We often talk about change leadership within an organization: Whether the organization is changing their software, the sales function, or the entire business focus, having the right leadership is crucial to success. And in many cases, leadership starts with the president or CEO - it's important for the person at the top to be a positive, engaged role model for the change.
But what happens when the change is happening in an M&A (mergers and acquisitions) context? In those cases, there is often more than one person 'at the top' - each organization has a president or CEO or chairman, and it may not immediately be clear which of them will, ultimately, be in charge, or who will ultimately wield more power. This can create serious problems for change management, particularly in change leadership.
A few years ago, the British Journal of Change Management published a study in which several organizations were studied over the course of 7 years. One of their findings was that during the M&A process, change was derailed when individual workers felt that change had been imposed on management, rather than being led by management.
It's not surprising: In most mergers and acquisitions, one company is seen to be dominant, while the other feels like it's getting 'swallowed up'. It's not unusual for the senior leadership of the 'swallowed' company to feel like they're just marking time until their position is made redundant and they're given a nice severance package. It's hard to lead anything - including change - if you're just waiting for your pink slip, even if that pink slip is going to come with a lucrative cushion. And that's the best-case scenario. If the merger/acquisition has been acrimonious, there may be active negativity emanating from the executive suites.
When leadership figures appear to be ambivalent (or actively disparaging) about the changes happening to the organization, two things happen:
- Leaders stop being leaders: When leaders appear disengaged from the process, they stop leading and start looking like they're just victims of change. That's when employees start feeling like the change has been 'imposed' on the leaders - and start seeing their former leaders as fellow 'victims' of change. It's hard for anyone to lead much of anything when everyone's feeling sorry for them because they're a victim.
- Change resistance becomes more entrenched: It goes something like this: "If the president, who we've always liked, isn't engaged with this merger and seems to have been unwillingly stuck with it, then it must be bad. So we're just going to keep doing business as usual, and let those new corporate overlords put that in their pipes and smoke it!" This isn't good for anyone: It makes the existing employees of the 'swallowed' company look petty and unproductive; it makes the work environment for everyone toxic; and ultimately it costs a whole lot of money, either in lost productivity or in massive turnover.
What's the solution? More attention paid to the importance of transitional leadership during a merger or acquisition. Letting the leaders of the acquired organization disengage or take on a victimized attitude is short-sighted - and costs money in terms of productivity, increased turnover, and a longer ROI horizon. Leveraging those leaders to help facilitate change during the M&A process means the new, merged/acquired organization can start delivering efficiencies more quickly.
