CorpComms Magazine

Your company has just clinched a big merger. Its shares are up, the City editors are briefed and next year's bonus is probably in the bag. Forgotten anything? Ah yes, the employees, those individuals who are going to have to make the deal work.

Some will be sacrificed for efficiency gains, others may have to switch locations or work harder. Those left will need to learn to work together - not easy if they have hitherto competed as fierce rivals. Someone had better make sure they're all on board.

Time to call the internal communications department... It shouldn't happen like that and hopefully it doesn't. But this scenario still seems to contain a few grains of truth.

'Employee engagement' is the buzz phrase for trying to prevent this scenario from becoming a reality but that is rarely a priority for the chief executive when he is masterminding deals. 'They tend to focus on other matters, like whether the business they're buying is a good strategic fit, whether they're paying the right price and what they have to give away in the negotiations,' says Jim Horsley, chief executive of workplace communications agency CHA. 'Those put the emphasis on how the deal will benefit shareholders so internal communications often comes as the very last priority.'

This difficulty is compounded by a natural tendency for companies to clam up amidst legal and regulatory issues once they have announced a deal. Just ask SSL International, the Durex to Scholl consumer brand business that recently agreed a £2.5 billion takeover offer by Reckitt Benckiser, about its employee engagement strategy. Or rather, please don't. At least, not yet.

'It's a very difficult time for them to talk about it as the deal has not been completed,' says William Clutterbuck, partner at SSL's financial PR agency Maitland. 'They really don't want to discuss it at this stage.'

Keeping staff in the loop

Of course, immediately after a deal has been announced is precisely when staff want to hear what it will mean for them. Communicate badly and key staff may no longer be around by the time the merger is complete.

Those left may be disillusioned, angry or bitter. The  new corporate entity runs a risk of being strangled at birth. Employee engagement experts say news about changing working conditions needs to be communicated internally as soon as possible, with Horsley recommending that internal communications personnel are brought into the loop before an acquisition is announced to ensure this is a priority from the outset.

Communications need to be structured, he says, with the key initial message explaining deals coming directly from the chief executive and news then cascaded through divisional heads and line managers, who should all be given briefings about what to say.

If a manager has not been briefed, people will hear from other sources and they will trust those more than the official channels, undermining the company's leadership.

'It's not just what is happening that you need to communicate, it's why it is necessary,' says John Birnsteel, insights director at communications company Imagination. 'It's about tangible steps and communicating them cannot be an afterthought. You need regular briefings.'

Being upfront

It is good to talk, even if you cannot say very much. 'Don't let an information vacuum form,' advises Nick Pearce, managing director of employee engagement consultancy Instinctif.

'If you're not allowed to answer certain questions, say so and give guidance about when you should be able to. Remember, nothing breeds uncertainty like lack of communication.'

Line managers need training so they can handle their communication tasks, says Neil Taylor, creative director at The Writer, the UK's largest business language consultancy.

He advises that they should be open in admitting that there are three categories of information that workers want to know after mergers and acquisitions.

'There are things you know, things you don't know and things you know but you cannot tell employees,' he says.

'You just have to say that to them upfront. People can usually tell if you are hiding something so be straight about it and you'll then get credit for honesty.'

Then there's the not inconsiderable matter of what's actually communicated. Alison Crossley, managing director of internal communications agency Sequel, says the  messages need to motivate staff for the difficult times ahead by making sure they understand why the deal is important.

'You have to tell people and tell people and then tell them again,' she says. 'You have to keep reiterating the important messages so people really understand them.'

The role of internal communications in a merger or takeover continues long after the deal has completed.

Sheila Parry, managing director of internal communications agency theblueballroom, recalls advising logistics group DHL on its takeover by fierce rival Germany's Deutsche Post in 2001. DHL's logo was a red name on a white background, while Deutsche Post had a yellow one. It was decided to merge the two under a red on yellow logo, which caused a great deal of initial friction.

'Deutsche Post was 200 years old and proud of its yellow but the DHL people didn't like it because they had been used to seeing it as the colour of their major competitor,' she says. 'It was a big issue to get over.'

She says that it is essential that a combined culture is created after a merger and that employees are encouraged to stop thinking of themselves as belonging to one of the two former companies. At Deutsche Post, this was created through shared induction schemes and special events but it can be an onerous task.

Delivering key messages

Elizabeth Brown, director of corporate and group centre communications at banking group Barclays, recalls communicating a planned office move to staff when she worked in change management at America's General Electric.

'It was something as innocuous as a building move but moving 17 miles away is a big deal to staff, especially if they don't have a car,' she says. 'The important thing was to deliver our key messages. Why should people do this? What was the strategy behind it? How would it affect the workforce itself?'

Comparatively small matters can have a major effect on staff morale, as evidenced in 2008 when Japan's Nomura took over the European and non-Japanese Asia operations of collapsed American investment bank Lehman Brothers.

Nomura's London workforce trebled to 4,500 overnight but management's great concern was that its highly mobile (and sought after) investment bankers would leave.

Employee engagement therefore focused on ensuring that staff could carry on as normal, down to the smallest details. For example, staff were particularly irked that Lehman's collapse had deprived them of the Benugo coffee shop inside the bank's Canary Wharf headquarters. Nomura ensured it was swiftly reopened and rebranded under the Nomura name.

'Some quite trivial things can be deeply symbolic for staff,' says Paul Abrahams, Nomura's head of corporate communications for Europe, the Middle East and Africa.

'A lot of people felt that the merger would fail. They could not get coffee one morning and felt no-one cared. We brought Benugo back in, had a day of free coffee and rebranded the coffee shop as Nomura. A lot of our people said this was really important.'

Nomura's employee engagement programme also included ensuring that Lehman employees' screensavers, computer screen 'wallpaper' and all other corporate branding was changed from Lehman's green to Nomura's red. Just say Nomura was introduced as a slogan to encourage people to use the bank's name and to see themselves as Nomura staff.

Nomura also took on Lehman's corporate social responsibility programmes, created a weekly digest to inform staff of all new appointments and filmed video interviews with staff from the chief executive to the window cleaner, describing what the takeover meant to them.

As a result, according to Abrahams, when the guaranteed bonuses that Nomura had used to lock in key bankers expired in April, the churn rate was about half the banking sector's average. Instinctif's Pearce, who advised on Nomura's programme, says it shows that employee engagement needs to be total and genuine. 'People say they want to engage their employees,' he states. 'I say to them What do you want them to engage with? To them, the term 'employee engagement' doesn't mean a great deal. Unless you articulate what it is that you want them to do, they cannot understand it.'

The Writer's Taylor goes further. 'People don't want to be engaged with,' he says. 'They just want to know what's going on and how it will affect them. Once they know that, they're usually able to get on with business.'

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