AT&T recently announced it would buy T-Mobile USA from Deutsche Telekom for $39 billion. If the deal goes through, AT&T would become the number one wireless company in the United States. The Wall Street Journal estimated that the combined entity would be about a third larger than the country’s current leader, Verizon Wireless, and would have more than twice the subscribers as Sprint Nextel.
This development has spurred many people into action. As lobbyists, politicos and shareholders are campaigning and debating, the Federal Communications Commission (which has the power to kick the deal to the curb) is wrestling with the issue of how to expand access to mobile broadband services while keeping competition healthy.
AT&T is doing what it can to ensure the merger passes. The company has a history of strong influence in legislative decisions, as the Wall Street Journal recently reported: “Since 1989 AT&T has been the top corporate donor to members of Congress, shelling out more than $46 million in campaign contributions to both Republicans and Democrats, according to the Center for Responsive Politics… Last year, the company spent $15.4 million on lobbying in Washington. It had 93 lobbyists working on its behalf, federal lobbying records show.”
In all of this jockeying to ensure the merger goes through, one core element that is rarely mentioned is the “people impact” – or what effect the merger will have on the employees within these companies. It’s challenging to undergo a transition and oftentimes the people impact is most overlooked. And still, people are resilient. As Jim Collins artfully stated, if you have the “right people on the bus,” they will ride the tidal waves of change with you.
Although this may be true, people don’t just spring back effortlessly from major changes. Many different kinds of people impacts should be considered when an organization goes through change, including: how will roles and responsibilities change, who will be in charge of what, how long will the change last, what is the roll out plan, how soon will employees feel the impact, which jobs will be lost, how will innovation be impacted, etc.
An article in The Journal of Business & Economics Research, entitled “Telecommunications Mega-Mergers: Impact On Employee Morale And Turnover Intention” (by Keisha Chambers, PhD, Capella University, USA and Andrew Honeycutt, DBA, Anaheim University, USA), states: “Only 30-40% of all mergers and acquisitions are successful..., The key element to the success of a merger or acquisition is often overlooked, that key element being, human capital.”
If you chart the annals of AT&T’s past, it becomes clear that the company does not have a shining record of restructurings. While AT&T still needs the FCC’s approval in order to carry out the merger, in order for the company to ensure the merger is successful, it must win the support of its people. On top of that, in order to fully integrate the two companies, AT&T must coordinate vision, mission, business units and strategies while harmonizing leadership and management styles and structures and cultures. If you thought mergers were only about money and gaining a competitive edge, think again.
A merger is a transition. In any transition, whether large or small, there are high-level, key steps that you must take to ensure that your strategic plan foremost considers your human capital:
1. Culture integration – Be mindful that there are two cultures being integrated into one. How far will you maintain or absorb the cultures of one or both companies? Which norms and values will be merged? How can you inspire unity with your new-found entity when one company is absorbed into another?
2. Culture patience - be willing to spend the time to create a new culture that utilizes the best of both companies.
3. Honesty is the best policy – be honest with all employees about the transition. People will be most concerned if they will still have a job.
4. Communicate, communicate, communicate – let employees know what is happening every step of the way and anticipate critical messages ahead of time.
5. Engagement – remember that transitions make it tough for employees to stay engaged. Not knowing what will happen next can create frustration and resentment. When there is a lack of positive morale, good people often leave the company. Consider innovative ways to continue to invigorate employees during these sensitive times.
6. Temporary systems – think about what temporary systems you can create to give employees a foundation that offers comfort when they feel lost and confused.
By creating strategies that consider how transitions impact the workforce, organizations can gain a competitive advantage. When cultures are integrated properly, the new organization may gain critical skills, which determine success in today’s competitive market. With that, good business is guaranteed.
