Best-practice M&A Surveys and Theoretical Foundations

There are numerous reasons for companies to merge or acquire. Economists consider mergers and acquisitions (M&A) as a strategy to achieve corporate growth, overcome trade barriers, gain market share, achieve innovation, and many more benefits (Lupina-Wegener, 2013). Statistics show that organizations strive to benefit from these competitive advantages as in the last ten years more than half a million M&A transactions have taken place worldwide - and the numbers are increasing (Statista, 2022).

According to researchers, despite the popularity of M&A, failure rates are very high. Specifically, the numbers of failure of M&A cases vary between 50% (Lin et al. 2006) and 80% (Selden and Colvin, 2003). Vazirani (2012) established that 50 to 80% of the anticipated mergers and acquisitions benefits do not match the actual results. 

The main reasons for the failure of M&A are mostly seen to be related to human resource management, as the human factor in the projects is often neglected (Martínez Caraballo, 2006; Rodríguez-Sánchez et al., 2018). Throughout the scientific literature and various studies, the strong correlation between human resource involvement and M&A success has become undeniable (Rizvi, 2011). There are major human-resource-related roadblocks of M&A success such as incompatible cultures, loss or mismanagement of key talent, clash of management styles, and defensive attitudes of employees (Schuler et al., 2001; Schmidt, 2003).

Defensive attitudes from the workforce are linked to increased levels of uncertainty, stress, and anxiety for employees by the mere announcement of an M&A. Due to the high impact that the workforce has on the M&A success, it is of immense value to evaluate their emotions and perceptions towards the upcoming M&A event and their experiences afterwards. This way, organizations can avoid employees developing negative emotions and defensive attitudes towards the project and the overall company (Zagelmeyer et al., 2018).

To gain further insight on how your company’s employees experience the upcoming M&A event of your organization and to build out effective people-orientated strategies, we recommend using Leapsome’s Pre M&A Survey.

The 16 questions (see listed below) are differentiated into the five categories: Pre M&A Safety, Pre M&A Benefits; Pre M&A Experience; Pre M&A Communication, and Pre M&A Strategy. As stated above, an M&A project can cause negative emotions such as increased stress levels and uncertainties as employees fear losing their jobs due to emerging redundancies. The feeling of a lack of job security can cause a decrease in job satisfaction and a resulting increase in employee turnover. To reduce these negative feelings, transparent and proactive communication throughout the whole process is seen to be essential. Employees that are proactively informed about the steps and strategies were shown to quickly identify themselves with the new organization, keep up a high work morale, and demonstrate higher commitment towards the new organization. Also, employees that perceive a personal benefit — such as increased rewards or advanced career opportunities — seem to have lower resistance and increased commitment to the M&A event (Schuler et al., 2001; Mendenhall, 2005).

After the merger has taken place you can use Leapsome’s Post M&A Survey to measure how your employees experience the whole process if the perceived expectations were met and how they feel within the new organization. The questionnaire includes 18 Items which are divided into the same categories as the Pre M&A survey, with one addition of the category Post M&A Culture. Company culture is the main driver for employee engagement and therefore retainment (Osborne and Mohamad, 2017). Therefore it is of great significance that employees perceive that current company culture was not lost through the merger and that it is compatible with the culture of the other company. Febriani et al. (2019) found that when employees “perceived less culture change during the merger, they had greater organizational commitment and employee engagement after the merger.“ Also, they highlighted the positive influence that human resource initiatives can have on employee engagement when culture change needs to occur as a result of a merger.

Pre M&A Survey 

1. I am confident that even after the merger, my job is safe. 
2. I feel I can express concerns about the merger and that they are taken into account.
3. I am sure that the merger will not have a negative effect on the working atmosphere.
4. I am confident that I can be successful in my role after the merger.
5. I know that I will benefit from the company merger. 
6. I look forward to the new opportunities that will come from this merger.
7. I believe the merger will be good for our organization.
8. I know my manager will support me during the transition. 
9. My whole team is working together to make the transition successful.
10. I have the feeling that I have an impact in making the merger work. 
11. What could [Company] do to ensure you feel well prepared for the merger?
12. [Company] is transparent with the goals they want to achieve with the merger.
13. [Company] communicated how the merger will affect my team. 
14. [Company] communicated how the merger will impact my role.
15. The strategy set by the management is taking [Company] in the right direction.
16. I think that the merger is a well-planned decision.

Post M&A Survey

1. 1. [Company] supported team building events after the merger.
   2. I can identify with the values of the merged company.
   3. In total, I think that I have benefited from the company merger. 
   4. Due to the merger, I have gained new responsibilities and new career opportunities.
   5. The merger and the associated increase in resources has improved my workload.
   6. I believe the merger has been good for our organization. 
   7. I have experienced that I am successful in my role after the merger. 
   8. My manager gave me the support I needed during the transition.
   9. As before the merger, I have a say in decisions that affect my work.
   10. My whole team was working together to make the transition successful.
   11. I have the feeling that I had an impact in making the merger work.
   12. After the transition, I still think that the merger, was a well-planned decision. 
   13. The strategy and mission of the new company inspire and motivate me
   14. The merger affected my team in the way it was announced before the merger.
   15. The acquisition affected my role, as expected and announced before the merger.
   16. I am confident that my job is safe.
   17. I feel comfortable and welcome in the merged company.
   18. What could [Company] do to help you adjust and feel welcome at the new organization?

Gathering information on how your employees experience the M&A can help you to set up the right human resource strategies.

To evaluate the results, we recommend using several analytic tools you can find in Leapsome’s survey module. Further guidance on how to effectively use the tools can be found in this article.

Based on the findings from your surveys, you have the chance to gain insight into how your employees perceive the whole M&A event in your company. The results provide you with perfect indications of how you can take action (for example, using action items) to build out the right human resource strategies to gain your employee's support and engagement before during, and after the merge.

Underestimating the influence of the human factor in the M&A planning and execution has cost many organizations a successful merge with the perceived and desired benefits (Vazirani, 2012). A well-managed merger, combined with a positive experience for all stakeholders can therefore be of great value for the new organization’s success.

Literature

Febriani, Dea Mariska, and George B. Yancey. "The Effect of Integration Approaches and Human  Resources Initiatives on Changes in Organizational Culture and Employee Attitudes during a Merger." The Psychologist-Manager Journal 22.2 (2019): 108.

Lin, Bou‐Wen, Shih‐Chang Hung, and Po‐Chien Li. “Mergers and Acquisitions as a Human Resource Strategy: Evidence from Us Banking Firms.” International Journal of Manpower (2006). 27: 126–42. 

Selden, Larry, and Geoffrey Colvin. “M&A Needn’t Be a Loser’s Game.” Harvard business review 81.6 (2003): 70-9.

Lupina‐Wegener, Anna A. “Human Resource Integration in Subsidiary Mergers and Acquisitions: Evidence from Poland.” Journal of Organizational Change Management (2013).

Martínez Caraballo, Noemí. “Los Recursos Humanos en Los Procesos de Fusión Y Adquisición.” Intangible Capital, abril-junio de 2006, vol. 2, núm. 12, p. 236-258 (2006).

Mendenhall, Mark E. Mergers and Acquisitions: Managing Culture and Human Resources.Stanford University Press, 2005.

Osborne, Schrita, and Mohamad S. Hammoud. “Effective Employee Engagement in the Workplace.” International Journal of Applied Management and Technology 16.1 (2017): 4.

Rizvi, Yasmeen. “Human Capital Development Role of Human Resource (HR) During Mergers and Acquisitions.” African Journal of Business Management 5.2 (2011): 261-268.

Rodríguez-Sánchez, José-Luis, Eva-María Mora-Valentín, and Marta Ortiz-de-Urbina-Criado. “Successful Human Resources Management Factors in International Mergers and Acquisitions.” Administrative Sciences 8.3 (2018): 45.

Schuler, Randall, and Susan Jackson. “HR Issues and Activities in Mergers and Acquisitions.” European management journal 19.3 (2001): 239-253.

Statista (2022). Number of Merger and Acquisition (M&A) Transactions Worldwide from 2010 to 2021. https://www.statista.com/statistics/267368/number-of-mergers-and-acquisitions-worldwide-since-2005/#:~:text=Over%20500%2C000%20merger%20and%20acquisition,largest%20number%20of%20M%26A%20deals. Accessed: 11. March 2022.

Vazirani, Nitin. “Mergers and Acquisitions Performance Evaluation-a Literature Review.” SIES Journal of Management 8.2 (2012).

Zagelmeyer, Stefan, et al. “Exploring the Link between Management Communication and Emotions in Mergers and Acquisitions.” Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l'Administration 35.1 (2018): 93-106.