New ownership of a business doesn't have to be plagued with problems.
Going through a company merger or acquisition can be both an intimidating and humbling experience — especially for employees of an acquired company. There are a lot of unknowns — the biggest for most employees being, “What does this mean for me?”
Depending on the reason and goals for the deal, outcomes for employees are varied. In a 2000 survey by the Institute for Mergers, Acquisitions and Alliances, a quarter of survey respondents reported increases in undesirable turnover and 41% reported declines in morale and engagement as a part of the fallout of merger and acquisition activity. Although they might not have answers to all of the unknowns, executives must be intentional in combating these sentiments from the forefront.
Joe Chillura, former CEO of USAmeriBank, says employee engagement was a top priority when New Jersey-based Valley National Bancorp acquired USAmeriBank in 2017. The executive team believed the long-term success of the deal with the publicly traded bank depended on it.
Two years post-acquisition, the bank is 30% bigger locally than what it was, says Chillura, now an executive vice president at Valley and president of commercial lending for Florida and Alabama. The leadership team, “kept the faith, drank the Kool-Aid and became part of the solution,” he says, which translated to success in retaining most of its customer-facing key personnel. “We haven’t batted 1,000; we lost a few. But we rank with those that were able to maintain a majority of our key people and post-sale experience a lift in business instead of a pull back.”
Steps the bank took to help key stakeholders keep the faith throughout the transition include:
1. Provide skin in the game: Ensure employees know what’s in it for them – how they will benefit from the deal.
Being acquired by a larger entity can be “financially lucrative and enhance careers,” Chillura says. That’s how he introduced the move to his team. As part of the deal, employees received 6.1 shares of Valley common stock for each USAmeriBank share that they owned. Having employees retain ownership through the move to a public company served as a powerful “tool to retain and attract,” Chillura says, with the added bonus of potential dividends.
It’s also helpful to point out the potential for growth opportunities or career advancement. USAmeriBank’s marketing team, for instance, would now be able to tout that they were marketing for a 230-branch regional bank with $37.5 billion in assets.
2. Be transparent: Openness and honesty go a long way toward maintaining the trust and buy-in of a team.
Chillura was forthright with his employees about why USAmeriBank was making this move, what the team would be doing differently and the positives to look forward to. But perhaps more importantly, the executive team didn’t sugarcoat details and admitted when there might be hurdles the team would need to overcome.
For example, when the bank merged its technology, employees were asked to transition from a “pretty nimble system,” to one that was more burdensome. Chillura says that management listened to and acknowledged employees’ concerns, telling them, “We know, and here’s what we’re doing about it.” Rather than avoid the hot button, management was clear about the reasoning behind the change and the plan to move forward.
3. Demonstrate a partnership (not a dictatorship): Showing employees leaders are approachable and open to ideas from both sides of the table helps to meld the teams.
For a company growing through acquisition, it’s easy to take the parent company’s existing leadership team, culture, processes and technology and prescribe them on the acquired business. But instead, management chose to demonstrate its willingness to adopt some of the new team’s strengths.
The company agreed for much of the leadership team to remain operating out of Florida, instead of relocating to headquarters, and based some key operational teams out of its newly acquired markets, such as SBA lending and marketing.
Another example is how the team decided to utilize casual internal videos as a means to communicate updates to employees — something USAmeriBank had done. Using something that felt familiar to USAmeriBank was disarming while also showcasing that Valley truly aimed to learn from and partner with USAmeriBank, rather than just bringing them onto an already moving train and hoping they’d fall in line.
4. Make cuts with dignity: With many acquisitions, there are redundancies that make reductions a necessity. When doing so, it’s important to use compassion and offer assistance whenever possible.
Chillura says they helped the impacted employees find other jobs and kept them on board until they transitioned. “We did it the right way,” he says, “in a way that they ended on good terms.”
5. Don’t forget your customers: Maintaining customers’ trust in your business paramount.
As a community bank transitioning to a much larger entity, USAmeriBank needed to be transparent in order to maintain its market share and continue its growth path. It also produced a video featuring a 6-year-old boy who used his birthday money to open his first bank account at USAmeriBank. The boy quizzed Valley’s CEO Ira Robbins and Chillura on what the deal would mean for his savings. The cute and quirky video was also a brilliant marketing play to ensure the bank maintained its backyard bank appeal with a more robust backbone of a larger system.
Acquisitions can be sensitive for all parties involved and have the potential to incite fear and anxiety among a team. Through careful considerations, executives can alleviate feelings of alarm and proactively maintain the support and engagement of a newly unified workforce.
Traci McMillan Beach's company, Craft Impact, partners with C-Level execs to build communication strategies that engage top talent and customers during organizational change. To discuss how communications can boost retention and operational excellence at your evolving business, email [email protected].