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WHAT IS MERGER AND ACQUISITION?
Mergers and acquisitions (M&As) are different ways companies are combined. Entire companies or their major business assets are consolidated through financial transactions between two or more companies.[i]
WAYS TO MANAGE EMPLOYEE TRANSITION IN A MERGER & ACQUISITION TRANSACTION
Organizations employ various strategies to manage employees during mergers and acquisitions, with communication emerging as a critical factor in facilitating transparency, managing expectations, and building trust. Employees are usually worried during mergers and acquisitions of companies regarding their job security. There are different ways one can manage employees’ transition during Mergers and acquisitions, and they will be discussed below.
1. Transparency and communication
Concerns regarding inadequate communication and transparency throughout the Merger and Acquisition process are frequently voiced by employees. They want to know the specifics of the merger or acquisition, how it is progressing, and how it will impact them.
Without this knowledge, staff members worry about how the merger or acquisition might affect the corporate culture and their positions within it.
2. Security of employment
Layoffs are one way that mergers and acquisitions affect workers. Business executives frequently reorganise the target organization during the transition, making numerous positions obsolete and drastically cutting employees.
Regardless of an employee’s background or credentials, this unavoidable practice frequently takes place. Because of this, many workers who are going through mergers or acquisitions are concerned about their job security.[ii]
3. Integration of cultures
Two corporate cultures combine to form one during a merger or acquisition. It can be difficult and disruptive to both firms’ current workflows and standard procedures to establish a single culture and set of values.
The target organization’s managers may decide to modify or eliminate certain current procedures.
Employees may be concerned that workplace relationships will change after years of using well-known processes, and they may be unsure of how they will fit into the new organizational culture.[iii]
4. Employee Involvement and Participation
Organizations should recognize the importance of fostering employee involvement and participation as catalysts for successful mergers and acquisitions.[iv] Their involvement and participation help in fostering collaboration and innovation.
CONCLUSION
During a merger or acquisition, handling personnel transition is essential to a seamless integration and preserving staff morale. The keys to easing employee anxieties and fostering trust are openness, unambiguous communication, and steady leadership. The greatest worry is still job security, which can be addressed with open dialogue and helpful resources to lessen anxiety.
In order to guarantee alignment and reduce disruption, merging different corporate cultures also calls for meticulous planning and participation from staff members at all levels. Organizations may manage the challenges of M&A and transform the transition into a chance for expansion and innovation by promoting involvement, promoting candid communication, and exhibiting empathy.
In the end, effective personnel management throughout an M&A process can create the groundwork for a more robust and cohesive organization in the future.
[i] https://www.investopedia.com/terms/m/mergersandacquisitions.asp
[ii] https://velocityglobal.com/resources/blog/employee-concerns-during-a-merger-and-acquisition/ accessed on 16/12/2024
[iii] https://velocityglobal.com/resources/blog/employee-concerns-during-a-merger-and-acquisition/ accessed on 16/12/2024
[iv]https://www.researchgate.net/publication/380501799_Strategies_for_Managing_Employees_during_Mergers_and_Acquisitions accessed on 16/12/2024
Written by Elizabeth Oyinlola for The Trusted Advisors
Email us: info@cms.trustedadvisorslaw.com