MERGER S U C C E S S by tit19163

VIEWS: 12 PAGES: 3

									     MERGER
       SUCCESS                  What’s communication got to do with it?




     I
             s your company’s merger des-            ent firm or the acquiring firm would        SIZE UP THE SITUATION
             tined for greatness, or for grad-       actually have earned more had they          Wendy Kouba: My two most interesting
             ual disintegration? According to        taken the same money they invested in       merger and acquisition experiences
             an IABC Research Foundation             a merger and put it in a bank certifi-      were at Allied Signal in the late 1990s,
             study sponsored by Johnston Smith       cate of deposit.                            when the business unit that I worked in
     International on “How Communica-                • One-third of all deals today will be      acquired a very small business, and the
     tion Drives Merger Success,” your com-          sold off in the first five years.           merger that combined Pharmacia &
     munication strategy may be the deciding         2. The norm is that poor integration        Upjohn with the Monsanto Co. Long-
     factor. To follow up on these findings,         and the lack of good consistent infor-      term, acquiring and integrating that
     the IABC Research Foundation con-               mation within the merging organiza-         small business was a success story for
     vened a distinguished panel of merger           tions hurt the deals. But not all mergers   Allied, and it was the informal channels
     and acquisition (M&A) experts from              and acquisitions require the same level     that were most effective. But when a
     around the globe during this year’s IABC        of integration. Among the deals taking      large company acquires a US$400 mil-
     international conference to examine             place today, 15 to 25 percent don’t         lion business with 1,200 employees,
     how M&A communication does—and                  require a lot of integration, because the   there’s a whole different structure and
     doesn’t—work in actual practice. High-          merging units are dissimilar and there      level of scrutiny. We set up very formal
     lights from this conversation follow.           is no strategic value in consolidating      communication processes—messages
                                                     them. Firms in this situation sometimes     from the chairman, publications, focus
     BEAT THE ODDS                                   err by over-communicating to their          groups—to help drive the initial under-
     WITH STRATEGIC COMMUNICATION                    employees. But the greater error occurs     standing that was desperately needed.
     Dr. Patricia Whalen: Here is a brief overview   when a fairly high level of consolida-      We thought it was going well, until
     of three findings from the “How Commu-          tion is needed among merging firms,         some of the culture surveys came back
     nication Drives Merger Success” study:          yet there isn’t any one single, strong      and showed us how dramatically differ-
     1. Although mergers and acquisitions            source of information about the deal.       ent in thinking, work style and philoso-
     have been the number one growth                 3. Informal, face-to-face communication     phy these companies were. It wasn’t
     strategy for corporations worldwide             plays a bigger role in the outcome of the   until we got to that point that the
     for the past 35 years, the majority of          deals than the number of formal com-        merger really started to take off from an
     the deals will not live up to their             munications in such tools as newsletters,   internal integration standpoint.
     expectations. For instance:                     intranets and letters to employees. In
     • 50 percent of all deals today will            addition, for those firms that have a       Louise Denver: At the Commonwealth
     destroy shareholder wealth.                     high degree of informal, face-to-face       Bank of Australia, we had a AU$10 bil-
     • 60 percent of the deals will see their        communication taking place in and           lion merger between our conservative
     stock price lag behind their peers in           around merger implementation, the for-      retail bank, with 120,000 outlets, 10
     the first two years.                            mal materials become far more credi-        million customers and 33,000 employ-
     • In two-thirds of these deals, the par-        ble and more useful among employees.        ees, and the Colonial Limited Bank, a


12   October-November 2002 COMMUNICATION WORLD                                                                                               COMMUNICATION WORLD October-November 2002   13
                                                                                                                                        your case that communication needs to              then the two organizations will look at
                                                                                                                                        be seen as a full spectrum of activity—            what are best practices on either side and
                                                                                                                                        not just an occasional news release or             attempt to incorporate them.
                                                                                                                                        focus groups.
                                                                                                                                                                                           Hunt: You’ve got to be careful about the
                                                                                                                                        ACKNOWLEDGE THE FEAR FACTOR                        scorekeeping that automatically occurs
                                                                                                                                        Denver: The biggest obstacle to any                when people are in an emotional state.
                                                                                                                                        merger or acquisition is fear of the               They will keep lists: “How many leaders
                                                                                                                                        unknown, whether that’s community                  came from this side, how many came
     Lead researcher Patricia      Louise Denver, who      Ruth Hunt, principal    Wendy A. Kouba,           Paul Sanchez, APR,
     Whalen, Ph.D., APR,           has served as           and leader of the       leader of the global      practice leader for
                                                                                                                                        hostility or senior management para-               from that side?” Are you trying to incor-
     assistant professor at        strategic counsel on    Chicago, Ill., USA,     internal communication    the communication          noia. Acknowledge the fear. Tease out              porate the best of both to meet customer
     Northwestern University’s     Australia’s largest     regional practice for   team at Pharmacia         consulting group of        the detail. What are you afraid of? Is it          needs and increase shareholder value?
     Medill Integrated             merger as head of       Buck Consultants,       Corp., Peapack, N.J.,     William M. Mercer
     Marketing Communication       communication           who specializes in      USA, who headed the       Ltd. in London,
                                                                                                                                        job loss, is it culture conflict, is it just       Absolutely. Does that mean that there’s
     program in Evanston, Ill.,    for the Technology,     strategic internal      communication effort      England, and longtime      general uncertainty? Start to break                going to be an equal distribution on either
     USA, summarized her           Operation and           communication           behind the                management                 down the fear, and then start to con-              side? Not likely. Help coach your leader-
     findings from the IABC        Procurement division    programs, including     “Pharmaceutical M&A       consultant with
     Research Foundation study     of the Commonwealth     merger and              Deal of the Year”         specific expertise         struct the opportunity. Work at how                ship team to manage expectations and
     and moderated this panel,     Bank Group, Sydney,     acquisitions            between Pharmacia &       in merger                  you can engage those employees, and                not use “merger of equals” terminology.       The larger, the more
     featuring the expertise of:   Australia.              communication.          Upjohn and Monsanto.      communication.             see that what they’re saying is taken
                                                                                                                                        on board in some way.                              BRIDGE DIFFERENCES                            complex the merger,
     The 2002 IABC Research Foundation Expert Panel is sponsored by
                                                                                                                                                                                           Kouba: We began the process of inte-          the more difficulty there
                                                                                                                                        Hunt: You’ve got to manage expecta-                grating Pharmacia & Upjohn with
     much more nimble online bank. It was          Ruth Hunt: As a communicator, you        quantitative—the more helpful it is         tions, because you’re not going to be able         Monsanto with a lot of culture mea-
                                                                                                                                                                                                                                         will be around
     regarded as a “merger of equals,” but         can be important in helping to make      in changing that mindset.                   to solve all employees’ problems. Allow            surement. The P&U people saw them-            understanding the legal
     there was not a win-win situation in any      sure that there is a seamlessness                                                    employees to have a voice, so that you             selves as being very flexible and inno-
                                                                                                                                                                                                                                         role. As communicators,
     environment. We engaged all the com-          between the message that is sent to      Denver: A lot of people with a merger       can pinpoint the issues and help address           vative, but the Monsanto people saw
     munication professionals about reten-         external stakeholders—the cus-           plan have a box labeled “communica-         them. I might not be able to promise the           the P&U people as being bureaucratic          if you can get close to
     tion of customers, retention of key           tomers, the shareholders and the         tion.” They believe that sending a          organization that I’m going to be able to          and staid—it was very eye-opening.            the legal team and win
     staff and managing the shareholders           analyst community—as well as the         message puts a tick in that box—they        give them all the answers they want,               That research shouldn’t be shared just
     through minimizing uncertainty. In a          internal community. Find whatever        forget that communication is about the      when they want them. But I will be able            at the management committee level—
                                                                                                                                                                                                                                         its confidence, your life will
     merger the size of the Commonwealth           you can find in the merger or the        transfer of meaning and understand-         to tell them the process by which we will          those culture data help everybody in          be a lot easier. Taking your
     Bank and Colonial, this meant telling         deal that can be a powerful and          ing. You’ve got to measure what you’re      be coming up with some of those                    the organization understand who these
                                                                                                                                                                                                                                         lawyer to lunch is not
     people that things were going to take         compelling unifying element. Some-       doing and demonstrate in a survey that      answers, so that the punishing effects of          people are that we’re trying to build
     quite a long time.                            times that can be how you’re going       when you fill an information vacuum,        uncertainty and change are reduced.                bridges with.                                 a bad idea.
                                                   to absorb everything under an exist-     confidence in the merger goes up.
     MAKE NICE WITH THE LAWYERS                    ing brand, or create a whole new                                                     ARE MERGERS OF EQUALS                              Sanchez: One successful merger was
     Paul Sanchez: The larger, the more            brand identity that has some ele-        Sanchez: Often what swings the vote on      FACT OR FICTION?                                   with a chemical company that was
     complex the merger, the more difficulty       ments of the old.                        the core team to recognize the impor-       Sanchez: Mergers of equals happen less             focused on an acquisition to gain intel-
     there will be around understanding the                                                 tance of communication as a truly inte-     frequently than might be proclaimed, but           lectual capital. We selected employee
     legal role. As communicators, if you          MEASURE YOUR WAY                         gral part of the whole merger is data       they do happen. The level of equality              leaders who would engage their groups
     can get close to the legal team and win       INTO THE BOARDROOM                       derived from focus groups or culture-       depends on the real reason for the                 of people in solving some of the integra-
     its confidence, your life will be a lot       Kouba: With Pharmacia & Upjohn           assessment surveys. Most of the people      merger: Is it for market share, efficiency         tion issues, and they took to it like ducks
     easier. Taking your lawyer to lunch is        and Monsanto, it took us some time       on the core team come from finance or       or intellectual capital? If it’s for efficiency,   to water. When the people in the com-
     not a bad idea, because you’ve got to         to get communicators to the table. I     operations, and if you can give them        it’s not likely to be a merger of equals. If       pany that was being acquired got on
     understand what they’re doing, appre-         think senior executives think they       percentages and charts and profile lines,   it isn’t a merger of equals, the imposing          board with an understanding of where
     ciate the timing constraints that you’re      know what’s going on [with the           they’re going to feel a whole lot better    organization needs to move swiftly to put          we were going, they became change
     going to be operating under, and con-         merger], that they’re connected—         about what you’re saying than if you go     in place its processes, its brand and its          agents supporting the merger. That oper-
     sider the financial disclosure regula-        and a lot of times they’re not. So the   in with broad-based narrative. There’s      identity, and not try to delude anybody            ation went on to become one of the stars
     tions of various markets in various           earlier you can get some measure-        lots of published data from IABC and        that it’s a merger of equals. If the merger        of this particular chemical company.
     countries if you have a global merger.        ment—whether it is qualitative or        others that you can present to support      is for intellectual capital or market share,                          (continued on page 25)


14   October-November 2002 COMMUNICATION WORLD
                                                                                                  Merger Success
                                                                                                  (continued from page 15)
                                                                                                  Denver: At Commonwealth Bank
                                                                                                  we’ve developed a buddy system that
                                                                                                  allows people from Colonial to come
                                                                                                  over into the Commonwealth space
                                                                                                  and vice versa. The tasks are fairly sim-
                                                                                                  ilar, so we can swap people from one
                                                                                                  place to another. When we engaged
                                                                                                  people at a new site, we found the cul-
                                                                                                  tural issues just dropped away.

                                                                                                  MAKE IT QUICK AND
                                                                                                  CONSTRUCTIVE
                                                                                                  Hunt: I     was with PriceWa t e r-
             “March Sadness”                                                                      h o u s eCoopers, and a number of our
                                                                                                  studies showed that as they looked
be a tragic event. They bond in their                                                             back at what they would have done
grief. Hands are pressed to faces,                                                                differently, 89 percent of companies
heads are buried on the shoulders of                                                              undergoing mergers said they would
others. All wear sporting garments.                                                               have done them faster. The analogy
“March Sadness” is a losing basket-                                                               is very simple: You know a Band-Aid
ball team. We can relate to loss. It’s a                                                          is going to hurt when you pull it off.
common human value, and Weimer                                                                    Why wouldn’t you do it quickly and
uses it to interpret and make her point                                                           be done with it? Employees know it’s
about the outcome of a sporting event.                                                            going to happen, and they’re proba-
  Weimer’s final example takes us to a                                                            bly assuming it’s worse than it really
flower show. Instead of showing us                                                                is—so coach management to move
acres of flowers, she puts the flora out                                                          aggressively and get out their plan
of focus and focuses on two people                                                                for the process. You can leverage the
reacting to what they are seeing. The                                                             merger event as a stimulus for some
caption reads “Like mother, like                                                                  significant change, and turn it into
daughter.” Each raises forefinger to lip                                                          an opportunity.
in identical gestures of thought.
Through this incongruous set of                                                                   Sanchez: You need adaptability and a
responses, Weimer’s interpretation                                                                sense of humor as you’re working
expresses values unique to human                                                                  through a merger. I think communica-
beings—the ability to wonder, marvel                                                              tion people have a particular responsi-
and think about those special things                     “Like mother, like daughter”             bility to remain level-headed to make
we discover along the way.                                                                        sure that the merger works—don’t
  In each of these examples, Weimer              Douglis, an IABC Fellow, is the most widely      lead the depression or the shouting.
interprets events by capturing spon-             known consultant on editorial photography
                                                 for organizations. He offers a comprehensive
taneous natural gestures, linking                                                                 Denver: People don’t come to work
                                                 six-person Communicating with Pictures
them to evocative body language,                 workshop every May and October in Oak            just for money; people come to work
and thereby expressing basic human               Creek Canyon, near Sedona, Ariz. For current     because they want to be part of some-
                                                 openings and registration information, call
values that all of us understand.                Douglis at 602-493-6709, or e-mail him at        thing that’s bigger than they. So let’s
                                                 pnd1@cox.net. He also welcomes tear sheets       look at ways that you can tease out all
Philip N. Douglis, ABC, is director of The       for possible use in this column. Send to
Douglis Visual Workshops, now in its 31st year   The Douglis Visual Workshops,                    the positives of this new entity, and
of training communicators in visual literacy.    2505 E. Carol Ave., Phoenix, AZ 85028.           engage people in that experience.


                                                                                                COMMUNICATION WORLD October-November 2002     25

								
To top