Internal Communications: Morale under fire

The key to maintaining morale during a takeover bid is to let staff know as much as possible early on, writes Mary Cowlett. There can be nothing more disheartening for a firm's workforce than discovering that their employer has become the subject of a takeover bid.

This is all the more galling if the bid is contested and the news delivered via the media rather than by the company itself.

As recent high-profile efforts to buy the Telegraph Group, Marks & Spencer and Abbey show, an attempted takeover can soon become a media circus.

And it is the individual staff who are left wondering how much and which bits of media speculation they should believe.

Spare a thought, then, for the 25,000 staff at Abbey. Following Lloyds TSB's approach to the bank three years ago, which was blocked on competition grounds, they are being put through the same process for a second time.

As PRWeek went to press, Abbey had agreed to a takeover by Spanish bidder Banco Santander Central Hispano, although it appeared likely that HBOS would also put in a bid in the coming weeks.

In the middle of this battle, Abbey itself is, unsurprisingly, unable to comment on its internal comms policies. As Four Communications partner Ray Eglington highlights, however, for those in charge of internal communications, takeover situations are made all the more difficult by the hefty public scrutiny that surrounds them.

'Furthermore, any bid for which there is a lot of negative publicity is doubly damaging internally, because staff are much more likely to believe what's written in a national newspaper than anything you might say to them,' he says.

And when Stock Exchange rules come into play, preventing firms from commenting on any rumours or speculation, staff morale might only get worse. 'There are often lots of thing you can't talk about,' adds Eglington. 'The danger then is that firms ignore what their employees are hearing from third parties and stick their heads in the sand.'

Be open, be honest

At times of instability, staff not only deserve to know what is going on in their own organisation, but also to hear it from the very top. This means that as soon as a takeover bid goes public, the comms team must be open and honest with employees and secure the engagement of senior management.

'What the chief executive says carries a lot of weight and is a fantastic boost for morale,' says Bell Pottinger Corporate & Financial chief executive Tim Ryan. 'And even if you can't talk about specific rumours, the chief executive can boost confidence and reassure staff that he or she will be the first to inform them of any developments.'

The CEO can also set the communications agenda, offering a likely timetable for events and separating the blatantly ridiculous from the more likely scenarios about prospective purchasers.

This direct approach is one the Telegraph Group used in its hard-fought takeover battle, which kicked off last November.

At several key points during the contest to buy Lord Black's former media stable, Jeremy Deedes, who returned to the Telegraph Group as chief executive this spring, held mass floor meetings with staff, accompanied by managing director Hugo Drayton, financial director Niamh O'Donnell-Keenan and editorial director Kim Fletcher. This included visits to the newspapers' City offices and afternoon sessions for production staff who were working the late shift.

'Deedes went floor by floor, explaining that this was the sales process, this was where we were at that moment, using the meetings as opportunities to answer any questions,' says Fletcher.

This strategy was supported by disseminating information through heads of department, while the group looked to maintain morale by encouraging staff to concentrate on the job at hand: producing newspapers.

With a predominantly media-savvy audience, says Fletcher, a key concern was addressing speculation by rival newspapers when the facts often moved slower than the rumours and the commercial process made some information confidential.

'But we looked to turn a potential negative - that there was some turmoil about future ownership - into a positive, so that we could say "we are up for sale and all these people want to buy us, to the point of paying a lot of money",' he says.

This message was underlined by explaining to employees that the value of their organisation lay not in hard assets, but in its titles and its people.

But no matter how convincing the corporate line, there is no denying that competitive acquisition situations create a lot of ambiguity and uncertainty for staff. And while the management team, share holders, financial advisers and lawyers address the bigger picture, employees' primary question is always: 'What will this mean for me?'

Job security

'The main concern is always job security, with staff worrying if their jobs will be the same, if they'll be transferred or whether their benefits will change,' says Toby Moore, director of Citigate Dewe Rogerson's financial department, which has worked on Morrison's bid for Safeway and Russian billionaire Roman Abramovich's takeover of Chelsea Football Club. 'Contested bids go on for months, so the vital thing is to make sure staff are not distracted.'

This is where an organisation's leadership needs to focus minds on business strategy and developments. 'Firms should encourage their leaders to be bold, to set stretch targets and to publicly praise high performance and good ideas,' says internal communications specialist Hedron director Helena Memory. 'Providing challenging goals takes minds off uncertainty.'

Others feel middle management hold the key to maintaining staff morale.

'Line managers and supervisors are the ones who will be asked what they know,' says internal communications consultancy Harkness Kennett partner James Harkness. 'And if they're not given anything to communicate, the danger is that they will make something up or speculate.'

Anything said to the workforce internally needs to be consistent with external messages and checked by the lawyers. And it is safe to assume that everything communicated to staff internally, will be leaked externally, especially if redundancies are involved.

Whatever information warp is being driven by the rumour mill, the organisations that negotiate the takeover process the best are those that talk to their people. Tell people as much as you can as soon as you can. Even if you can't give specifics, make your people feel as valued as your media commentators.

HOW AMERSHAM KEPT ITS STAFF IN THE PICTURE

Last October, diagnostic imaging and life sciences specialist Amersham became the subject of a takeover bid by the former GE Medical Systems (GEMS). This deal eventually completed for £5.7bn in April, creating the new company GE Healthcare.

As Amersham was a complementary business to US firm GEMS, staff in the UK had few worries. But there were concerns that the company's close-knit spirit would be swallowed up by the might of GE's global corporate culture.

'Amersham was very family-oriented and its 10,000 employees felt very committed to the company,' explains executive vice-president global communications of GE Healthcare Pam Wickham. 'It was a question of identifying the large areas of commonality and overlap between cultures.'

During the regulatory period, employee communications were kept low-key, but both Amersham president and CEO Bill Castell and his opposite number at GEMS, Joe Hogan, regularly shared progress on the deal with staff.

In January, the strategy changed to focus on education and awareness.

Once the deal closed on 9 April, the internal communications team created a global celebration day and an employee launch of the new GE Healthcare business. UK staff took part in a global Q&A session, broadcast live from GEMS' former HQ in Wisconsin, involving Castell, the president and CEO of GE Healthcare.

As the final phase of integrating the two businesses goes on, Wickham says staff surveys have found that former Amersham employees feel the internal communications were engaging and provided the information they needed, helping them learn about the new GE business units.

'That Amersham staff retained their leadership and autonomy, and worked on the same projects as before, also had a huge impact,' she adds.

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