Mergers and acquisitions are happening more frequently than ever in the healthcare industry. Hospitals are becoming multi-site health systems, healthcare companies are gobbling up biotech firms, and large pharmaceutical companies are merging into even bigger powerhouses.
Throughout this process, companies naturally focus on their external audiences: the media, investors and stock analysts, and the healthcare-consuming public. But this is a particularly critical time to focus on their most important internal audience: employees.
Edelman recently conducted a corporate benchmarking study in which companies were asked to rank the 10 most important communications functions. Internal communications ranked near the top. But when it came to budget priorites, internal communications dropped to a lowly eighth.
In fact, most companies spend only about $10 per employee per year on internal communications - barely enough for a modest Christmas party. Now consider this: when an employee leaves a company, that company spends a minimum of $8,300 per worker - in headhunter costs, the need for training a new employee, and the work lost between the time an employee leaves and a new one is hired. In the middle lies a gray area that can be another source of indirect costs: employees who are unhappy but remain at a company, often resulting in low productivity that can infect other employees.
Information, please
In the case of a merger, all eyes - external and internal - are on you. Your employees will be hearing all kinds of information from the rumor mill and from the media. Yet this is the time that companies are most likely to make mistakes when it comes to communicating with their employees.
One of the most common mistakes managers make is thinking that they have to have all the answers before they say anything to their employees. The reality is that it's much more important to continually provide information, even if you don't have the answers. Be honest. Report progress. Remember that your workers are your "spokespeople" to the community, whether they are at work, at the grocery store or at the neighborhood park. As such, they must be included in your information network.
Another area for improvement is follow-through. Mergers and acquisitions take time, and much will happen between the announcement and the closing of the deal. This leaves a lot of room for speculation and rumors to form - and thus is a key time for you to be providing constant, upfront communication with your employees. This frequency shows respect for your workers, and showing respect can go a long way in building loyalty.
Using New Tools and Technology
In this era of mergers and acquisitions, what can companies do to ensure they are communicating with their workers properly? First, think carefully about how you want to announce the change to your employees. You may be tempted to hold a large event, with the requisite fanfare and hoopla, at the site where the new company's home base will be. But if you have many workers in field offices, holding an event they cannot attend can be alienating. And if you are planning layoffs, a "pep rally" to announce the new company may seem inappropriate to some employees.
Consider other ways you can communicate with all of your workers. One tool for assisting in your announcement is "Meeting in a Box," a kit that helps middle managers tell the merger (or acquisition) story to regional and/or more junior-level employees. You can customize the Meeting in a Box to meet your needs, but in general it can include items such as a video with comments from the CEO, instructions on how to run your own local meeting, key message points, and a detailed Q&A. Managers using the kit can be given training in presentations and two-way communication to maximize their effectiveness when conducting their meetings.
Another important tool is an online, "third-party" news channel that provides news and other materials to employees to keep them involved in the merger or acquisition process. At Edelman we call it the Change Channel.
Unlike traditional company newsletters, a Change Channel can be updated quickly and easily to keep employees informed of what's happening and to keep you informed of how your employees are feeling.
To survive an M&A, do whatever you can to make people feel secure. If layoffs are in the picture, do everything you can to help those who will lose their jobs. Set them up with headhunters. Give them office space and the materials to update their resumes and make calls to prospective new employers. Make all of your employees proud of the company and how it treats people.
Today, internal public relations has become as strategically important as external PR. As you move forward, your employees must be part of your new vision. The rewards will be tangible: an enthusiastic, informed employee can be part of a critical core of positive "spokespeople" during your time of transition.
Nancy Turett is president of the healthcare and consumer divisions of Edelman Public Relations Worldwide. She can be reached at 212-704-8195 or [email protected].
Her contributing authors for this month's column are Fern Lazar, EVP of corporate healthcare, and Stan Steinreich, EVP and national director of change management communications at Edelman.
Online Merger Communications
During an M&A, your Intranet site should include:
- The latest news (such as press releases) from the new company.
- A message from the CEO (including sound and digitized video).
- A Q&A that can be updated.
- On-line chats with top management.