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Working life - 23.04.2019 klo 10.50

The buyer sets the goals in corporate acquisitions – inform staff of changes in time

Professor Niina Nummela has studied corporate acquisitions and corporate cultures. Photo: Veli-Matti Väärä

A corporate acquisition may be a difficult thing to deal with, particularly for the staff of the company that is being bought. Will they keep their jobs? How will the working methods and atmosphere change?

When one company buys another, there is typically a transition period of a year or two during which the products, services, duties, organisations, teams and processes are merged. The most difficult and most time-consuming transition is combining two different corporate cultures, or the ways people cooperate, think and feel about their workplace.

“The socio-cultural integration can take years,” says Niina Nummela, professor of international business at the University of Turku.

Equal treatment for employees

The company buying another can determine to what extent it wants to merge the operations and corporate cultures.

“The fact that the buyer calls the shots can seem unfair. One pitfall of internal communications is to not explain what the changes are based on.”

It may be unnecessary to change the culture of the company being bought at all. This can be the case when the company being bought is small:

“They’ll change the business cards, logos and the colour of the work overalls, not much else,” Nummela says.

The pressures for change will be greater for the staff of a service company in the throes of a major corporate acquisition.

“The buyer wants the service experience provided by the company to be the same for all customers everywhere. Another basis for merging operations can be that employees must be treated equitably.”

A rarer option is that the merger of two companies will result in an entirely new, shared culture which combines traits from both companies.

Facts, not rumours

Acquisition negotiations for listed companies must be confidential, but once the deal has been struck, there is no such thing as too much communication. A corporate acquisition often generates false rumours, and setting them right afterwards may be difficult.

“The most important thing is to treat your employees with respect and to ensure an active dialogue,” Nummela explains.

“In the early stages, building trust requires that the employees from the two companies meet each other for long enough to get to know each other by sight. The emails should only come after that.”

Nummela calls it the 100-day rule. This means that the main issues must be announced to the staff within roughly three months of making the acquisition public. Otherwise the organisation begins to suffer, and key personnel may vote with their feet. This rule of thumb pertains to acquisitions where months of processing by competition authorities are not necessary.

One example of a major corporate acquisition and merger of corporate cultures in the service industry in Finland is when Scandic bought Restel’s hotel operations in late 2017.

Nummela’s tips for employees in a corporate acquisition:

  • Keep an open mind about the acquisition. The changes may also be good.
  • Talk about the changes and ask questions both from your supervisor and in the break room.
  • Positive and negative feelings are contagious – think about what kind of a work atmosphere you want to generate.