After Merger, Workforce Performance Is Key to Success or Failure

Cingular has bid for AT&T Wireless, and J.P. Morgan Chase recently acquired Bank One, and more deals are in the making. But historically, at least 50 percent of these deals do not deliver the desired results. Learning executives can help ensur

With the economy easing into recovery, the return of major mergers and acquisitions is at hand. Cingular has bid for AT&T Wireless, and J.P. Morgan Chase recently acquired Bank One, and more deals are in the making. But historically, at least 50 percent of these deals do not deliver the desired results. Learning executives can help ensure success by paying attention to crucial workforce performance issues and ensuring employees of the merged organization have the skills needed to drive success.


According to Dr. Seth Leibler, chairman and CEO of The Center for Effective Performance (CEP), the underlying cause of poor performance of newly merged organizations is problems with workforce performance. “With all the mergers and acquisitions, the literature says that more than 75 percent of the time it fails to increase shareholder value, …and it’s primarily because of workforce performance problems,” Leibler said. “The bizarre thing is that they’re reasonably predictable, and if they’re predictable, they’re preventable. Even if they’re not prescient enough to predict it, after the event it’s relatively easy to identify them, figure out why they exist and solve them.”


Frequently following a merger or acquisition there are layoffs. To prevent this from leading to motivational and performance problems, companies must ensure that the remaining employees can handle the increased workloads of their expanded roles and responsibilities. “As soon as layoffs happen, there are additional motivational problems,” Leibler said. “People who aren’t laid off are expected to cover more jobs. The Wall Street Journal said two people are often required to do the work of three, and they don’t get any additional compensation.”


Layoffs divert employees’ attention from their own work, Leibler added. “People aren’t focusing on their jobs. They’re hanging around the water cooler saying, ‘What do you think is going to happen next?’ Motivational problems in these situations definitely increase turnover,” Leibler said. “When that happens, companies frequently lose the people they didn’t want to lose. The people who are most employable are often the first to jump ship.”


With the increase in turnover, companies often lose information that is crucial to running the business successfully. “Frequently, executives don’t know who is walking around with mission-critical information in their head, and you can lose those people either because they’re the first to jump ship or sometimes you make the decision from the executive suite that these are the people who are going to go,” said Leibler.


In addition to taking on expanded workloads, remaining employees often have to adopt new processes and procedures, or learn new skills function in their changing job roles. It is imperative that the remaining employees learn the skills they need to ensure the success of the newly merged organization. “When the nature of someone’s job changes, usually different skills are required,” Leibler explained. “Sometimes they’re additional skills, but they’re usually new and, frequently in this day and age, more complex skills. People don’t deal with change all that easily.”


People also may have had bad training experiences, and they don’t expect training to help them learn to perform new skills effectively. “Most people’s experience with training has been, ‘I don’t really learn how to do my job in training; I usually have to learn it on the job through trial and error. And now here’s this new organization, and there are certainly new expectations for my performance, and I’m pretty skeptical that I’m going to be able to acquire the skills easily.”


When employees expect to learn through trial and error, they also expect to make mistakes, and this leads to additional concerns and motivational issues. “That may affect my pay. It may affect whether they retain me or not,” Leibler said. “So there are motivational problems because it’s threatening. There are motivational problems because they’re not confident they’re going to get the skills. They know their jobs are changing, but people usually aren’t clear to them about how it’s changing, so they get nervous about that. So you can see that these motivational problems and skill problems, if allowed to exist, are going to inhibit desired job performance and actually increase turnover beyond what was expected.”


To handle these motivational and performance problems, organizations must ensure that their mid-level managers are able to handle the change process. Leibler explained that it’s the mid-level manager who is on the line because they’re the ones who are expected to handle performance problems, though they are rarely equipped to do so. “The people in the executive suite just think if there are people problems, they have managers throughout the organization who take care of it,” he said. “But you haven’t given them the tools to do that, so it snowballs.”


He added, “People really want to do a good job, they want to do quality work, but they have to know precisely what’s expected. They not only have to have the skills, but they have to have the confidence that they can apply those skills, and that only comes with state-of-the-art training.”


In addition to ensuring the workforce has the skills and the self-efficacy to apply those skills, organizations must measure job performance. “The cause of any performance problem is going to fall in any one of three areas,” Leibler explained. “People can’t do what you want them to do; they flat out lack the skill to do it, which is the only time training is an appropriate thing to do. Or, they won’t do what you want them to do; they lack the motivation to do it. Or there are other kinds of obstacles that prevent them from doing what you want them to do—a lack of time, the right supplies, equipment, information. So if you equip managers with that before a merger or acquisition, they would be able to do a much better job of quickly identifying and solving performance problems that are going to happen after the merger.”


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Emily Hollis is managing editor for Chief Learning Officer Magazine. She can be reached at