3 Steps to Tame Merger Meltdown

Kraft Food Groups recently announced a merge with H.J. Heinz Co. to form the fifth largest food-and-beverage company in the world and the third largest in the U.S. The takeover involves famed investor Warren Buffett’s Berkshire Hathaway and 3G Capital Partners, a well-known buyout giant headquartered in Brazil. It will be interesting to see how the Kraft-Heinz titanic alliance unfolds. Analysts are projecting that there will be ruthless cost cutting and a significant number of jobs eliminated. “Costs are like fingernails: You have to cut them constantly,” is reportedly a favorite axiom of one of 3G’s chief advisors, according to a Bloomberg interview.

Related: How to Keep Company Culture Alive After an Acquisition

We all know mergers have pros and cons. On the upside, they are an ideal opportunity for businesses to expand their talent pool -- which can give the newly formed operation an edge in terms of more creative and effective product development, customer service and wider market reach. The downside is that during a restructuring, transitions can be problematic for company leadership to manage, as employees are often overwhelmed by a general sense of instability.

More often than not, a disproportionate amount of time and money is spent on the financial due-diligence aspect of a merger or acquisition; and sadly, very limited resources are allocated to “people due diligence.” But numbers don't make a merger work; people do.

Here are three important areas to pay close attention to during the merger and acquisition process:

1. Avoid a clash of cultures.

Most companies think they can easily assimilate two completely different company cultures into one. This can be a recipe for disaster. Start managing the integration before the merger is announced. When you take the time to explore the similarities and distinctions of both cultures, you may be able to establish a more effective communication strategy. Share best practices of both companies -- not just those of the acquiring firm -- and leave the corporate ego at the door.

2. Communicate.

The word “merger” has become synonymous with layoffs and cost-cutting, so it is important to address the emotional aspect before the business one. The answer to this is communication. Show empathy, host open-forum conversations and allow employees to vent; then listen to their opinions. Get to their hearts before their minds. This generates a healthier setting, rather than an environment filled with disgruntled employees who may not be at their best under duress.  

Related:  How Culture Clash Killed a $35 Billion Merger

People want to be heard. They want their questions answered, and their fears identified and addressed. When a company leader cannot provide answers or refuses to communicate, that scenario forces people to make up their own story. Address the 800-pound gorilla in the room, head-on. Summon up the courage to answer the difficult questions. If you lack definitive answers, don’t change the subject; simply say: “I don’t have that answer for you today but my commitment to you is that as soon as I have it, I will get back to you. Here is what I can tell you …” Take the time to explain what is happening and why -- particularly regarding any new decision that affects employees. Communicate in more personal settings, with smaller groups. This will impart a sense of encouragement and support.

3. Focus on health and wellness.

Health and wellness is an area that is often ignored,but recent studies that examined the physical and mental health of employees during a merger transition prove otherwise. One lengthy study that came out of the Netherlands in 2012 concluded, “Prolonged exposure to enterprise restructuring increased the likelihood of emotional exhaustion . . . and poor general health.” Interestingly, the ill effects on employee health dissipated once the restructuring process stabilized.

It may not be the merger that causes heightened stress and causes employees to make poor health choices. Job insecurity could be the culprit. By offering reassurance and encouragement, you uphold resolve and enthusiasm. As a leader, you should take particularly good care of yourself so that your energy reserves do not become depleted. Pay close attention to proper diet, sleep and exercise.

Related:  Look for Even More Megamergers in 2014