There were approximately 14,000 corporate acquisitions in the US last year and the number is expected to increase this year. With all of the activity in acquisitions, many companies find themselves integrating acquired employees and too often treat them as new hires. This may be one of the major contributing factors to the high failure rate of acquisitions. (All reports and analyses put the failure rate at 60-80%.)

When an organization is acquired, there is often a frenzied period of planning to determine: Will there be layoffs? Will there be changes in salaries and benefits? Will other policies such as the travel and expense policy change? etc. The typical company addresses these issues within the first few weeks after the transaction closes. Some even conduct massive orientation programs for the new employees to help them understand the new benefits, the positive aspects of the company's culture and the like. Yet employees in acquired companies seem uncertain about the future in most cases, regardless of how positive a spin is placed on all of the above items.

Skepticism and distrust

Why don't companies succeed in winning over the hearts and minds of new employees? Why is there so much skepticism and distrust? This is almost always the case even when the new company offers richer benefits and wider opportunities. Of course it takes time to build trust, and this is to be expected. So often the conclusion is to ignore the distrust and give it some time. Working with the new company's management will win them over in time. This is the approach that most companies take, yet the high failure rates continue.

When companies are acquired, employees are thrown into "careers without consent." That is, the shareholders decided to sell and suddenly an announcement is made that informs employees that they are now working for another corporate entity. Of course they are skeptical. In the beginning they are often downright scared. But even after it has been determined that their jobs are safe, the survivors are wondering why they are working for this new company.

It's useful to consider why each of us takes a job in the first place. While salary and benefits are a factor, they are seldom the motivating reason for a job choice. The decision to put our careers on the line with a new company is more often related to job function and importance, our sense of accomplishment, recognition, and the feeling of being part of a winning team. In Maslow's hierarchy, our decision is based on much higher levels of need than the security needs of just any job with salary and benefits.

Acquirers convince themselves that the vast majority of the jobs in an acquired company have not changed much and therefore these issues shouldn't get in the way. They often underestimate the effects of: a shift in decision making; a change in leadership; a shift in strategy; and the effects of "conquering practices" on new employees. They ask: How important is my job to my new boss who is remotely located and has many more people working for him? How important is my opinion to the new company when it has yet to be requested? I have changed jobs without my consent, changed benefits without my input, and probably the strategy has shifted without really involving me. Many new practices are thrust upon me, running the gamut from new travel policies to new performance systems, to new IT systems. All, by the way, without my input. Feeling lost, ignored and confused, many employees decide to leave and go where they are wanted, listened to, and appreciated.

Beat the odds

What can an acquirer do to beat the odds? The answer is simple to say and complex to do. Simply said, it is important to engage new employees in the basic context of their jobs. What are the shifts in the strategy? How will it affect my goals and my day-to-day activities? How important am I to achieving the strategic goals? This cannot be achieved by a series of corporate pronouncements about the strategy and statements of "how important all of you in this room" are to us. It comes through real engagement, two-way dialogue, and willingness to compromise.

Not surprisingly, it takes an extraordinary effort to accomplish this with a large group of new employees in time to beat the exodus to competitive companies. Once the turnover begins, it creates a momentum of its own. Employees who have left know well the strengths and weaknesses of the current environment. They know who is committed and who is still undecided. Seeing good people leave adds to the uncertainty of continued survival of the organization.

The clock is ticking. You have a limited time to win over the hearts and minds of new employees and you will only do it with an extraordinary effort at immersing them in the implications of the strategic intent of the acquisition, engaging them, and renewing their importance to the organization and the new management team. Treating them as new hires is a recipe for failure. Treating them as an important new asset from whom you can learn and improve will get you closer to success, and engaging them quickly in meaningful dialogue will give you the best chance of success.

Dennis Fitzgerald is a partner in AcquisitionWorks, Inc. and a NEHRA member. He can be reached at dennis.fitzgerald@acquisitionworks.com.