You may be expecting talent run-off, but did you know that 47% of senior executives in the acquired company leave in the first year? Those who don’t jump ship will be dealing with stress and fear responses that can take 18 months to fade away.
What buyers miss is that the organization must still go through all the predictable change dynamics – the change curve.
The acquisition has been made and here’s the scenario: You’ve trained everyone, you’ve invested time and money in the latest systems and processes and you have prepared them to succeed in the new corporate environment (or so you think.) Yet months later, people still persist in their old ways: Where are the business improvements you expected? And when will the disruption you’re experiencing subside?
The fact is that organizations don’t just change because of new systems, processes or new organization structures. They change because the people within the organization adapt and change, too. Only when the people within it have made their own personal transitions can an organization truly reap the benefits of change.
With managing an acquisition, the challenge is not only to get the systems, process and structures right, but also to help and support people through their individual transitions (which can sometimes be intensely traumatic; involve loss of power and prestige… and often employment.)
The easier you can make this journey for people, the sooner your organization will benefit from the merger and the more likely you are to be successful. However if you get this wrong, you could be heading for acquisition – and career – failure.
The Change Curve is a popular and powerful model used to understand the stages of personal transition and organizational change. It helps you predict how people will react to change, so that you can help them make their own personal transitions, and make sure that they have the support they need.
The Change Curve is widely used in business and change management and there are many variations and adaptations. It is often attributed to psychiatrist Elisabeth Kubler-Ross, resulting from her work on personal transition in grief and bereavement (The Grief Curve).
The Change Curve
The Change Curve describes the four stages that most people go through as they adjust to change.
When the merger is first announced, people’s initial reaction may be shock or denial. This reaction to the challenge in the status quo is Stage 1 of the Change Curve.
Once the reality of acquisition begins to hit, people tend to react negatively and move to Stage 2 of the Change Curve. They may fear the impact; feel angry; and actively resist or protest against the changes. Some will wrongly fear the negative consequences of change, while others will correctly identify real threats to their position.
“Will I get to keep my job? Will I have to move? Will my job responsibilities change?”
As a result, the organizations will experience disruption, which, if not carefully managed, can quickly spiral into chaos – and certainly won’t help you get the most of your acquisition.
You’ll also need to recognize that, for some, the change may affect them negatively in a very real way that you may not have foreseen (like personal and family impact on the individual as a result of the acquisition). Another example may be the individual’s perspective on self and their value. People who’ve developed expertise in (or have earned a position of respect from) the old way of doing things can see their positions severely undermined or eliminated by the change.
Stage 2 is a stressful and unpleasant stage and the longer people stay here, the more damage is done to your deal. For everyone involved, it is much healthier to move to Stage 3 of the Change Curve, where pessimism and resistance give way to some optimism and acceptance.
At stage 3 of the Change Curve, people stop focusing on what they have lost, start to let go and accept the changes. They begin testing and exploring what the changes mean, and so learn the reality of what’s good and not so good, and how they must adapt.
By Stage 4, they not only accept the changes but also start to embrace the changes: They rebuild their ways of working and only when people get to this stage can the organization can really start to reap the benefits of the acquisition.
Using the Change Curve
With knowledge of the Change Curve, you can plan how you’ll minimize the negative impact of the acquisition and help people adapt more quickly to it. Your aim is to make the curve shallower and narrower, as you can see in here:
As acquisition project manager, you can use your knowledge of the Change Curve to give individuals the information and help they need, depending on where they are on the curve. This will help you accelerate change, and increase its likelihood of a successful merger.
Actions at each stage are:
Stage 1
At this stage, people may be in shock or in denial. Even if the change has been well planned and you understand what is happening, this is when reality of the change hits, and people need to take time to adjust. Here, people need information, need to understand what is happening, and need to know how to get help.
We recommend using the Mergercoach Communications Template in this stage. The template helps you answer the questions people will have about the acquisition, including answered tailored to specific roles in the organization (i.e. management, employees, customers, suppliers).
This is a critical stage for communication. Make sure you communicate often, but also ensure that you don’t overwhelm people: They’ll only be able to take in a limited amount of information at a time. But make sure that people know where to go for more information if they need it, and ensure that you take the time to answer any questions that come up.
Stage 2
As people start to react to the change, they may start to feel concern, anger, resentment or fear. For the organization, this stage is the “danger zone.” If this stage is badly managed, the organization may descend into crisis or chaos.
So this stage needs careful planning and preparation. As acquisition project manager, you should prepare for this stage by carefully considering the impacts and objections that people may have.
Make sure that you address these early with clear communication and support, and by taking action to minimize and mitigate the problems that people will experience. As the reaction to change is very personal and can be emotional, it is often impossible to preempt everything, so make sure that you listen and watch carefully during this stage (or have mechanisms to help you do this) so you can respond to the unexpected.
Stage 3
This is the turning point for individuals and for the organization. Once you turn the corner to stage 3, the organization starts to come out of the danger zone, and is on the way to making a success of the changes.
Individually, as people’s acceptance grows, they’ll need to test and explore what the change means. They will do this more easily if they are helped and supported to do so, even if this is a simple matter of allowing enough time for them to do so.
As the person managing the changes, you can lay good foundations for this stage by making sure that people are well trained and are given early opportunities to experience what the acquisition will bring. Be aware that this stage is vital for learning and acceptance and that it takes time: Don’t expect people to be 100% productive during this time! Build in the contingency time so that people can learn and explore without too much pressure.
Stage 4
This stage is the one you have been waiting for! This is where the changes start to become second nature and people embrace the new organization.
You’ll finally start to see the benefits you worked so hard for. Your newly formed organization starts to become productive and efficient and the positive effects of the acquisition become apparent.