Mergers and acquisitions have become an intrinsic part of corporate
life as companies seek to become more competitive. In 1995 to 1996 there
were more than 3,000 mergers and acquisitions in the UK, according to
Acquisitions Monthly On Line. ’Nowadays the question is who hasn’t gone
through it?’ says Kevin Thomson, chairman of MCA, an internal marketing
and communication consultancy which has helped many blue chip companies
through what can be a traumatic period of change.
Poor communication was cited as one of the top five reasons for the
failure of a merger or acquisition in a study carried out by
Carlsberg-Tetley last year. ’You can’t change culture,’ says Thomson
’but you can change communication to bridge the culture gaps.’
He cites the case of a bank that took over another whose culture was
more staid. ’The acquisition was not handled sensitively and the ’you’re
going to do it like this’ method didn’t go down well with the acquired
bank. Eventually the acquiring bank realised it’d gone too far and went
into happy, clappy mode trying to buy-in support through a series of
roadshows with ice and smoke. Neither lasts very long - you don’t
actually change anything with a hyped-up programme.’
Countrywide Porter Novelli client services director Chris Woodcock
agrees: ’There are no quick fixes. Our experience shows that significant
internal culture change demands long-term commitment and a patient
strategy of top-down communications, motivation, training and
While change effects all employees, experts agree it needs to be led
from the top. ’Fundamental to communications in a merger and acquisition
is for all senior management to buy into a clear and crystallised
long-term goal for the business which can be quickly and clearly
communicated to all employees,’ says Woodcock.
Lorrie Arganbright, a director at MCA, worked on Novell’s acquisition of
WordPerfect in 1994. According to Arganbright, the two companies had
dramatically different cultures: Novell was older and more thorough
while WordPerfect was younger, more ’seat-of-the-pants’.
’We talked to staff at all levels and did a lot of listening. We set up
Issues Groups to focus on problems which helped us to form a
communications plan for senior management to address these
MCA opened a three-way (top-down, bottom-up, side-to-side) internal
communications channel in 20 countries in Europe, the Middle East and
Africa which was sustained by local managers. An in-house journal was
introduced giving consistent messages and dealing with business issues
as research revealed this is what people wanted. Line managers took core
information and targeted it to the needs of their team. ’Staff were
hungry for face-to-face briefings; the higher the level of concern the
greater the interest in face-to-face communications,’ says
The approach clearly paid off as initially only 20 per cent of staff
thought the acquisition was a good idea, but after six months 80 per
cent were in favour.
In common with Novell/WordPerfect, the acquisition of UK-based Hoskyns
by fellow IT services company Cap Gemini relied on good communications
through a company newsletter, supported by face-to-face briefings.
’The monthly newsletter was intended to provide a framework for
understanding and be a vehicle for two-way communication,’ explains
Rebecca Thomas, marketing manager at Cap Gemini. Staff were invited to
voice their concerns via a coupon in the newsletter or through a special
’The bulk of the real work was getting teams of people together to work
through how things were going to be done - that’s the way we really
changed culture and thinking,’ says Thomas.
The programme at Cap Gemini was led by marketing communications
representatives from different companies in the group in Europe,
initially working together in Paris, but spending more time in their
local teams as the programme was rolled out. The core change programme
took almost two years to complete, proving the point that there are no
One of the unfortunate side-effects of mergers and acquisitions is that
they often involve redundancies, presenting another major challenge to
internal communications. - how to retain corporate loyalty while friends
and colleagues are being laid off.
’Nowadays staff are half expecting redundancies so it’s important just
to tell them,’ says Kevin Thomson. ’Organisations are afraid of giving
bad news, but a Management Today survey three years ago confirmed that
the number one cause of stress in organisations is lack of
If you couch the announcement in terms of ’we’ve spoken to everyone and
they realise the savings that can be made by putting together the two
organisations’ there’s a huge difference in the way it will be
Job losses resulting from the Novell acquisition of WordPerfect were
dealt with head-on. ’If you present people with reasons, it makes sense
for the business and if you handle things compassionately, people are
more likely to buy into it,’ says Arganbright. ’We dealt with
redundancies as directly as we could on a local basis because people
want to hear from their own line manager.’
Once redundancies have been dealt with quickly, and fairly, then you can
get on with the real communication job of getting remaining employees to
buy into a programme of culture change. ’Employees who feel secure about
their job are more committed and more likely to stay,’ says Phillip
Festa, director of culture change specialist MSB - who has recently
written a report in conjunction with consultant Thora Thorsdottir called
Profitable People? - The People Factor in Mergers and Acquisitions.
Thomson agrees that involving employees is one of the keys to
’You need to continue to listen and involve your people in the business
so they gain a sense of ownership. You also need to show what’s
different in the new company and demonstrate the benefits,’ he says.
The merger of three pharmaceutical companies from different countries
provided a particular communications challenge for MCA. German-owned
company Hoechst UK merged with French company Roussel. A year later this
company merged with US-owned Marion Merrell Dow to form Hoechst Marion
Roussel (HMR). One employee commented: ’The old cultures have gone but
there is no clear HMR company culture to replace them.’
MCA implemented what it brands ’Team Listening’ to encourage upward
feedback and make staff feel that their views count. ’All the managers
agreed that such a system had to be active in its approach, unlike the
passive communication that takes place during traditional team
briefing,’ says MCA’s Lin Johnston.
Team Listening was a big hit with staff, with 96 per cent saying that
they felt the process was useful.
Communicating cultural change is fraught with difficulties, but the
rewards can be immense. As Festa points out: ’The challenging and
reassessment of the deepest, most taken for granted assumptions in an
organisation is one of the greatest sources of potential benefits.’
CASE STUDY: ERNST AND YOUNG TAKES A DISCIPLINED APPROACH
Professional services firm Ernst and Young employs about 6,500 people in
27 offices in the UK, almost half in London. Two years ago the company
decided to restructure its London offices to focus on industry
This meant reorganising more than 2,000 staff who were used to working
in discipline-focused units such as tax advice, auditing and
Now a little over 18 months since the new structure came into place,
head of internal communications, Edmund White, has no doubt that
’successful implementation was due in large part to using the internal
communications channels we had created to gain buy-in through proper
tested understanding of the issues and of the impact of the proposed
These communications channels consist of three networks or groups
created to encourage the flow of information around the group and to
invite ideas and discussion.
The Strategy Implementation Group consists of about 30 senior staff
including the UK Executive and heads of major business units and
national departments including internal communications. It meets several
times a year. ’The group acts as a sort of strategy think-tank, but each
member is charged with considering the communication aspects of any
particular strategy,’ explains White.
The Leaders for Change network encompasses the Strategy Implementation
Group plus about 70 managers of UK offices and nationally-based
Every few months the group meets for a two-day workshop to consider how
to implement business strategies.
The most important communications network, however, is the Internal
Communications Managers group - 45 managers and senior managers who make
sure information is available from the centre and act as a focal point
for feedback on how information has been received. It also works closely
with local managers to assess the impact of strategic decisions and to
determine appropriate means of communication.
This role is voluntary and takes up about 300 hours a year, but is now
highly prized. ’It’s a high profile role which is used by both the firm
and the individual to add to personal development,’ says White. Several
times a year the Internal Communications Managers group meets for
training in communication techniques and to exchange ideas. At other
times a Lotus Notes discussion database is used to exchange experiences
and best practice.
White believes the networks played a crucial role during Ernst
andYoung’s successful restructuring in London. ’The Leaders for Change
meetings provided the opportunity to develop deeper understanding of the
business reasons for the reorganisation and to build commitment. The IC
managers facilitated communication at local level aided by printed
materials and supported by planned briefings with opportunities for
discussion and feedback.’
One senior manager commented: ’The London reorganisation has been
communicated excellently. There have been very few undercurrents of
negativity. People realise it is a good idea. Previously decisions came
down through rumours.
Now there is far more involvement at lower levels.’
CASE STUDY: IDV EXPERIMENTS WITH THE FORMAL AND INFORMAL
In 1996 Grand Metropolitan-owned IDV appointed its first director of
internal communication, John Harben, and began a transformation
programme under a new chief executive officer, Jack Keenan.
Harben works in group corporate relations under director Charles Anson
and has a GrandMet-wide mandate which includes Burger King and Pillsbury
as well as IDV - a total of 62,000 staff in more than 50 countries.
Harben’s central tenet is ’Formal media will only take you some way,
informal communication will usually take you much further’. He is a
great believer in face-to-face communication and what he calls
’Leaders need to be attentive to the stories they tell and the stories
they live,’ says Harben. ’We all prefer leaders to tell good
Research tells us that staff have a keen appetite for stories about
’what’s going on around here’ and for hearing them first hand.’
Harben has introduced a range of informal communications activities at
GrandMet including senior leadership meetings and results-based team
briefings backed by what he describes as ’massive conversational, fax
and e-mail traffic’.
The key to success, believes Harben, is the understanding, involvement
and commitment of people in business teams to organisational
While informal communication is evolving, formal communication is also
changing. A glossy house journal has been introduced containing news and
information as research showed this was what staff wanted and an
Intranet is being launched.
Harben’s vision is a mix of formal and informal communications based on
strategic thinking. ’If leadership teams could be persuaded to end every
meeting by asking ’what do we communicate from this meeting?’ then we
can help ensure that strategic messages are clearly defined and
limited,’ he says.
’As leaders talk and listen, we can carry the messages in formal media
and gather feedback. At the next meeting the leadership can reflect on
what they hear and re-define the messages in what can become constant
and powerful feedback loops.’
CASE STUDY: SHEPWAY SEEKS INVESTORS CREDENTIALS
Investors in People is an initiative that’s bandied about a lot, but one
that can cause confusion and suspicion among staff. This is what Shepway
District Council found when its assistant chief executive Stephen Hagues
started to work towards accreditation in 1995. ’From the employees point
of view IIP meant a decent pay rise, shorter working hours, more
training and a space in the staff car park,’ says Hagues.
Paul Lloyd, consultant with the Office for Public Management which
helped Shepway in its bid to achieve IIP, warns of the dangers of
regarding IIP merely as a label or trophy. ’The message must be a lot
more than just marketing hype. It’s no good just relying on the IIP
label branded on mugs, pencils or posters to do the real job of
convincing people and expecting instant commitment.’
When it came to communicating IIP, Shepway had to overcome the legacy of
poor internal communications in the past. Hagues describes the council
in the 1980s as ’very traditional and highly bureaucratic; managers were
seen as godlike figures and if you were called in to see them you knew
it was serious trouble’.
Attempts to improve the situation were made in the early 1990s, with a
new structure based on 19 business units and a programme of management
development. But Hagues admits: ’It wasn’t working. Morale was low,
people were cynical and felt the changes were the latest management
It became clear to management that the key to improving the organisation
was better communication. ’No matter what business plans or appraisal
systems we had in place, unless we communicated well with employees none
of this would truly work,’ says Hagues. So a cross-section of the
organisation was brought together to work with the chief executive and
management team to devise an IC policy and strategy as part of the drive
Specific initiatives included personal portfolio records for everyone
containing full details of training, appraisals and even pensions. ’It
was the first tangible evidence the council was giving something back to
them,’ says Hagues.
What he describes as ’softer changes’ were also made. Managers started
walking around the office, talking to staff and involving them in
decision making. They even spent time on reception. Minutes of
management meetings were circulated, taking away some of the barriers
and mistrust that had developed.
Another sign of management’s new attitude came when it took the brave
decision to track down the editor of an underground staff newsletter
that had been circulating and make him the editor of the official staff
’The new newspaper is sometimes a little painful for management, but
staff really approve,’ says Hagues.
The new style of IC has been critical in helping Shepway achieve
’Effective communication is inherent in what IIP sees as its ultimate
goals - effective teamworking, valued training and real development of
the workforce, improved organisational and individual performance, and a
genuine mutual feeling of value and worth by both employers and
employees,’ concludes Lloyd.
Shepway District Council conducts an annual survey of staff and a real
sign that IC has improved is revealed by responses to the question ’How
far do you believe the information supplied by management?’. In 1994, 50
per cent said ’always’. By 1996 this had risen to 90 per cent.