointing out the positive aspects of the merger on a verypersonal, one-on-one basis with each staff member, 2) being empathetic andlistening carefully to staff members’ concerns and feelings, and 3) managingin a very orderly and strong manner.

SOURCE: Reprinted with permission from “BestPractices in Mergers and Acquisitions,” Watson Wyatt Data Services. For moreinformation, visit or call (201) 843-1177.

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