By Susan Letterman White
Resistance to change is always a danger even in small projects and promising innovations. But when a whole company is about to change its shape, to transform itself into something entirely different through a merger, emotions can run rampant. Rosabeth Moss Kanter (Supercorps)
Perhaps there is something inherently wrong with most of the advice suggesting a merger as a sensible strategic move. ALM research suggests that five years after a merger is announced, 30% of firms experience a drop in gross revenue, 73% of gains are actually less than peer firms experience, and 93% of firms see an increase in cost-per-lawyer despite the argument that mergers are a way to gain efficiencies and reduce expenses. Or, maybe there is another reason for these strategy failures.
When the financial analysis supports a decision for a merger or acquisition and the ongoing financial plan enhances financial stability, there is no reason for a merger to fail, yet they do. The same research references above suggests that disruption is commonly experienced following a merger. Mergers at the organization, group, and interpersonal levels are vulnerable to failure without a plan to address the to-be-expected resistance to change.
Recently, I worked with a large firm on a post-merger integration project aimed to reduce resistance at the group level. The combination of two firms resulted in friction among teams at the Chiefs, Directors, and Managers level. The old ways of doing things were not working effectively in the new firm. This is a common experience in any organization after a merger.
My sponsor within the firm and I worked together to design a program to reduce resistance. She recently reflected on that work and said, “teams are working more effectively than a couple of months ago. Whenever you can have folks communicate effectively and candidly about integration and discuss the concerns that people have, it reduces the anxiety that many may feel when firms initially merge.” That was our goal for a two-part pre- and post-lunch program at a two-day retreat.
In most combinations, success depended on people understanding what the combination means. How will the new puzzle pieces fit together to create a new firm? How will their piece of the puzzle fit? Are people at risk of losing their jobs? It is not an overstatement to say that a merger is a significant change process. During the early stages of any significant change processes, namely for the first year after the event, anxiety is high and confusion abounds.
In my client’s situation, each legacy firm had its own way of doing things – its own culture. Culture isn’t something people talk about. In fact, they usually do not notice it. Culture is the behavioral norms that results from shared, yet hidden and undiscussed assumptions and beliefs about how people should interact with each other and what is valued most and least.
When two cultures merge into something new and different, it’s a bumpy transition for many reasons. Some of those reasons are about the logistics, the actual organization dynamics change. Other reasons fall under the category of psychology – how human beings think and feel about change. People need to figure out how to navigate their differences and work together effectively and efficiently in the midst of changes to the law firm’s structures, processes, and resource allocation.
As is common in a merger, in my client’s situation, many people affected by the merger were on the same team and yet had never met. Even among those, who had communicated with each other, most did not know each other very well. They came from different organizations with different workplace cultures and had different work styles and processes. Superimposed over that, they had different, undiscussed assumptions of how they should be working together until they met at a two-day retreat. Merging the organization dynamics was as important as merging the cultures.
In a successful merger, different individuals, groups, and organizations with necessarily different identities and cultures are becoming a unified whole and if done correctly, the new organization develops into a fierce marketplace competitor. Done incorrectly, it’s may be a mistake from which the firm will never recover.
Key integration steps include the following.
Select the right people, groups, and firms. The group selected for the initial project included, Chiefs, Directors, and Managers. These individuals were responsible for working together and supporting the work of the overall firm and attorneys. The specific small working-groups were designed with the “right” people – people that needed to work together and solve their problems that were interfering with their ability to work together effectively and efficiently.
Demonstrate concern for people and respect for their feelings and situations. The two day-retreat created the time and space for people to talk about the merger and its effects. A significant component was a portion devoted to explaining the logistics and psychology of the merger and providing time to discuss individual experiences of these effects.
Integrate while acknowledging different identities and by choosing inclusion. Encourage new ideas and ways of thinking. Encourage people to challenge old ways of doing things. The retreat was part of an ongoing effort to acknowledge the differences of the two legacy firms, while also developing shared ideals and co-creating a shared future. The retreat included time for these firm leaders to collaborate as problem-solvers. They learned about the different legacy cultures driving how work was done effectively and efficiently and then began co-creating a new culture of new ways to effectively and efficiently working together.
Provide the space and time. Busy people need reasons and scheduled time to get to know and develop trust for one another. The two-day retreat did this. They were given a shared task to figure out how to improve their experience of working together and were also given time for informal networking to get to know each other better.
Mergers and integrations have the potential to jumpstart a new growth cycle for your law firm when leaders plan in advance to address the resistance that inevitably follows. That means paying equal attention to the logistics and the people affected and their wants, needs, expectations, interests, and concerns, and responding effectively and innovatively.
