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Persuader-In-Chief: The CEO’s Role in Winning Hearts and Minds to Make a Merger Successful
by Ken Banta and Rick Heinick

 
   
 
   

To make a merger or acquisition successful, the CEO has to play a vital role, one that often is overlooked.  The CEO must be the champion, the point person, the driving force in the effort to persuade employees to dedicate themselves to helping achieve the merger's goals. Generating everyone's enthusiasm and active support is essential for overcoming the many obstacles that work against M&A success and which derail so many mergers.

This can't be accomplished with an executive order. Nor can the message be delivered through the regular flow of company communications.  To generate the needed sentiment and spirit, the CEO must be the persuader-in-chief, creating steady, positive, trickle-down energy and momentum at a time when many employees tend to feel vulnerable and established protocols become less settled. All this can be accomplished in a fairly methodical way. It requires the following steps:

Develop a campaign

The CEO needs to create a communication strategy at the very start of negotiations so managers and human resources personnel have a process for directing information toward a profound purpose.  It is to influence people on both sides of the deal so they are able to answer the inevitable question of “What is in it for me?” and, even more critically, “How can I contribute to making this merger work?” Every action and communication should nurture the belief that individual contributions are required for success.

Make the story compelling

Create a roadmap of how the organization and its people will get from the present to a rewarding and inspiring future. To be persuaded to make the merger/acquisition work, people need to hear the compelling story of what is and what is not needed. They should be able to envision a roadmap of steps that will carry them through the challenges. This is the unique and imperative role of the CEO, whose consistency and credibility are the most powerful tools of persuasion.

Assess attitudes, misconceptions and temperament

Be available. As soon as the merger or acquisition becomes active, the CEO should develop ways to become attuned to the attitudes of employees. This is needed to understand where the areas of receptiveness and resistance are greatest.  This knowledge can be learned through the use of informal roundtables and other methods of communication. 

These initiatives also will instill a sense of proprietary interest among managers and staff. While responsibilities can be directed to human resource and communications personnel, it is imperative that the CEOs of both companies take the direct lead in articulating objectives, issuing key messages, using questionnaires to identify issues to target, and directing responses — much like a political candidate presenting his or her platform.

Separate support from alignment

It is a common error to assume that the alignment of the two companies' managements in finalizing the deal implies their personal support of it. Alignment and support are not to be confused. The level of support can range from active conviction to passive reluctance. The CEO needs a more reliable consensus of the constituencies’ attitudes, one that tests their commitment and moves them from being spectators to team players. Open one-on-one dialogue is essential.

Stress credible positives

People who will be affected by the new strategies and methods often are issued communications with which they may disagree -- or disbelieve. A more constructive approach is to maximize the aspects of the merger or acquisition proposition that can credibly be framed for employees as something they already agree with or are prepared to believe. Accentuate the positive.  Minimize the proclaiming of issues that require changing negative attitudes into positives ones.

For example, in the acquisition of a subsidiary of a large competing company, it may seem pragmatic to move the headquarters of that subsidiary to the corporate headquarters. But if the subsidiary’s employees derive motivation and pride from the independent, entrepreneurial culture of their headquarters location, it might be beneficial to allow them to remain where they are. That decision, based on the persuasion equation, will help enlist the commitment of those employees.

Focus on timing

The critical periods are the three months before Day One, the 100 days post-Day One, and the decisive two-year cultural integration period thereafter.

Day One should be mainly business as usual. More important is the persuasion process prior to that day and following it. Many mergers and acquisitions fail because the CEO hasn’t sustained the intensity of his or her persuasive efforts through the critical two-year cultural integration period when the potential for driving long-term high performance is won (or lost).

Connect directly with the front line

In any M&A situation the mid-level managers are the ones most likely to resist change and fear it.  Therefore they may not be dependable allies in the persuasion campaign. Conventional cascading communications through management levels cannot be relied on. Instead, the CEO needs to deal directly with the front line managers who command the respect and credibility of the people who do the vital execution in the organization: sales professionals, factory floor workers, marketing managers, and research and development scientists.

The CEO’s goal must be to earn the trust of this pivotal cadre of managers. To do this efficiently the CEO uses dedicated meetings with frontline managers, roundtables and visits with the managers and their teams, etc. Conventional cascading communications can then follow – but only as reinforcement.

Plan achievable early wins

Nothing is more effective in convincing employees that the change is succeeding than early wins such as rapid sales force integration, a new product or a new customer. These early wins are vital for sustaining and building momentum during the stressful integration period and earning trust for the CEO internally and externally.

Confront the difficult reality

Confront. Empathize. Enlist. It is hard to persuade people to believe in something new but it is achievable.   On the other hand, it often is impossible to persuade people to change from disagreeing with a proposition to agreeing with it. Every merger and acquisition has aspects that some or all constituencies will dislike – realities such as job losses, or the elimination of heritage sites or product lines. The conventional practice is to gloss over these realities, or to try the most difficult task of moving people from disagreement to agreement.  Both are unproductive.
 
A third path, however, provides results: Bring the issue into the open, confront it, empathize and acknowledge that you’ve heard employees' points of view. With that established, explain in terms employees can relate to why the change is critical and success is essential. A CEO earns trust and respect as a leader by having the courage to tell things as they are. Doing this also provides the opportunity to paint a larger picture of why the change is worth putting up with in the short term to reach a higher, collective goal.

Court investors

A key role for the CEO is to devote time with investors while the integration gains traction and begins to deliver the numbers. The CEO must persuade investors to trust the long-term promise of the deal. This can be accomplished by sharing with them the same roadmap for the future that serves as the foundation for the persuasive campaign directed toward employees. Among other things, give the investors evidence of the energized alignment of the organization by setting conservative expectations that can be met and exceeded.

The CEO as persuader-in-chief

The CEO must win everyone's hearts and minds to make integration of the merger successful.  This is done by providing clear direction at all points during the pre-merger and post-merger periods. This direction is conveyed through creative alternatives to the typical memo-driven dissemination of facts and information. By communicating live and in person, the CEO generates enthusiasm and support of the merger effort, modeling the behaviors expected of everyone else.  The CEO paints an exciting, though realistic, picture of the future, one that demonstrates to everyone the payoffs they'll get with the merger's success. 

The CEO continues to motivate, inspire, reinforce and reward as the merger moves forward. The CEO is, indeed, the persuader-in-chief.


       
   
 
       
   

The Authors

Ken Banta

Rick Heinick

Ken Banta headed corporate strategic affairs at Schering-Plough Corp. from 2003 through 2009, when it merged with Merck & Co.  For the previous seven years he was head of strategic communications for Pharmacia Corp.  Contact him at kenbanta3@gmail.com

Rick Heinick is a senior partner at Robert H. Schaffer & Associates and heads its M&A practice.  He has specialized in consulting for M&A integration and organizational change for the past 23 years.  Contact him at rah@rhsa.com.

 
       
   
 
       
   
Many more articles in Executive Performance in The CEO Refresher Archives
 
       
   
 
       
   
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Copyright 2010 by Ken Banta and Rick Heinick. All rights reserved.

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