Although the insurance industry may not garner the same flashy headlines so often reserved for powerful technology companies, it has nevertheless proven to be quite a dynamic player in today’s economy. In the first half of 2018, much of that excitement came as a result of mergers and acquisitions. A PWC report indicated that 247 deals in the insurance sector were announced with a total value of $28.6 billion. An S&P Global analysis estimated that the total deal value of 2018 would increase from 2017 by about 150 percent, which makes quite a case for the significance of this activity. While many of these deals were driven by interest in international markets and the windfall from federal tax reform, many insurance companies used the merger and acquisition process to diversify their product offerings and increase specialization in niche markets.
One of the biggest challenges leaders face during mergers and acquisition activity is helping employees deal with the transition period. The announcement of a merger can send shockwaves through an organization, potentially threatening productivity and engagement as employees worry about their job security and the extent of cultural and organizational changes that could be coming in the future.
Fortunately, there are a number of steps leaders can take to make the transition as smooth as possible for employees.
Be Transparent and Accurate
Information is critical to any successful change situation. If employees know what is happening and what to expect in the future, they’ll be better equipped to handle the challenges of the transition. It’s important to be very clear and transparent about the situation to maintain the trust and confidence of employees. In today’s information-rich digital world, it’s difficult to keep secrecy surrounding public events like corporate mergers and acquisitions.
By the same token, any information provided should be as accurate as possible. Telling employees what “might” happen or what is “expected” to happen before plans are actually finalized is bound to result in resentment and distrust if those claims don’t end up being true. Keeping people informed about the state of the merger and acquisition process is very important, even if the update doesn’t have any new information to share.
Give People a Chance to Provide Input
Employees are bound to have many concerns about the future of the organization (and, more specifically, their role within it). Restricting the flow of information can cause people to feel neglected, unappreciated, and unwanted. Taking the time to solicit feedback from employees and allowing them to ask questions helps them feel like their concerns matter and gives leaders an opportunity to empathize with their situation.
Having direct feedback from employees also shows leaders what issues matter most to people. This is valuable information because any transition period is going to require the cooperation of employees. Knowing what concerns they have in a mergers and acquisitions situation allows leaders to implement a more effective change strategy capable of securing their buy-in.
Establish a Compelling Narrative
All company mergers and acquisitions happen for a reason. Some provide an opportunity for growth while others are focused on obtaining a specific benefit like a new service or presence in a new market. An understanding of the nature and benefits of mergers and acquisitions has a major impact on how they will actually be implemented.
Rather than dwelling on how the mergers and acquisitions process could change the way a company operates, a compelling narrative can focus on the future, highlighting how the change will open up a new range of possibilities. For employees, this could include development opportunities, new leadership roles, or even the chance to take part in new working arrangements like virtual or cross-functional teams.
Think About Culture
Integrating separate companies as part of a merger and acquisition process can significantly impact organizational culture. The culture of a workplace isn’t just an expression of its core values (although those are important); it also reflects the collective behavior, experience and history of the company itself and the people who work there. Mergers have the potential to completely change those dynamics. If a company that primarily sells auto insurance suddenly merges with a company that provides life insurance, for example, leadership will be tasked with reconciling the way these companies view their customers and the marketplace.
While a transitionary period may see key players in the integration process operating in a siloed fashion, those distinctions will need to be broken down and replaced by a unified set of processes and cultural expectations if the new organization is going to operate effectively.
As company mergers and acquisitions continue to reshape the insurance industry, leaders need to think about how they can take a proactive role in facilitating these complex change situations. By working closely with employees and remembering how these changes impact people’s lives and careers, they can diminish resistance to change and positively shape the future of the newly created organization.