Could we talk about excellence in leadership and how you might define that?

I think that we can sometimes talk about an entrepreneurial manager and a leader, various different types of role that people can play at a senior level in an organization. I would sometimes differentiate managers or managements as: Managers manage things or processes and Leaders lead people. So we have a difference between processes/things and people. What does that really mean? It means that leaders have to engage with people at an emotional level, not simply at a functional or a disciplinary level. Leaders need to inspire, influence and ultimately motivate other people to do what they want them to do. Motivate rather than manipulate! That for me is really what leadership is all about. Hopefully leadership is taken in a positive direction and that influence and motivation is done in a constructive way to create ‘Good’. Whether that’s value, shareholder value etc.

Clearly there have been tremendously catastrophic examples throughout history of very powerful and extremely successful ‘leaders’ who have led their people in destructive directions, wars have started for reasons such as that. The power of leadership can also be used to take people in a tremendously destructive and ‘bad’ direction. I think that leadership really is about taking people somewhere different and if it’s used well, taking them somewhere better.

What role does emotional intelligence play in that story?

I think emotional quotient/emotional intelligence and social quotient/social intelligence are both extremely important attributes in a successful leader in a modern environment. That being said, the different type of leadership skills that may need to be played out exhibited, manifested at a particular time, or in a particular organizational culture, will need to be very different.

If we have a manager with extremely good emotional intelligence/social intelligence working in a very disciplinary, functional, numbers oriented, process-oriented environment then we have the most terrible cultural mis-match. Both the organization is going to find this person rather strange and the person is going to find the organization rather frustrating. Similarly, if we’re at war, literally at war, yes clearly soldiers and military leaders sometimes need to display incredible emotional intelligence to the people around them in the most frightening situations but at certain other times they need to present authority. Very simple leadership is sometimes about authority.

Those are some polar extremes there but in certain business situations there comes a point where we need to say “I’m very sorry, but this is the way it’s going to be.” To associate leadership with authority is perhaps a very strong historical link, but sometimes it’s still relevant.
The emotional intelligence and social intelligence are very critical in modern business environments, especially in smaller companies that are operating outside of a traditional corporate setup. However, if you’re walking into a traditional corporate setup, perhaps an organization with a strong Japanese type culture or something like that, then you might find other functional, technical attributes significantly more important in your leadership style than emotional intelligence.

I think an approach that fits the requirements, if you’re willing to adapt and if you’re style is clearly very different to the culture in which you’re operating then you either make a quick decision as to whether you can influence the culture more in the direction that you feel comfortable or whether you need to influence your life in a different direction with a different company where you’ll feel more at home.

Could you say a few quick words on the logic of Mergers and Acquisitions in Industrial Gasses and the appeal of deal-making within this industry?

Scale really matters. Operational density and intensity really matters within power zones, these are the drivers of profitability. As the industry has consolidated in the past prices have tended to move up, EBIT margins have tended to move up, so the industrial logic for consolidation in the sector has been very similar to any other businesses such as those operating in the Pharmaceuticals or Chemical sectors.

The deals have been fundamentally around scale, not so much technology. In the world of High-tech, sometimes people make acquisitions to bolt on bits of technology into their organization. That’s not so much been the driver, it’s more about driving efficiency, scale, profitability, in terms of price and cost.

Scale matters, density matters, these are the main drivers of profitability. Understanding that means that you’re 90% of the way there to being a good leader and a good executive in the sector.

Could you take us through your experience in acquiring businesses and the leadership demands that were placed on you?

When we think about what I said earlier about M&A being very much a classical and typical change management process, the leadership skills required to operate effectively in an M&A situation are pretty much the same as we would need in any significant change situation. Frankly speaking that we would need to lead our teams daily, whatever is going on. We are always faced with change, evolving our business, the environment around us is evolving also. During a major M&A situation it’s simply more intense. We’re working at a faster pace, people’s emotional stimulation is more intense, the stakes are higher and it means more in terms of the risks.

We might have just paid a lot of money for a company; we need to get it right and don’t want to lose the value that we’ve put in. People’s lives and jobs are at stake, they might need to relocate or switch roles. The consequences of change can go beyond the professional and into the personal. The level of intensity is quite extreme, but the principals are no different to being a leader in daily business or any other change situation. What’s absolutely critical in my opinion, in terms of leadership in this intense environment or in fact in a daily situation, are some of the social and emotional empathetic people skills that we demonstrate through our leadership. How we manage people’s hope, their motivation, sense of purpose and how we communicate with people with empathy. Communication is not just talking to them or at them, but listening to them.

Communication is very much a two-way process; it involves the words we use and the emotions we express and acknowledge in others. These for me are the absolute core fundamentals of leaders and are some of the things that differentiate functional managers who might be extremely good at what they do technically from leaders who while they are good technically and functionally also recognize that it’s the people around them who are going to make the difference between success and failure in the M&A situation, or to be honest in any major change situation.

Could you describe to us the experience the BOC/Linde deal. With emphasis on the experience of being acquired?

Here are two very large organizations that are coming together, each with multi-billion-dollar turnover. The year is 2007, so more than ten years ago. Both of the companies having global operations and a mixture of local businesses and global teams. In any one particular country you might have had a Linde and a BOC team coming together in that particular country. Effectively the whole deal can be looked at as the combination of 10-14 different country businesses, so 10-14 different acquisitions to bind together and integrate. In addition to that both organizations had a global or a super-regional team, for example an EMEA team or a North America team. You have regional teams to bind together as well as global teams to bind together. Whether that be functional teams such as HR or Finance operating at a global level or global business management teams.

Global, Regional and Local, three layers in the hierarchy of integration to take place. That made it a very complex integration process. The stakes were pretty high, both were public listed companies with very successful track records, expectations from the financial community were high, synergy promises, cost commitments, revenue commitments had all been made and were expected to be delivered. People’s reputations as CEO or senior business leaders were at stake in making sure that they were delivered.

From my perspective being part of the BOC Global business leadership team at that time, we were being bought. Financially that was very clear to us, it was an acquisition of BOC by Linde, but I must be very honest, the process felt very equitable and felt more like a merger. Financially the transaction was an acquisition, but the way the processes were led and the amount of respect that was shown on both sides for the other side felt very equitable and what you might intuitively expect a merger process to feel like.
The internal and external communication was that it was a merger of equals despite the financial transaction actually being an acquisition.

What are the practical ways in which respect was shown?

Making sure that a similar number of representatives from each particular legacy company were appointed to senior management roles within a management team. A very visible way that the history and track record of senior managers from both sides was reflected. On the board for example, three board members from legacy BOC and three from legacy Linde. In the management of the global business leadership team maybe there were eight roles, perhaps five from one side and three from another, or four and four, things like that. These were extremely visible and tangible, it wasn’t like one side was crushing the other in these very visible situations. Things like this which were extremely real, were done in a very fair way. Maybe two or three years later the picture changed as people chose to voluntarily leave or people realized that perhaps they weren’t a round peg in a round hole and might have moved on.

Over time things change but from day one it was a very clear intent to have things very equitable in that particular way. On the merger and integration planning teams, which were groups of people, cross-functional teams working in similar business areas for example. Combining very senior people perhaps with more junior people, really to get the job of planning and planning synergies and executing and delivering on those synergies done. In those teams as well, it was a very equitable mix of experts from one organization plus experts from another organization. Maybe two or three people with a senior coordinating role from a mix of both companies at the top of that merger and integration planning team, trying to drive it forward.

There seems to be a phenomenon that leadership sometimes underestimates how much people who shouldn’t really worry, actually do worry about their fate or position in the evolving organization. The communication strategy is absolutely central in dealing with that quite typical human phenomenon. Could you describe how you approach that and what might have worked or not in the BOC/Linde situation?

It’s interesting that in your question you said that people worried when they shouldn’t worry. I would challenge that judgement, who’s to say if it's right for somebody to worry or not? We might say “Well look, you’re going to keep your job, so why are you worried? Why is it a big deal for you, you’ve already been appointed a certain role. Therefore, you shouldn’t be worrying. There’s other people over there who are going to lose their jobs, they’re the ones who should be worried.”

I find this kind of assumption (that some people should be worrying and others shouldn’t be worrying) misjudged. Everybody has a right to be nervous, everybody has a right to feel fear, everybody has a right to see uncertainty and feel nervous, anxiety or fear as a result of it. As a leader, to be in a position of putting people into pigeon holes and saying “Those guys over there should be worried and these guys over here shouldn’t be worried” I think is a tremendous mistake and completely and utterly lacks empathy, cognitive empathy or emotional empathy, because anybody has a right to feel any feeling. We shouldn’t be judging them for that. If somebody walks into my office and they’ve kept their job but they come and sit down and say “Steve, the uncertainty around this deal is making me feel uncomfortable, I feel anxiety. I’m really glad I’ve got my job but I’m really not sure how things are going to pan out over the next two or three years. This new culture that we’re developing, I’m not sure that’s for me. These targets that I have been given with regard to growth, I’m not sure that they’re realistic or that I’m going to have the infrastructure and support I need to deliver them.”
Somebody in that situation needs my empathy and understanding. They need to have some open and frank conversation with me about “Well, okay, get on with it and find a way through,” or “You could actually be very right, there could be some significant problems that we’ve built into the system here and I’m really glad that you’ve come through my door to talk to me about it.”

People need to be heard, whether we should be judging that certain people should be worrying and others not, I think is very inappropriate. Everybody needs to be heard, everybody has a legitimate claim to our time and our empathy as a leader. We might judge that some have a ‘higher’ claim than others because we judge them to be in a more difficult situation, but somebody who has made a clear decision to leave the company and go and do something else with their life, might have more certainty and less fear and anxiety than somebody who has chosen to stay. Similarly somebody who has been handed a severance/redundancy package, may not have wanted it, but at the same time they may be in a very clear and safe financial position and have a lot of certainty associated with their future whether or not they have got a job or not to go to than somebody who is staying with the company.

I would say not to pre-judge anybody’s emotional disposition. Those people who you might think are going to be OK, could actually be some of the ones who are close to the edge. Those people who have lost their job, been made redundant or chosen to quit, might actually surprise you and be totally okay. Or in fact ecstatic with the choice that they have made or the opportunities that being set free from the organization might actually pose to them.

I think my biggest advice is actually a challenge to the way you asked the question. Don’t assume who are the lucky ones, who are the happy ones, who are the ones who are going to have a good time of this. Keep an open mind and keep your emotional feelers very open and aware for anybody being in a vulnerable position and needing some coaching, support, guidance and empathy from senior leadership.

What have you learned about crafting a communication strategy in this context?

What do people need? They need facts and the truth is that the facts can sometimes change. Facts and policy, a fact might be that we are going to retain 400 people. That might be the fact as we know it today, that fact might change. People need facts and they need quick communication when those facts have changed. They need honesty about uncertainty. So if 400 people are going to stay but it could actually be between 400 and 500, we don’t know. Be honest about uncertainty, people need to be heard and their questions need to be addressed, they don’t always need to be answered immediately but it’s essential to maintain a good two-way flow of communication. If questions can’t be answered they must certainly be addressed and acknowledged and hopefully can be answered at a relatively quick point in time down the road.

What do people not need in terms of a communication plan? Well they don’t need arrogance from senior management, they don’t need people at the top who think they’re in control and know all the answers and who think it’s going to be an easy process, because the truth is everybody knows that it probably isn’t. They certainly don’t need arrogance, or dogma, the sense that things will be done a certain way for no particularly good reason. Let’s understand why we’re doing things the way that we are. People don’t need uncertainty to be built up or mixed messages, with one manager saying one thing and the other saying something else. People want some level of certainty and the way that communication can take place, can either build or erode that level of uncertainty, consistency is critical.

People really don’t want insensitivity, for me that is all about cultural/intercultural insensitivity, whether that’s working across geographies, or whether it’s somebody communicating with a complete lack of empathy for the audience and the emotional responses that they might be creating within that particular audience. People don’t want to feel manipulated; they don’t want lies, or exaggerated reassurances that can’t be followed through on. “We all know it’s a tough situation, don’t treat me like a child, I’m strong enough to deal with this, don’t try and tell me that everything is going to be okay.” Because the truth of it is that we know not everything is going to be okay for everybody, there will be people who are hurt, people who will lose their jobs that didn’t want to.

We don’t want witch hunts, in terms of deciding who is going to get the top roles in the new organization, we have to acknowledge that these people are good and that’s why we’re giving them the job. Let’s not start going around saying that certain people were terrible and that’s why they’re out, we don’t need that negative kind of presentation of people’s careers at this stage and in this situation. Similarly, we don’t need any personalization of the situation either, in terms of how the communication is presented, maybe roles are being made redundant but we don’t want to start saying “Well you’re out of a job because you were useless and you never delivered on your targets.” This isn’t a performance review, it’s an M&A process, yes there will be casualties but there is no need to personalize the situation at this particular time. There will be perhaps fewer management roles, we’ve selected the people that we think are going to be most appropriate to take those roles and that’s why they got them. We don’t need to say anything beyond that around the people who didn’t get them.

What have you learned about what would define excellence in leadership in this highly uncertain environment?

When we ask what is a strong leader, in my opinion and what I value in leaders, is a strong leader will acknowledge their own vulnerability and limitations. “I don’t have all the facts,” “I don’t have all the information”, “I’m not yet able to communicate a decision”, “I’ll be honest with you I feel some level of anxiety myself.” Somebody who is willing to stand up and say those kind of things, in my opinion is demonstrating strength by being able to draw a box around what they know and feel and what they don’t know. What do people need at a time like this? They need honesty, openness and empathy. What we don’t need are arrogance, dogma and insensitivity. To have somebody who stands up and says “Well I’m okay, I’ve got this job and I’m the new CEO and I’m going to decide everything that goes on around here.” Is the last thing that we need.

What types of psychological resistance presents itself within team of the acquired in your experience?

I think that two aspects come out quite commonly, one is denial, as a form of defense or resistance of the situation. That can manifest itself in the “Nothing’s really happening here”, “I don’t see that this is such a big deal”, “I don’t really understand why we need to change that much” where people are in denial that there’s an M&A situation or a major change taking place in the company. Really somebody who is not seeing the gravity of the situation is in a state of denial to themselves, or maybe communicating that to others.

That’s one level of psychological resistance, where we are resisting the change internally and externally by putting ourselves in a position of denial. I think another level of resistance comes through somebody who may try to sabotage the situation or try to prove that it was a bad idea by making sure that things fail and thereby in some way demonstrate that they were right and that this was the wrong thing to be doing. If it fails then of course they can say “I told you so.” The fact that it has failed for themselves and for everybody else comes unfortunately secondary to the fact that they can stand up and say they were right.

These are some ways in which psychological resistance, sabotaging, putting our need to be right, by saying that things are going wrong, ahead of the common good of things going well.

As the leader of a business that is being acquired, could you describe what you have learned and describe the behavioral tendencies and dispositions that help one when figuring out the state of play and the new rules in this new and bigger organization?

I come back to what I was saying before. It’s a little bit about self-awareness in the pre-world. Do I actually understand the culture of the company that I’m working in and how that culture could be different from another culture? If I do understand my culture very well, then there’s a good chance that I’ve got good personal self-awareness as well as awareness of the culture within the company that I have. When we bring two companies together, we ask ourselves “What are the new rules?” That’s a very good question, if it’s an M&A situation, are the new culture and values of the organization going to be the same as the acquiring company, or are we going to say “Look, we were blue and you were red, our new culture is going to be purple.”

What it’s very important to do, in my opinion, is to make sure that we do have this thought process of “What kind of culture do we want to have in the future?” Maybe the blue culture was the right one and actually that’s why the red company wasn’t doing so well and made themselves vulnerable to a takeover, because there were problems with the culture, values and rules. Therefore, we don’t want a purple culture, we want to stay with blue, because that was the better way to be doing things, behaving, exhibiting and living our values. Firstly, we need to be very aware of what are our principles, culture and values, the rules within an organization, were they right? Could they be improved on, does it make sense to combine red and blue and make purple? Or is it better to stay with blue?

On the other hand, once we begin to see what red looks like, maybe we say that blue worked well in the past but can see that red is going to be a much better way to go in the future. So we need to understand what our own values, cultures, principals are, what our operating model is and then reflect quite carefully upon what we want to be in the future. This has to be one of the first things that’s being done through the M&A process. This is first month stuff, not first 90-100 days. We need to write them down, communicate them and live and demonstrate them. The leadership team needs to take responsibility for making the decision, communicating it and living by whatever decisions they have chosen to take.

This again is an area where people’s psychological resistance can play a huge role if they feel for example that red was the right way to go but the decision was for blue. Does that ultimately mean that they’re going to be fighting against the blue culture and not communicating it effectively, not taking ownership of it and not internalizing it. Because to ask a senior executive with maybe 10-20 years of experience to do an about turn and stop telling a red story and start telling a blue story is very difficult. To be honest in situations such as that, all parties should reflect on whether or not it would make sense for that person to take a different career and leave.

With regard to culture, critical self-awareness and awareness of the company within which you are working, you open a conversation involving both parties about the culture of the future. A clear decision needs to be made, written down, communicated, lived and taken responsibility of by yourself as a leader for embodying or manifesting the new rules and the new culture that has been agreed upon.

Could you explain your views on the psychological or behavioral dispositions that allow a leader to thrive in these kinds of situations?

I think flexibility, agility, awareness of one’s own boundaries and principles. I think these are very critical to somebody thriving in these situations. A willingness to be able to say, “I’m very red, but I can see that the future is going to be very blue, to be honest the best thing for me and everybody else in this organization is to go and find another red company to go and work for. Or to take a career break, but me as a very red person trying to force myself into this blue culture simply isn’t going to work for me, it’s going to be painful for me and a pain in the arse for everybody around me and I’m probably going to end up undermining what could be a very good outcome for the company. So I need to talk to somebody about what kind of severance package I might be able to come up with and have the confidence and trust that life will turn me a good deal in the future and I’ll find something that fits me better, find a happier place for me to be adding value.”

I think that adaptability, flexibility and all of that is super, but we need to be able to understand our boundaries. If “I’m a very red kind of person and I want to work in a red company, the writings on the wall when I can see things are turning blue. I need to get out, it’s going to be best for me and everybody else.”

Could you elaborate on the elements of flexibility and agility?

I think a lot of us have certain no-go areas within our own psychological makeup. “I can tolerate the following, but I can’t tolerate change in these other areas” For example, “It’s very important to me that I work in an open and honest culture but I’d be very open to move to a different country” might be a way of being flexible, “It’s important for me that I’m surrounded by people who I respect and I trust and can communicate  with really well, that’s my absolute, fundamental values, but to be honest I’d be totally happy doing that in the US, Australia or even Germany, even if I have to learn a new language. For other people, their boundaries might be totally different, “For me what’s most important is that I stay exactly where I am today, my wife’s here and my children are in school here and I don’t want to move house, and to be honest I’ll put up with a new boss whatever they’re like, I’ll make it work.”

So different people have different no-go areas and different people have different areas in which they’re willing to be flexible. This is what I mean about “Yes if you’re willing to be flexible geographically or the kind of functional department that you work in.” Maybe the company says “Well look, you’re great in finance, naturally we’d love you to take that finance skill that you’ve got into a business leadership role, would you be willing to do that?” Maybe that’s the kind of flexibility that I’m talking about.

As soon as people begin to start chipping away at your core principles and values, which might be things like a minimum salary expectation, you might have certain minimum expectations of working conditions, hours, flexibility. People really need to understand what their non-negotiable areas and negotiable areas are. This is what I mean about having a mix of flexibility, agility, adaptability and also a clear understanding of our own boundaries.

Could you explain the most important mistakes that leaders at an acquiring company make during and after the acquisition process?

I think, arrogance and insensitivity are some of the biggest mistakes that an acquiring business leader can make, especially when communicating to the company that they have just acquired. ‘Fair deal, you guys bought us we didn’t buy you, maybe that means that you were doing things better in the market or that you were simply bigger than us.’ It doesn’t mean that at a person to person level, it gives you any right to trample on people emotionally, operate with dogma, arrogance or insensitivity. I would say that that is perhaps the biggest pitfall that an acquiring business leader might fall into.

As somebody who is being acquired I think that perhaps the biggest mistake that you can make is to fall into the trap of thinking “We were doing things wrong, everything we did was without value, everything we did was a failure, we need to totally accept these new ways from this company that’s buying us, on the assumption that they were bigger and more successful and therefore had the right way of doing things. Therefore, I’m going to sit here and be quiet and take everything that they’re saying as gospel.” That would be a tremendous mistake.

Very often companies buy other companies because they value in that company that they’re buying. They value the people, the technology, the ideas, the diversity that it might bring. For all of those things to become true, what they need is for people in that acquired company to stand up and say “Well listen, you guys bought us, but we have some great ideas, we did have some great plans for growth, maybe your plans were better than ours but at least please hear what we’ve got to say.” These people need to be heard but they have to stand up and say “I’ve got a story, I’ve got a message, I’ve got something that I would like to say, yes you guys bought us and that maybe puts us in an ‘inferior’ position in some way, but actually you guys need to listen to what we’ve got to say because if we’re going to make 1+1=3, not simply 1+1=2 then we need to have a discussion and see where those synergy points are.

What can an acquirer do, practically speaking, to establish those communication channels?

Listen, demonstrate that they’re willing to listen. Listening doesn’t mean agreeing all of the time, there’s a big difference between empathy and sympathy, listening to people’s ideas and doing what people say with their ideas are two very different things.

I think one of the concerns that an acquirer might have is “Well I can’t possibly ask these guys what they think because then I’ll have to go away and do it.” That’s absolutely not true, of course we can ask people what they think, what their ideas and views are and if we like it, then we can go somewhere in that direction and if we don’t like it then it’s incumbent upon us to say, “Actually I’ve heard you, thank you very much indeed for being transparent but we’re going to do it this way and there’s a clear decision for doing it.” Maybe there’s also a clear reason for doing it. I think that’s very important, to allow people to be heard, to encourage people to be heard.

To listen, and listening to other people’s opinions doesn’t mean we actually have to do them, but we should certainly explain to people what we’ve heard and why (if it’s possible to articulate it clearly) we are going to do something which is either exactly what they’ve proposed or perhaps the exact opposite. Hopefully with that respect for two-way dialogue, you leave enough room open for them to say, “Well look, I said we should go red, you’ve told me that you’re very clear about blue, that’s fair enough. I still feel confident  enough about the way this conversation went that next week when I come back to you with another idea, again I will trust the fact that you will listen to me, hear me, really try to understand me and then maybe you’ll agree with me or maybe not, but again if you don’t then maybe I’ll understand your position better. Ultimately if we keep disagreeing, then at some point I have to ask myself ‘am I the right manager’, ‘are my ideas the right ideas to be successful in this company’, clearly we need diversity, but if there’s too much divergence then we have the risk of the company falling apart.”

I think that the most important thing you can do as an acquirer is listen, demonstrate to people that you have been heard very clearly. This is a lot about cognitive empathy as well as emotional empathy and your listening skills, to explain what you’ve heard and what you’re going to do and hope that you’ve left enough room for people to come back and try again, even if we didn’t end up agreeing with them.

What have you learned about developing networks within a merged organization if you are a leader that has decided to stay?

It depends on the part of the organization that you are in at the time of a merger. If we think about two large corporate entities coming together, if you’re in a local business in Japan and there’s no overlap with the merging or the acquired company in Japan then it’s much more important to get your head down and get on with the people that you’ve known for a long time and make a success of the business that you’re involved in, in Japan. Maybe you ask some questions such as “How does this merged entity operate their business in the US and can we learn anything from that, are there any transferable best practices or are there any new products that we can take from one geographic region and bring into ours?”

The importance of building your network outside of your existing network depends on the context. If on the other hand, you’re part of a global team ,the two global teams from these two merging entities are being let’s say “smashed” together to try and get some synergies flowing through, then of course it’s of paramount importance that you build your network with the people from the other legacy organization. Try to get to know each other and each other’s experience and expertise, strengths and weaknesses, what we can do for each other. What skills we bring to the party, what skills we can lean on other people for.

You can imagine some layers in between these two examples, where the importance in building that  network is either the number one priority, certainly in the first couple of months, or it might be something that you can wait for during the first six months and then wait for the dust to settle and start popping your head above the parapet and see what’s going on in other parts of the organization.

Could you recap the fundamentals for what makes an effective communication strategy for a manager who is being acquired?

There are several directions, the communication with the people more senior to myself, we have a communication strategy with our peers and our communication strategy with some hierarchical subordinates, our team.

Slightly different focuses in each of those three dimensions. In terms of peers and upwards, if we carry on being who we are and doing what we’re doing that’s a pretty good start but the biggest problems that we are going to bump into that we should certainly be aware of are language differences. Maybe we’re dealing with a foreign language, or even if it’s the same language, however the terminology and shortcuts that we use or the meanings associated and assumptions that we’ve made communicating in one legacy company are different to those used in the other legacy company.

The same word or terminology might have a different meaning from me to you. For example, if I say our sales channels go through agents. You immediately understand the word agents and you understand the word sales channels so you think you know exactly what I’m talking about but then when you dig deeper and ask the difference between an agent, a distributor and a reseller then you might realize that when I say agent, you mean reseller, or when I say agent, you mean distributor. It’s only when we check everything and ask those really stupid questions like “When you say agent what do you mean by an agent please, how do you deal with an agent?” It sounds like a stupid question, “of course everybody knows what an agent is!” but in our company we might have defined that relationship slightly differently to that acquired company or that merged company.

Any kinds of terminology, shortcuts, definitions etc., check them to see if they mean the same thing. If somebody says “Well we use an agent, supply chain network distribution channel ‘You know what I mean?’” Perhaps we don’t actually know what they mean and we should find out and make sure that we are on the same page. Some of the differences that emerge through that conversation might become very interesting learning points, the differences in practice. Even if we’re speaking the same mother tongue, it's essential that we check these terminology, shortcuts, abbreviations and definitions consistently and permanently for the first 6 months to two years. Make sure we understand each other, not making assumptions that I hear something and assume that I understand it. It might sound a bit stupid and might slow the conversations down but these are fantastic learning opportunities and essential to make sure that we’re genuinely talking about the same thing and on the same page.

I think those things are essential for peer communication and upwards communication. In terms of communicating with our teams, our employees and subordinates, no real difference to what you might expect in normal life outside of a merger period. Open and honest and empathetic communication, try and understand that this is a period of intense activity and emotional stress for people, keep the flow of information frequent, open and with plenty of empathy, with feeling awareness as well as listening and words awareness.

What mistakes have you observed leaders making when setting boundaries on that level?

I think the channels of communication that people grow to expect can be quite different in different organizations. I think that that can be a mistake that people make. For example, in some organizations it’s very common for important news to be distributed through a newsletter or an email, an important change I read it first of all in the company magazine or I read it in a weekly news email or it’s posted on the company intranet and that’s accepted culture in some organizations. In other organizations important news is always passed on by word of mouth. So the manager will call his team together (every week, every morning) and have a quick update of what’s going on. “well this morning’s big news is that Mr So and So has been appointed as our new CFO, that’s a very important appointment for us and we should be supporting him in his daily work.”

The different communication channels that are accepted or established, performance feedback, how we give and receive it, do I simply send someone an email saying “that report wasn’t good enough could you please redo section 6” or do I always provide feedback verbally with a bit of coaching to go with it. These kinds of differences in how communication is delivered, even if the message is the same, am I going to send somebody an email, am I going to deliver that message in public at a team meeting where we’re reviewing something as a team, or am I going to do that one to one in a meeting. I think those are some of the boundaries or styles where it’s quite possible to go in the wrong direction, what I mean by wrong is inappropriate for the cultural expectations/norms in the organization that I’m not familiar with, this new merged entity, the other half of the new company that I’m in. I come from one background, they come from a different background, what kind of communication culture are they familiar with and would be acceptable to them?

What is more dangerous, over communicating or under communicating?

I would say under communicating. At a time of merger and acquisition there is a high level of uncertainty in people. People are perhaps feeling afraid and one of the best ways to move through that into a position where people are spending a hundred percent of their emotional and intellectual energy focusing on the task, instead of fifty percent of their emotional and intellectual energy focusing on being afraid, concerned or worrying about the future. They only have fifty percent available capacity for the productive task. One of the best ways to get people with more capacity for productive work is to listen to their concerns, talk about what’s going on. It doesn’t have to be answers to all of the questions, but giving people the opportunity to raise their questions and raise their concerns is very important. When you say over communication or under communication, I’m defining communication as a two-way process. Allowing others around us the chance to talk to us, as well as having the chance to talk to them. The messages are exchanged in both directions.

In terms of habits that are effective in cultivating self-awareness as a leader, could you provide some insight?

I think cultivating self-awareness that is not the kind of skill that can be taught in an MBA course, we’re into the realms of our own personal psychology and coaching and changes that take place through a long period of reflection. Behaviors that we can engage in, that can help us in that direction, to help us keep our feet on the ground, or to be in touch with our own core values if you want to take a more ethereal view of it. I think it’s very important that we ask others for feedback, if we want to make sure that we don’t get an inflated ego is to ask other for open an honest feedback. They might want to pat us on the back and tell us everything is okay and tell us that we’re super, unfortunately that’s probably going to be inflating my ego and doing the opposite of what I really need.

I really need to probe and say “Is there anything I could be doing differently or better? Is there anything in this environment that I’m doing that makes you feel uncomfortable?” So actually, probe for the ‘negative’ feedback, probe for where you could be doing something slightly different which would ultimately create a much better working environment for other people or a much more highly productive team.

Another strategy is to think about your own feelings and ask other people how they feel, if they say “Well I feel great”, maybe probe that a little bit, ask if they feel anxious, excited or thrilled. Ask “What excites you about working in this new company”, or “What kind of fears and concerns do you have?” Try to really get people talking openly and honestly about their feelings and be willing to express and talk about your own feelings as well, not just what I’m doing “Oh I’m working on project Athena”, but actually how I feel and “Well I’m working on project Athena and to be honest I feel a bit overwhelmed, there’s so much to do and I’m not sure I’ve got enough time, I’m a bit concerned that we’re not going to meet the deadline.” Really try and bring feelings into the conversation, your own feelings and try and seek those feelings out from others. I think the more we talk about our feelings, the less chance our ego has to run away with us.

Set some time aside for prioritizing the needs of others, in a situation like this, (especially if we’ve just been appointed to a big new job) it’s very easy to let our ego run away with us, for us to move leadership into a position of authority and start telling other people what to do and putting our needs ahead of theirs. Prioritize the needs of others, whether that’s family members, friends or people in the workplace and colleagues, it helps us bring some humility and reality into it when we begin to say “These are human beings and their needs are equally as important as mine and I need to give them the time, space and attention they deserve as human beings.”

Maybe we want to do that by allocating half a day a week in the workplace to the needs of others, whether we do that with an open door or do that with a time for tea meeting, whether we really make the effort to go for lunch with the team instead of sitting at our desk working on something that we believe is really important. Make sure that we allocate time simply to be with others with no agenda, maybe just walk the office, shake a few hands, ask people how they’re feeling and how things are going? Listen in a very open way without trying to push our message down their throat, turn it around and make it their time.

Finally, keep up the out of work activities that keep us on the level, spend time with our children, our family, doing sports, spending time in nature or whatever it is that you do. Children are a wonderful leveler; our friends are a wonderful leveler. There’s less hierarchical situation when we’re out with our friends, I’m not the boss, neither are you, we’re just a bunch of friends together. I think that helps us to move away from a situation in the workplace where things are quite hierarchical, ‘He’s my boss, I’m his boss, those are my peers.’ Out with my friends we’re all peers, with my family I’m going to play and be silly with my children, run around in the garden and scream and shout in a way that I couldn’t do in the office. These are very levelling experiences, they bring us back down to earth and help to keep our ego in check.

On the subject of leadership in mergers, or leadership more broadly, is there anything else that you would like to touch on?

No, that’s fine, but there was one other area that you did want to talk about, maybe we’ll go into that. I think you wanted to understand with the benefit of hindsight would I have done anything differently in some of the situations that I have been in.

I think, for me, it’s a very personal thing, what would I have done differently? I was a bit slow to adapt to be very honest, from the type of business that I was working in before a significant acquisition took place, to the type of business that I was responsible for after that acquisition. Prior to the acquisition my business was the fifth largest in this particular space in the world and we had some strengths but by and large we weren’t necessarily a leader within the sector. On the other hand, the business that I was responsible for post-acquisition was the largest, or one of the two largest, and our company ambition – the new company strapline, was ‘Leading’. It took me a bit of time to adapt my behavior from being a number 5 player in the sector to directing and leading my team to behave like we were all working in a leading, visionary, the largest market share player in the sector.

So my behavior took a bit of time for this penny to drop, despite the company slogan from day one of the acquisition being ‘Leading’. It took a bit of time for my behavior and my expectations of myself, of the business and the people around me to align with this new situation that clearly, we were all in.

What I could have done and what I’d say to anybody else is ask yourself “What’s expected of me in this new environment? What can we do as this new merged entity that we couldn’t do in the old organization that I was in, how can I fully exploit that? How can I make sure that my ideas are big enough for this new bigger organization that I’m in? How can I make sure that my vision is exciting and engaging enough to compete for senior management’s attention in this new organization that I’m in? How can I engage with those people who have access to capital, resources and organizational energy, the people with the big ideas and the big vision to make a difference; and get to those people as quickly as possible and make sure that the resources are flowing to my team and my business.” Get ready sooner is what I could and should have done.

In a negative sense, maybe this will surprise you, we should have lost more people sooner to be honest. Within my own team there were a few people that we kept on a little bit longer than we should have done, they weren’t necessarily the right people in the right roles. Having merged two organizations together perhaps we had too many people, too many opinions, the financial crisis of 2008-2009 fixed that for us in the sense that the economic situation forced us to lose people, but in hindsight we could have taken those measures more proactively and more decisively at an earlier stage. Clearly it would have cut costs and it might also have improved our productiveness and motivation. Sometimes too many opinions are something that will hold you back, as people spend endless time coming to a decision. Sometimes a functional team of five can be a lot more effective and dynamic than a dysfunctional or stagnant team of eight.

Leadership in M&A

What is the difference between typical change management processes and merger situations?

What tools and principles can leaders turn to when navigating a period of heightened uncertainty as is typical in mergers?

What are the psychological dispositions that can help leaders thrive in a merger situation?

What does effective leadership communication strategy look like in a merger?

Leadership in M&A

Principal at Nexant and Former Global Head of Specialty Gases & Equipment at Linde

inpractise.com/articles/leadershipinM&A

Why is this interview interesting?

Executive Bio

Stephen Harrison

Principal at Nexant and Former Global Head of Specialty Gases & Equipment at Linde

Interview Transcript

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