For proof that PR has stepped up its strategic role in the new economy, look no further than the 2,000+ mergers announced in the first quarter of 2000 (worth $455 billion,
according to Mergerstat.com). Communication is the glue that holds corporate marriages together. But it's seldom a blissful pronouncement. If your company is about to join the
growing ranks of the merger-maligned, realize that the role of the communications team is not to avoid a crisis. It's to manage one.
"Every merger is a crisis, plain and simple," says Jim Lukaszewski, a crisis consultant based in White Plains, N.Y. "There's this pervasive assumption [among employees] that a
merger is a planned execution, in which senior management has the whole thing mapped out. They don't. No one at the top knows what's going on, either."
One reason for the confusion is timing. The average distance between a handshake deal (among CEOs and investment banks) and an official merger announcement is usually less
than a week. During this quiet period, it's the senior PR counselor's responsibility to orchestrate a plan for launching the news simultaneously to every stakeholder group -
including investors, analysts, the media, customers, community officials, employees, union leaders and other key influencers. While selective disclosure law prohibits companies
from divulging information to any one group first (including staff), most experts agree that the communications emphasis after the announcement should be weighted heavily
toward employees.
"A merger is a huge disrupter in people's lives," says Bill White, VP corporate communications at telecom giant Sprint, which announced it would be acquired by MCI WorldCom
last October. Employees' immediate concerns are always the "me" questions - fears about job security, benefits, and the like. "If there's no information available, people will
create their own information to fill that vacuum," he says. And usually the scenarios they dream up are far worse than the reality of the situation. Communication has to be
swift and honest to curtail the rumor mill.
Judgment Day
Sprint kicked off its merger announcement at 7 a.m. on a Tuesday with a newswire release, followed by a notice to employees from CEO Bill Esrey via Sprint Daily, the
company's email/fax newsletter. Later that morning, 1,500 director-level managers watched a press conference via satellite feed. "This was so they could see our CEO explaining
the merger to the media and investors," White says. Reporters tend to ask the same kinds of "human-side" questions that employees ask, so this was a good way to prepare managers
for the day ahead.
"The important question to ask [before a merger] is do you have processes in place for information to cascade down from executives to their direct reports to managers to front-
line employees?" White says. Do you have channels for employees to ask questions? Do you have an Intranet site that gives people immediate and constant access to information?
If you've already got the infrastructure in place, you can plug in the content quickly. "It doesn't take long to replace a tire if you've got a jack and a spare tire in your
trunk already," he says. "But if you aren't equipped, you're out of luck."
Don't Ignore the Negative
While it's important to communicate the positive aspects of a merger to employees, ignoring or denying the negatives will only hurt your credibility. "The worst thing you can
do is make promises you can't keep - like job security," says Jack Bergen, president of the Council of PR Firms, who previously managed mergers for Westinghouse and GE. "It's
better to be honest about what you don't know. The fact is, in situations like this, the future of the business and its employees is often decided in the months after the
initial announcement."
This challenge is compounded by the fact that companies immersed in the merger process are reinvented not once, but rather every 100 days for the first three years after a
merger (which means most businesses operating in the present economy are in a perpetual state of flux). "It's called the 100-day cycle," Lukaszewski says. "Decisions get made.
Then people learn from their mistakes and make more changes. "
PR's challenge is to set a communications plan in motion and remind managers to keep the lines open, two-way and constant. The more they show their human side, the better. In
the weeks following Sprint's merger announcement, the CEO and COO traveled around the country for face-to-face Q&A sessions with front-line employees.
Jim Gregory, president of the consulting firm Corporate Branding L.L.C., recalls one Fortune 1000 merger in which disgruntled employees launched an underground newsletter,
urging their fellow staffers to rebel. "It was really damaging and had a huge readership," he says. "To counteract it, we created an underground newsletter of our own, in which
the company did a spoof on itself. It set the record straight on some [policies and decisions], but it also showed that the company's leaders had a sense of humor and weren't a
sinister bunch dedicated to punishing their employees." Three months after the counter-attack zine was casually dispensed in bathrooms, kitchens and other popular reading areas,
the original gripe-letter went defunct.
Be Prepared
In the best of all possible worlds, senior level communications counselors are pulled into the merger planning process at the same time as the COO, legal counsel and VP of HR.
Naturally, PR's admittance to this inner circle is ultimately decided by the CEO. But PR counselors can increase their chances of having a seat at the table by being prepared for
multiple contingencies.
The good news is that in today's merger nation, there are plenty of live examples to use as models. Craft a plan based on others' best practices and CEOs will listen,
Lukaszewski says. "Imagine two scenarios. A takeover plan involves messages that explain, explore and reassure. A plan for being acquired talks about fitting into a new
organizational culture, communicating what's happening and helping people decide whether to stay."
Which raises an important point. People will leave no matter what - even in the best handled situations. "The fact is, you know you're not going to manage a merger
well," Lukaszewski says. "The silliest quote I ever heard was from the chairman of DaimlerChrysler, 30 days after their merger was a signed deal. He said, 'The merger is now
complete and perfect.' Of course it wasn't over at that point. In executive decision-making, 50 percent of your energy each day goes into fixing the mistakes and bad decisions
from yesterday."
Need we say more about PR's relevance in the merger equation?
(Lukaszewski, 914/681-0000; White, 913/624-8594; Bergen, 877/773-4767; Gregory,
203/327-6333)
Internal Backbone
Jim Lukaszewski maps out the critical elements of a sound internal plan during a merger:
Let employees grieve. Give them a handbook to help them cope with emotional stress. Map out what will happenin the merger cycle on a weekly basis.
Mandate real-time communication. Ensure that managers get daily updates from the senior team. Keep the information flow constant to alleviate paralysis and preempt
rumors.
Say less, but reiterate key messages frequently. The more you say, the less you'll be understood. Determine which messages are essential and repeat them.
10 Reminders For Employees
From the Employee Survival Guide to M&As, by Price Pritchett, Ph.D:
1. Control your attitude
2. Be tolerant of management mistakes
3. Expect change and be a change agent
4. Don't blame everything you don't like on the merger
5. Be prepared for psychological soreness
6. Get to know the other company
7. Use the merger as an opportunity for growth
8. Keep your sense of humor
9. Practice good stress management techniques
10. Keep doing your job
For more information, call Pritchett-Rummler-Brache (Plano, Texas) at 800/992-5922.This article is the first in a three-part series on merger
communications. Watch for discussions of media relations, I/R and other stakeholder interests in a merger in upcoming issues of PR NEWS.