The Pfizer and Allergan merger is a game changer in the pharmaceutical industry, creating the biggest drug maker in the world. The complexities of reaching this landmark agreement cannot be overestimated, and yet the hardest work starts now.
Undoubtedly, this kind of news will raise questions among staff about what the merger could cost them personally, whether it is money, colleagues, privileges, the job itself, or more generally the loss of a comfortable status quo. In addition, vast cultural differences between the two firms could create a talent drain if not handled sensitively.
In light of these bubbling internal challenges, how can Pfizer’s leadership team – and others going through such a transition – ensure they integrate effectively and so greatly increase their chances of a successful M&A?
1: Create a strong narrative
One of the greatest challenges, and one of the most common reasons mergers fail, is that firms fail to build a strong internal narrative that the employees of both firms can engage with, both logically and emotionally. It’s vital that this narrative transcends any differences between the firms, and that the new firm becomes more than simply the sum of its parts. In doing so all staff gain a collective vision to work towards.
One example of the importance of this story can be seen in the difference between Pfizer and Allergan’s approach to research and development. Pfizer’s product portfolio is built on a strong scientific heritage and a much lauded research team, something that the company describes as ‘at the heart of fulfilling Pfizer’s purpose’. On the other hand, Allergan’s CEO, Brent Saunders is a well-known sceptic of in-house drug discovery.
Across an organisation the size of both Pfizer and Allergan, a clear strategy and a narrative that focuses on and reaches out to every employee’s own story are essential to start to iron out such differences and help people understand what the future holds.
Vast cultural differences between the two firms could create a talent drain
2: Empower employees
Achieving a narrative that all staff feel connected to requires more than clear vision from the board, it must be something that is supported by all levels of the business. The emotional and cultural identity that connects employees to their firms is one of the most widely recognised drivers of loyalty, engagement and productivity, meaning that the threat from a deal can have far-reaching consequences. Even staff that don’t take this as their cue to start job-hunting may diminish the value of the deal simply through the reduced quality of their work due to the upheaval they are experiencing.
To staff who are not directly involved in the acquisition, the change can feel like a loss of professional identity. In this case, Pfizer is indirectly asking Allergan’s employees to become part of an entirely new culture. Moreover, the new culture is that of a former competitor, and therefore one which in the past will have been viewed as alien, or even opposing.
To place the narrative of change squarely in front of every team throughout the company and secure the maximum buy-in, individuals also need to be directly involved.
Companies that do this best will devolve responsibility for implementation of top-level changes to staff at every level, even giving them a direct say in how the changes will be made to work.
If employees have individually authored change within their own corner of the business, it immediately moves from something threatening to something personal and collaborative.
3: Secure buy-in from the leadership
Getting a giant multinational corporation on board with large-scale change cannot be achieved by central leadership alone. In disruptive times, people look to their leaders for clarity and meaning about what is going on. It is therefore critical that leaders at every level are aligned to the change. The companies that manage it most successfully will concentrate first on the leaders, equipping them with the new company’s vision, and enabling them to take that vision down the chain. In helping their teams to understand and support what is going on they will also be reducing the fear of the unknown and securing the same buy-in from their managers and staff.
Only when leaders at every level of the company are empowered and trained to align their teams behind change will the value of a deal have the best chance of being retained. The earlier this happens in the acquisition process, the better.
4: Identify the quick wins
It’s very easy for corporations to underestimate the concerns of their employees and the extent of the knowledge and speculation that permeates a company from the very beginning of M&A talks. Once this begins, the fear factor and rumour mill knit together into a narrative of change which is often far more negative than the truth. In these situations, employees can often see themselves as the victims of change.
To bring home the positive narrative to all employees and help quash negative speculation, companies can have great success identifying short-term wins that fit into their narrative. By helping leaders at all levels to celebrate team successes that drive the company forwards, the success story will already have begun. Championing employee contributions to the new company narrative gives managers the opportunity to mitigate the victim status, and instead make employees into the heroes driving forward the company’s evolution.