Today I am here with Stephanie Carty, a corporate communications professional. Her expertise is executive communication, ensuring that top leaders are communicating with honesty, clarity, and credibility. In this episode, we will talk about how to best prepare for day one and avoid disasters.
Maybe if we could just kick off with a brief introduction on yourself?
I have been doing employee and executive communications for over 15 years with a variety of different companies, including GE and KPMG, and more recently in the healthcare space. My role is internal communications, helping make sure that executives communicate with their employees and that their employees understand the why behind changes within the organization. I have been involved in everything, from divestitures to acquisitions to mergers and other significant events that impact everyone involved, no matter where they are in the organization.
Can you start me off from the beginning, when does planing actually start?
As soon as possible. Communications planning typically begins right before signing. Even just knowing that a transaction is in consideration is useful for the communications team. Most transactions have a signing announcement and then they have a closing announcement.
How do you go about preparing for it? Who is involved?
Everybody should be involved. Internal communications can sit within several different places within a company, so sometimes internal communications is part of marketing, sometimes a part of HR, and sometimes doesn’t exist at all. Us getting involved in the beginning makes a lot more sense, so we can keep employees connected, instead of them learning about something from a press release.
Do you have a view in terms of where communications sit? Is there something you see in your experience where it is ideal?
If there is a corporate communications function itself that is standalone, separate, that works great, especially for companies who have a lot of merger and acquisition activity. If there is not such a function, it has to be between marketing or HR. I find that it fits better with HR because the HR team tends to be more in touch with the employee response and the culture, so communications are connected to the actual changes employees are going to experience. Most marketing people can consider employees, but that is not their priority.
Let’s talk about the components that go into communication. Could you maybe outline if there are any of those that I missed and in what order?
If we are announcing that we are signing an agreement to make something happen, there is a press release and an internal announcement, depending on the size of the organization and whether the organization is privately or publicly held. If it is publicly held, a press release is almost always required. What I always want to make sure is to communicate with employees concurrently with the press release because of concerns about insider trading.
Sometimes you would have a microsite, just dedicated to materials about the transaction, if it's a merger it is a combined site. If you are having events going on during the announcements and the media inquiry process, you need to let people know what they are allowed to say during those events.
When things are said and done, what is the difference between announcing deals ahead of time versus announcing them when they are closed?
If a transaction is significant enough and the company is public they are going to announce it. Privately held companies have a lot more leeway than they get excited sometimes and they just want to go ahead and announce it. Because they are privately held they tend to be more open with their employees. In a lot of circumstances, you can’t do that, because it is material information.
It seems like, and correct me if I’m wrong, that it’s just generally better to start talking about this earlier than later.
Yes, because it gets out very, very quickly. It’s always better to start talking about it as soon as you can internally. People pay more attention than you would expect they might.
What are the components of M&A integration people don’t realize go into a smooth transition?
I don’t think anybody who is not in the thick of things gets how much work is involved and how many people have to go talk to one another and figure out the mechanics doing due diligence and how complicated that can be. It’s a lot that goes on before that signing announcement even happens.
Then you’ve got two companies who have never worked with each other before, so they are trying to get to know each other, figuring out who is taking the lead on what and who is drafting what. There is a lot of planning and research that people are doing before they can even say they would like to do business with each other.
What are some of the behind the scenes things that you do that are not necessarily seen externally, but are very important to do or manage?
It is all just tactical logistics of making communications happen. To be able to communicate with your own employees is not an easy thing, much less communicating with those that are not yet yours, or have just become yours. You would think that leading companies would have very clear distribution lists and defined groups of people to send things to, but these outlook distribution lists are just chaos.
What drives a smooth transition?
The leaders taking it seriously, being very engaged and concerned about the impact on their employees, rather than having a ‘’we’ll talk to the employees later’’ attitude.
How can you tell there is good leadership versus when there is not?
It's how much attention they pay to it and asking the right questions such as
- Where should I be?
- Who should I meet with?
- How should I connect with these employees?
Talking to a new group at a place of change when you don’t have all the answers is an uncomfortable thing and when there are leaders who are comfortable with telling people that they don’t have the answers yet - that is the difference in leadership.
Can you walk me through milestones when communicating M&A?
We talked about signing the agreement. There may be regulatory approvals along the way that have to be garnered and those are nice points of communication for you to be able to say we’ve made this progress. If you have a good integration team together that’s pulled together prior to closing that can be communicated as a milestone. Then it really works up to closing, which is day one and there is a good deal of communication people may need on that first day, depending on the scope of the change.
I think that people who don’t really know integration have that view that they should delay it and do it over time.
I’ve not seen it work unless you truly have no intention of integrating the company and really want to operate them separately. That is alright, but still not great because people want to know where they stand with that change.
What is day one like?
It’s exciting! It’s exhausting for a communicator, but from the employee experience, they should have some sense of what has happened, what they are saying, who they are saying it to now, and what they can expect.
The really good day ones I have seen had a really high executive touch at all leadership levels. If you can make it feel like a fresh start for people, that’s good. It involves talking about what’s important to the company and the direction for the company and helping people make the simple changes they need to make and process things. Essentially, the best thing you can do is equip people to communicate themselves.
What often goes wrong?
People say they are going to do it and communicate themselves and they don’t. When leaders don’t host a meeting with their teams, that can leave a real gap and people can take it personally as well. There are also technical problems when you can’t get to people due to technical issues and they may not find out that there was an announcement, although that is rarer these days.
What are the biggest concerns from the employee’s perspective? Do I still have a job? Am I getting paid? What else?
Number one is do I still have a job. Number two is what’s happening to my benefits. Number three is usually can I work in another office or what’s happening to my health care. They essentially want to know what the change means for them.
What happens after day one?
Hopefully, you start working on integration and then you get a whole lot of tactical communications around email integrations and system integrations. People often get frustrated at this point because the systems they knew how to use are being replaced with new ones. It may feel like an arbitrary change and it may not be a positive change in all cases.
Do you think it’s going to get faster, having in mind the new technologies?
I think for smaller organizations it can go faster because people are more on cloud-based tools that are easier to integrate, while larger organizations are still working on massive legacy systems and they are not easy to connect to other things.
Stephanie, what kind of surprises have you seen?
Sometimes leaders and companies don’t show up at all for a day one. A good acquisition to me has a degree of handover between the two teams and some leaders have just not shown up. The impression they gave was - we are leaving you behind and abandoning ship. Sometimes leaders take it on themselves to announce things before they’re decided.
Can you give me an example of what not to do on day one or leading up to day one?
Don’t talk about change too much without being specific what that change is going to be like for them. Don’t hand your employees off without saying goodbye,instead treat them as valuable, because you might want them in the future or you may have them as a customer in the future.
Don’t do the massive layoffs if you are going to have them more than three weeks after the close. People start getting comfortable that nothings going to be announced, so if you do it then, they may get really surprised by layoffs and major changes in leadership. They expect a change early. The longer things take to change the more dramatic it feels.
What makes communication for day one so taxing or difficult?
You have to get everybody on the same page. I am working with communications professionals I don’t know, I don’t know their channels or their language, so it’s working with a completely new team to create something that makes sense to a new combination of people.
Some organisations have leadership communications that go to specific levels of employees, but if you try to go deeper into the organisation, they may simply not have a practice of doing it and may not be able to. This is why getting aligned with how employees are used to being communicated with matters.
Take an example: We are going to layoff 30 percent of the workforce. Can you please walk me through a good way to communicate that.
You want to do a cascade of verbal information before broad announcements are made. If you are going to have a large reduction in force, you would have a plan for how you are going to address the people who are immediately being impacted. You do notifications of impacted and non-impacted employees and then you do a general announcement. If you are notifying people, it should happen in a 24 hour period and it is crucial to be as specific in the broad announcement as you can.
What about when you are giving news to those that are impacted? How much of the why do you want to divulge?
You want it to make sense to them and to not be personal, because typically, if it's a layoff, it is not personal, it is because the job has been eliminated. The why isn’t going to make it through the fear response and the emotional reaction, because they have lost a job, but you do want to equip people with it so that they can come back to it and you do want to help people make sense of that.
Any other advice you’d give to me on my next acquisition when I have to do my day one announcements?
Make sure you have a communicator with you. The advice is to think about who would feel like they should be included in communications and then equip them to help you communicate.
What’s the craziest thing you have seen in M&A?
I did twenty five versions of a com plan before we had a buy.
Is it generally a good practice to have a series of iterations of things that are well thought out?
Yes, definitely. Because writing what you are actually going to say about a deal drives decision making. I am not helping people communicate what they have decided, I am helping them see what needs to be decided. I come to these things with questions that I know employees will ask. Would I say this to my employee? Would it make sense to them? Would they buy it? Is it true? And my standard is that it always has to be true.
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