Leading in Limbo

AT&T becomes the latest case study on focusing amid huge merger plans.

AT&T may have reported its earnings Wednesday, but much of the attention it got from investors and the media was on the lawsuit the government filed to block the company’s $85 billion purchase of Time Warner. The deal, a major piece of AT&T’s future strategy, has been in limbo for more than 15 months. But, from a leadership perspective, the biggest challenge isn’t in the courtroom. It’s in keeping employees focused and ensuring the business runs smoothly during the uncertainty.

“It’s a reminder that nothing is over until it’s over, and that management has to keep running their businesses as independent entities,” says Henry Topping, a senior client partner in Korn Ferry’s Media, Entertainment and Sports practice. “The hard part is getting employees and consumers to buy into that after a deal is announced.”

By some measures, AT&T has fared reasonably well. It's stock, which fell after announcing the Time Warner acquisition, has mostly recovered, and its earnings beat expectations Wednesday. Yet it faces a long regulatory process that has not been uncommon. With the number of deals announced last year the highest on record since 1980, according to Thomson Reuters, and the buying trend expected to continue this year, CEOs and other business leaders could easily lose focus. Getting too ensconced in trying to make the deal happen can lead to a lack of oversight of the core business, which ends up hurting employees, the individual companies, and the deal itself. “Leadership needs to walk that fine line,” Topping says. “They need to be present for employees, be cheerleaders for them, but also make sure they keep their eyes on the ball.”

Being present and supportive requires leaders to have an emotional intelligence in tune with the times. In most sectors, digital change has already created a baseline level of workforce anxiety. Adding another layer of uncertainty on top of that could result in decreased engagement and motivation. From the employee perspective, deal uncertainty creates a perfect storm of knowing that, regardless of approval, they are not a secure asset and layoffs are likely to occur one way or the other. Deal limbo also affects talent recruiting, since any resulting cultural and strategic changes are largely in flux until the outcome is known. That’s a particularly salient factor for leaders in disrupted industries, such as media and telecommunications, who are trying to lure top digital and tech talent to their legacy organizations.

Organizations will most likely continue to ramp up mergers and acquisitions as digital change accelerates. As the approval process for any given deal plays out, it’s worth remembering that the difference between an organization that can keep its employees engaged and the business running smoothly versus an organization that suffers a brain drain and instability in its core business comes down to how its leaders manage through ambiguity.