Mergers and acquisitions happen all the time in the trucking and transportation industry. Financials, profit-and-loss, “strategic fit,” and customer considerations all take top billing among the executives involved when companies consider coming together. But there’s a “people side” that, if ignored, can doom even the most logical and well-conceived M&A, according to participants in a recent WorkHound webinar.
What happens when a merger or acquisition makes strategic and financial sense, but the cultures of the two companies can’t blend? Such an M&A—flat out—won’t work, they emphasized.
“It’s doomed,” said Spencer Tenney, M&A specialist, president and CEO of Tenney Group, and a panelist in the Sept. 21 webinar, “The People Side of M&A: An Internal Comms Crash Course for Mergers & Acquisitions.”
Another panelist, Michael McLary, CEO of Ascend Transport, agreed with Tenney. If the two cultures clash, “don’t do it, move on,” McLary added.
And even if the cultures are judged compatible and the M&A proceeds, all agreed that employees coming from both companies need to be involved early and often after the deal is consummated—but not while it is still in the works. Otherwise, something else occurs that trucking and transportation companies loathe: employee turnover.
An M&A “can cause confusion and sometimes chaos,” said Max Farrell, CEO and co-founder of WorkHound.
“We know from worker feedback that the most common concerns result in questions like, ‘Who are we as a company?’ ‘Am I going to lose my job?’ ‘Is the company going to close?’ ‘Is this business unhealthy?’ So, as you can see, communication challenges can cause company synergies to be at risk during an M&A. That often can result in turnover,” Farrell said.
“We owe it to our company—and you owe it to yours—to be as transparent as possible,” he added. “Go a little slower, give people a sounding board.”
McLary said the language around an M&A should generate excitement among employees about what the deal will do for them and, as Tenney also noted, how the merger will allow workers to prosper.
“Nobody’s going to lose a job, the company’s not going to be dismantled,” McLary added. “Stress positives—more home time for drivers, for example. Talk with anybody in our company—it’s about culture and people.”
Farrell noted another example of correct communication to employees after an M&A: “It’s not downsizing—it’s creating opportunities that might not have been there before.” Also, he said, make sure employees know the benefits of your newly minted merger: more home time for drivers, better health insurance, and new uniforms to instill pride in working for the new company.
How should the conversation start among executives when a company is contemplating a merger or acquisition? “It starts with an honest conversation about where you’re strong and where you’re not,” Tenney said. “Use acquisitions to fill gaps.”
As far as acquisition strategies, McLary said his company looks at companies that are smaller, with worse benefits, so executives can later say to employees that the upsides of the merger might be, for example, better medical insurance and, for drivers, more home time.
“It’s not how can we improve the profitability of the company, it’s about helping the people,” he said, adding that “80% of M&A is about people and culture.”
Tenney added: “People will think, ‘What’s in it for me?’”
It’s also important to help employees identify with the new company, Farrell said. To do this, several communications strategies are important. He advised giving employees some chances to interact with new leadership, encourage questions, and address potential rumors, he said.
Also, McLary advised, the merged companies should create a microsite on their website where leadership can explain the merger and the changes that are coming with it. He advised setting up a frequently-asked-questions section that allows employees to interact directly.
Swag—that new uniform, new shirts, hats, et cetera—is underestimated as well, he said. “Especially drivers—they love that new uniform.”
Never think the work is done once the acquisition is wrapped up, both Farrell and McLary emphasized.
“Just because the acquisition is done doesn’t mean the work is done,” Farrell said.
“It’s not just, ‘We launch, and we’re done,’” McLary added. “Far from it.”
