I recently spoke to graduate students at Baruch College in New York City. The topic was employee communications in M&A deals, and I introduced what I call “Richard’s Rules” for these situations. Here’s a sample.
1. News will leak, and usually at the worst time. Anyone who has handled communications for an M&A deal knows that a leak is always a possibility. People talk, rumors spread, and pretty soon there’s a call from a reporter or a blog post gone viral. For a recent example, look no further than Sunday afternoon’s announcement by HSBC that it would sell its retail bank branches in upstate New York. A carefully scripted plan was probably in the works for weeks, but news reports and Twitter chat likely forced an early announcement. As a result, employees first heard the news from press reports instead of bank executives.
2. Distribution, not content, is the root of failure. Companies labor for weeks over the language that will put their deal in the best possible light. But if employees cannot get the news, all that effort will be in vain. Email is great, so is Twitter; but employees on factory floors or distribution centers might not have access to them. Employees in overseas locations can miss an announcement if it’s made in the middle of the night in their time zone. So unless these distribution issues are addressed, employees will hear the news from friends, colleagues and competitors – and each will put their own take on it. Your chance to tell them first, in your words, is lost.
3. Fast and incomplete beats late and complete. In the mid-1990s, Dennis Weatherstone, the CEO of JPMorgan (and my boss at the time), introduced an innovation to manage the firm’s risk profile. Called the “Four-fifteen Report” it summarized – on a single page – the firm’s risk positions with 95% confidence as of 4:15pm, shortly before the close of the New York trading day.
This snapshot gave Weatherstone a good approximation of the firm’s risk and did it quickly, so he could act on it if needed. But, at 95% confidence, it wasn’t “perfect,” and that was its strength. Weatherstone was fond of pointing out that he easily could have a report with 100% confidence in a day or two – but it would be too late to be useful.
It’s much the same with communications. Information that’s sent quickly to employees and responds to immediate events is valuable, even if it doesn’t answer every question. Employees appreciate candor and timeliness, and a little bit can go a long way toward keeping trust and credibility high at a critical time.