By John Celentano and Ken Banta
John Celentano, a senior advisor to Ernst & Young’s global life sciences practice, has led multiple life sciences carve-outs and integrations.
It’s hard enough to energize people in a merger or an acquisition when they know that they have a good chance of being part of the new organization. But a leader should also strive to win the loyalty and commitment of those who know that they are likely to lose their jobs.
Conventional management thinking often is, “We won’t spend too much time on people whose roles end with the transaction. They are not part of our future.” Nothing could be more mistaken. These colleagues are crucial to a successful transition. They powerfully influence the morale of those who will stay. Importantly, the mind-set of the “leavers” can significantly impact the reputation of the enterprise for many years to come, especially today, as social media multiplies the impact of any message.
To truly be a transformative leader in these circumstances, one must go the extra mile to make those who must leave feel like the key employees they are for as long as they are on the team.
Here are two cases that provide some important lessons that have applicability for many situations.
The first concerns a complex transatlantic acquisition of a biotech company by a pharmaceutical company. There were major overlaps in corporate and operational management positions, but most employees would be retained. An urgent challenge was to have all managers — including those who knew or feared they would eventually be terminated — be engaged as dynamic leaders.
The pivotal step occurred when the acquiring company’s CEO held in-person meetings with groups of managers from both companies to express empathy. He explained that he had experienced similar situations and understood that they were not easy. He acknowledged the tough choices and the real stress of uncertainty.
The CEO personally promised managers that they would be treated well, whether they were to leave or stay. He asked them to rise to a big challenge: the need to put aside their own anxieties to reassure and motivate their teams.
The result was galvanizing. Managers said how much they appreciated his candor and empathy. And, judging from employee surveys, most managers rose to the leadership challenge. Their people felt that managers had a revitalized commitment to caring for them and their own faith in their futures with the organization was renewed.
The second case involved the integration of a specialty company into a global pharmaceutical company. After the deal, it quickly became clear that a significant site would have to close, which would result in the loss of hundreds of jobs. Yet, a successful integration would require that the full team remain engaged until site closure occurred many months later.
The management team overseeing the integration recognized that the affected employees cared deeply about the work they did for patients, needed security and a sense of future for themselves and their families, and wanted to be treated with dignity. Meetings were held to forthrightly address the tough reality and to emphasize that the company respected the accomplishments of the departing employees and was sensitive to their personal and professional interests.
Management committed to communicate openly and regularly with employees, to keep them apprised of the planning horizon, to give 60 days’ notice, and to provide enhanced severance. Finally, the importance of continuing to serve the needs of countless thousands of patients was stressed.
Special attention was given to the site’s middle managers who felt both personal anxiety and responsibility for their people. A number of them were given leadership roles in the functional transition teams, which provided the affected employees with a seat at the management table.
Additionally, local managers were enlisted in a campaign to help their people prepare to find new jobs after the site closed. This included workshops on writing resumes and using LinkedIn, and coaching on how to translate skills and experience into new opportunities.
Trust was forged, and it grew. Knowledge and work were successfully transitioned from the site’s workforce to others taking on their jobs and the expected synergy from the merger was captured. Those who remained with the company were proud of how the transition was managed.
As these cases demonstrate, transformative leaders recognize the importance and impact of those who must leave, walk in their shoes, empathetically and candidly engage with them, restore confidence, and renew their sense of purpose. They provide concrete and emotional reasons for the departing to recommit to their current work and build a legacy that they can be proud of after they have moved on. By executing this role with excellence, they help secure the success of the enterprise.