Like marriage, solid foundation is needed in corporate mergers, where taking the time to build trust pays off in the long run.
Imagine you work for a firm that is acquired by another company. The news about the upcoming acquisition can often cause anxiety and raise a lot of questions. Will there be lay-offs? What will happen to me? Uncertainty fueled by mistrust arises among the personnel causing suspicions towards the unknown. The situation is so common that researchers have named it “the merger syndrome”. Symptoms of it vary from mass resignation of the skilled workforce to the stress and burnout of those workers who stay. But is there any way to avoid this?
Integrations should start with people instead of systems
Yes, there is hope and better ways to manage these situations. My recent research suggests that before integration of technical systems, firms need to start the integration with people. Trust and interpersonal relationships between parties of the acquisition affect strongly on the outcome of the integration. The results show that when the acquirer’s managers put effort into trust-building in the early phases of the integration process, it really pays off in getting the acquired workforce on board. These trust-building activities include: demonstrating competence, meaning that managers behave professionally; benevolence, which means managers caring about employees’ welfare; and reliability, meaning managers being trustworthy and predictable. The use of trust-building activities help in building interpersonal relationships between people and among teams.
What to do in practice?
First and foremost, parties of the acquisition should get to know each other on a more personal level. Arrange site visits and take time to build trust and a good rapport between organizational members. Involve employees to participate in developing the new procedures, this will increase their commitment to actually follow those procedures. Remember to communicate – explain the reasons if expectations of the personnel cannot be met. Also give the personnel a chance to “clear the air” and feel that they have been heard. When the acquired personnel can rationalize and understand the reasons for the changes they need to adopt, they can better accept also the more rigid systems and rules. Finally, providing acquired personnel help and assistance in dealing with the possible difficulties that occur is vital for successful integration.
When interpersonal relationships have been formed between the parties, it is easier for the acquired personnel to ask for help and assistance. Without this support, workers may try to bend the rules or hide any failures. Therefore, giving support is important for overall efficiency of the firm. Trust and good interpersonal relationships form a good base for organizational members of merging organizations to work together towards mutual goals and succeed also in the future.
In the end, if mistrust does not belong to a happy marriage why should it prevail in corporate mergers?
Marjo Väisänen is a doctoral researcher who will defend her PhD Thesis on management accounting and control in the context of mergers and acquisitions on 10th June 2022. One of her articles was published in one of the top scientific business journals: Contemporary Accounting Research in the summer of 2021. Check out Väisänen on LinkedIn.
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