In a year of many hot breaking business trends, it may well be the hottest of all: In just three months this year, the world’s corporate leaders struck $1.2 trillion worth of deals, the fastest start to a year ever. Even the banking sector, which hasn’t had much activity for most of a decade, had 19 announced deals, and analysts believe that merger mania is only just getting started, thanks to higher U.S. interest rates and potentially looser regulations.
All this activity is aimed, of course, at helping improve the business, but experts say many corporate chiefs may need a refresher course on all the internal leadership challenges M&A often bring. “Unless they can help their workforce get through the merger smoothly, the gains almost never wind up as big as what was initially envisioned,” says Alex Jakobson, Korn Ferry’s global solutions leader for Transactions and Transformations.
According to the Korn Ferry Institute’s analysis of data collected from over 10,000 leaders and professional employees around the globe, learning agility was positively associated with M&A experiences. Indeed, the study found that people who were highly learning agile were better able to capitalize on M&As to develop competencies required to fulfill their evolving role responsibilities and achieve ultimate career success.
To some degree, the power of agility in this area make senses. For starters, adapting to life after the announcement of a major M&A is trying. In many M&As, the combination of one plus one yielded less than two. More than 90% of leaders across the organizational hierarchy are often psychologically unprepared for the changes they encounter following M&As. In fact, people’s reactions to M&As are likened to those following a traumatic life event – when leaders become stuck in a stage of grief or cling to old identities, habits, or objectives, they may not be able to move on to acclimate to the new realities.
Progress through a post-M&A adaptation process occurs when people are prepared to relinquish what they hold dear in order to acquire something new. In other words, the success of M&As depends on the extent to which leader and employee populations are learning agile.
Learning agility is about mindset—how do leaders interpret and react to circumstances? If leaders see roadblocks or barriers as threats to their self-worth, those setbacks are considered daunting and irritating. In comparison, leaders who see hardiness and difficulties as birthplaces of self-development are energized and seek out ever-increasing challenges.
Studies show that learning agility is also about behavioral style—are leaders passive or proactive in unsettling situations? Passive leaders leave their futures to fate. Good things happen, bad things happen—a passive style implies that there is nothing to do but “wait and see.” Proactive leaders are anticipatory and change-oriented. They take initiative to make things happen. In ambiguous or complex environment, they take it upon themselves to shape the situation.
But most of all, learning agility is about behavioral flexibility—are leaders rigid or flexible with performance approaches. Rigid leaders are addicted to the tried-and-true. They are habitual and act in auto-pilot mode. Facing new tasks, they quickly apply what has worked in the past with little attention being paid to the subtle cues of what’s different this time. The opposite of automaticity is mindfulness. Mindful leaders approach events with prudence, treating each task deliberately and using multiple perspectives to interpret each situation in order to decide on the best course of action. Mindfulness enables leaders to break away from habitual behaviors and allows them flexible responses.
“When attention is paid to the degree of learning agility on leadership teams and in employee populations, organizations are better set to navigate all sorts of turbulent business situations, including M&As,” said Guangrong Dai, senior director of research at the Korn Ferry Institute.