As the business owner, it's your job to make tough decisions about staffing, retain key employees and lead your disparate staffs to unity.
Merging with another business? Here's a small business merger checklist to help you ensure a smooth transition for employees who will be affected.
Sometimes buying out a competitor or merging with another business is the best way to achieve business growth. But when you're combining two staffs, you may end up with employee redundancies, completely different cultures and inconsistent pay scales or benefit plans. Some staff members may be happy with the change in circumstances, while others may be distressed.
The majority of mergers and acquisitions fail to achieve the desired financial and strategic objectives — and that failure can often stem from HR-related factors. As the business owner, it's your job to make tough decisions about staffing, retain key employees and lead your disparate staffs to unity. A unified, positive staff will be key to the success of your newly expanded business.
A Merger Management System
Help prevent turmoil among your staff and lead employees by taking the following steps.
- Make the announcement properly. Don't let your employees learn about the merger through the rumor mill or social media. Make sure the information doesn't leak out before you're ready to share it — but share it as soon as possible. And when you're ready, make the announcement clearly, with attention to the fact that employees are wondering how this will affect them.
- Explain your strategy. Your employees will be more interested in staying on board and helping you successfully complete the merger if they understand your strategy. Explain what you hope to accomplish with the merger and how they can play a valuable role.
- Communicate openly. Throughout the process, hold regular meetings and send out regular written communications sharing all the necessary information about the merger and how employees will be affected. Regular, open communication is the best way to avoid rumors and hearsay.
- Review employee policies and applicable agreements. If you're planning to combine the staffs of two different organizations, at least some of those staff members will experience changes in personnel policies and benefits. Start by reviewing any employment agreements, especially if you plan to reduce headcount. Also closely review the written policies of both organizations and make decisions about what will remain and what will change. Consider the laws in all jurisdictions where your employees will be located. Based on this review, it may be a good idea to work with experienced legal counsel to develop a new set of employee policies, rules and guidelines to govern employee behavior and related workplace expectations.
- Select and assign employees. It's likely that a merger may result in employees in duplicate positions. In some cases, your new, larger business may need extra people in certain areas — but it's also likely that you will need to reassign or let go of other employees. Take time to interview each employee who may be reassigned, and consider competency testing. It's important to understand the skills and competencies that are already available within your staff so that you can reassign people appropriately.
- Downsize gracefully. Many mergers count on the financial benefits of running a larger organization with a smaller staff. If downsizing will be part of your strategy, make sure to consult with legal counsel. There are many things to take into consideration, including employment agreements and WARN Act requirements. To avoid lowering morale among remaining staff, continue to talk about your long-term strategy and how they fit into it, and work toward building a positive culture.
Combining two businesses with disparate staffs is not an easy proposition, but it can lead to significant growth. It's also a great opportunity to revisit old decisions, question assumptions and realign with your business's most up-to-date goals. With this small business merger checklist, you'll be on your way toward merger success.
Stay up-to-date on all the latest trends and insights for business owners: Subscribe to our e-newsletter.
SIGN UP FOR THE THRIVE NEWSLETTER