Help Employees Thrive During Disruption

When employees feel they have no control over their futures or fear what comes next, productivity, innovation, and collaboration stall.
Vanessa Akhtar and Laurin ParthemosAugust 30, 2021

Mergers and acquisitions and corporate restructurings have a lot of commonalities. For example, restructuring requires working with finite resources by trimming or reorganizing to optimize business performance without sacrificing long-term viability. Similarly, an M&A post-deal integration process frequently unearths challenges while consolidating departments and combining cultures that were not discovered (or considered) during the pre-deal due diligence process, complicating well-laid integration plans.

Most importantly, both efforts too often fall flat as leaders struggle to maintain trust and buy-in during a company’s difficult transition.

Vanessa Akhtar

As a leader, how can you navigate these major organizational shifts? The best leadership approaches are informed by the emerging science of change — concepts, principles, and tactics that help guide organizations through complex transformations. The following strategies based on those principles offer a better way for chief financial officers and leadership teams to handle significant structural change.

Lead with Empathy

Companies that want to maintain pre-change levels of productivity and buy-in will need to increase collaboration and communication well in advance of any final decisions. That includes engaging junior and middle management staff. Unfortunately, they are frequently left out of these strategic conversations early in the process. When employees feel that they have no control over their futures or fear what comes next, productivity, innovation, and collaboration stall. If that happens, a transitioning company is unlikely to realize (in any reasonable timeframe) the anticipated value or growth goals associated with an M&A deal or restructuring plan.

How Startup CFO Grew Food Company 50% YoY

How Startup CFO Grew Food Company 50% YoY

This case study of JonnyPops’ success highlights the unusual financial and operational strategies that enabled rapid expansion into a crowded and highly competitive frozen treat market. 

Leaders feel pressure to project confidence and certainty through these organizational changes. But there is power in establishing an authentic and transparent work environment, making space for people to share their questions or concerns. That, in turn, allows individuals at all levels to create stronger relationships and trust across the organization, moving it cohesively toward the intended end state.

Survive vs. Thrive

One startup we worked with purposefully held M&A meetings outside of working hours to shield employees from the natural trepidation of a potential sale process and ensure day-to-day business results were maintained during the negotiations. This typical behavior is meant to protect firms from an intellectual property and proprietary information standpoint. Leaders also viewed it as shielding colleagues from any anxiety about the uncertainty of the post-deal reality. However, this behind-closed-doors approach only led to a level of mistrust and the activation of employees’ “Survive” response.

Humans are hardwired with a built-in threat-seeking radar, which activates our sympathetic nervous system. When triggered, we go into fast problem-solving mode with a laser focus on dealing with the threat. However, when this Survive response becomes overheated — which is common for both restructurings and merger integrations — we get burnt out and lose sight of other opportunities and innovative ideas.

The antidote is to activate the “Thrive” channel, an opportunity-seeking radar. Thrive activates our parasympathetic nervous system and is correlated with our desire for innovation, openness to change, and willingness to seek new opportunities. As our firm saw when a client merged with a rival company, it’s critical to help employees understand what will be possible through a successful M&A or restructuring. Communicate as early and as often as possible and use the inspiring articulation of the future to engage employees in crafting the path to get there. Support them along the way, allowing their energy and passion to catalyze meaningful action that generates tangible results. That further reinforces Thrive.

Step Outside Silos

While the C-suite may be aligned on the need for a restructuring effort or the potential value creation associated with an M&A deal, efforts often stumble when they move from high-level strategy to tactics. Competing priorities, a desire to protect one’s team, and the demands of keeping the day-to-day business running tend to limit leaders’ ability to think (and act) holistically. However, to be successful, perspectives throughout the business are critical to spotting risks and potential opportunities.

Laurin Parthemos

For example, a CFO may be hyper-focused on the cost of integrating systems after an M&A deal. At the same time, the chief operating officer is concerned with role redundancies. The chief human resources officer is prioritizing retaining top talent. Breaking down these silos allows leaders to look at all the pieces on the table, so they can get ahead of potential missteps, inconsistent communications, or actions that will exacerbate employee mistrust.

Breaking down silos demands a level of transparency between leadership and the broader organization to help employees understand what’s expected of them and what’s possible when working cross-functionally. That allows the company to operate as a team that can work together through uncertainty and change — regardless of title, levels, or departments.

Prioritizing Culture

M&A deals are largely brokered for inorganic growth or strategic positioning, but acquirers must also consider the corporate culture and other intangibles while assessing targets.

Although buyers often overlook culture because it can be hard to measure, attention to it is crucial for retaining top talent, encouraging a healthy, productive workplace environment, and promoting innovation. Valuable employees may have a heightened sense of Survive, leading to significant key-person risk, when they face the prospect of being acquired or restructured. Focusing on organization- and department-level engagement as a success measure (including retention of top talent), rather than just financial outcomes, is imperative in driving sustained business performance and innovation beyond the adjustment period.

Vanessa Akhtar, Ed.D., is a director at Kotter who works on the firm’s most complex transformation engagements and helps drive research and development. Her new co-authored book, Change, details how leaders can leverage challenges and opportunities to make sustainable workplace changes. Laurin Parthemos is a principal at Kotter who advises senior leaders on operational excellence and efficiency, financial performance, and the deal process.

Image by kalhh from Pixabay