Mergers and acquisitions can be anxiety-provoking for leadership and staff. Here are four common mistakes to avoid while overseeing these strategic transitions.
Steve Gelineau |
Ok, I'll say it: No one enjoys mergers. They're anxiety inducing, morale-busting and likely to cause high turnover. But they're also a necessary evil. In a 2012 survey, three out of four hospitals said they were considering a merger or acquisition deal, often in an effort to keep healthcare affordable, be better prepared to approach new healthcare regulations, or to improve quality of care for patients.
Many organizations report that growth and partnerships are simply the best way to survive and thrive in a post-PPACA market, and the deals keep coming.
But there's a right way to go about these things and HR leaders are in a unique position to help make the most of a merger, or to put their people through the proverbial grinder.
Steve Gelineau, senior vice president at the Camden Group, specializes in overseeing mergers and acquisitions in the healthcare space. Over time, he's seen plenty of mergers administered smoothly—and has seen plenty of mistakes. He shared merger survival tips with me last month. Today he cautions HR leaders to watch out for four things.
1. Don't Assume Your Employees Don't Know What's Going On
No matter how remote or isolated your facility is, chances are that your employees read trade publications, attended conferences, and interact with peers at other organizations about the current state of the industry. They probably won't be as surprised to hear about an upcoming merger or acquisition as you might expect, says Gelineau.
"There's been significant growth in acceptance with employees around these things. They're better informed than they were 20 years ago," he says. Chances are, they have likely experienced a merger or acquisition before, know someone who has, or have seen one coming.
Treat your employees like adults and be prepared to answer some questions. Employees won't blindly trust HR or hospital leadership like they might have done in bygone days, so have real answers ready for their toughest inquiries.
2. Don't Misrepresent the Reality of the Situation
"It is an enormous mistake to say something like, 'nobody is going to lose their job,'" cautions Gelineau. This sets employees up with unrealistic expectations, and, when someone inevitably does leave—even if they coincidentally happen to retire at this time or are let go for completely unrelated reasons—the rumor mill will churn.
"It doesn't matter how they occur, whether through normal attrition, retirements, et cetera—if there are going to be reductions, don't misrepresent the reality of the situation. Say instead: 'we will do everything we can to minimize turnover or layoffs,'" he proposes.
Other promises to avoid include denying that
- Changes in management are coming,
- Benefits won't change
- Hospitals or other facilities in the healthcare system won't close.
In simple terms: Don't make promises you can't keep. And if you don't know if there will be layoffs or other changes, be honest with your employees and tell them that you don't know yet.
3. Don't Hide From Your Employees
The last thing you want to be during this tough time is inaccessible, says Gelineau. Now is not the time to work from home a couple days a week, take a week-long romp through Tuscany or barricade yourself in your office with the door closed.
As an HR leader, it's up to you to set the tone during this change. If you act like a member of the team and make an effort to continually reach out to your employees, they will take notice, and will respond with loyalty, which will help cut down on turnover and improve retention rates.
Make yourself available to employees in all forms during this time. Share your cell and home phone numbers, your email address, and your instant messenger and Twitter handles. Make sure you're around to talk about their concerns, fears, hopes and anxieties. Show up during the late shift, make road trips to satellite offices, and come in on weekends. Make sure employees see that you are in the trenches with them.
4. Don't Ignore the Culture of Either Organization
"Don't assume that culture can be easily managed," warns Gelineau. "Culture is the embodiment of many different things, including managerial styles… the connection between the managers and employees, the connection and respect that exists between physicians and clinical care providers… and the sense of purpose that exists in an organization."
Your organization's culture arose as a result of many different factors, including location, non-or-for-profit status, religious affiliation, the population it serves, and its mission. While many leaders downplay the importance of culture, the numbers disagree. Incompatible cultures are the most commonly cited reason as to why mergers and acquisitions are called off in healthcare.
$6.4B Henry Ford, Beaumont Merger Failed on Cultural Hurdles
"Culture clash can be one of the more destructive components in a merger if incorrectly addressed," says Gelineau.
Especially if you are on the acquiring side, don't try to change the culture too quickly, or employees will bristle. It's important to develop a cultural change plan with equal input from members of both organizations.
Additionally, just because the two organizations have similar roots—two non-profits, for example, or have the same religious affiliation—doesn't mean differences won't arise. Be prepared for them.
If managed correctly, M&As don't have to be nightmares.
Lena J. Weiner is an associate editor at HealthLeaders Media.