Q1: Ramp Up with Baylor ProSales February 2019

Mergers and Acquisitions: The Importance of Keeping your Salesforce Strategic, Social, and Successful

In 2015 more than 10,000 U.S. firms were involved in mergers and acquisitions. Yet only 10-30% of M&As are effective in creating value for the acquiring firm. In their study, Bommaraju et al. (2017) found that when two firms with different external images join forces, the merger can take a toll on salesforce organizational identification (OI) and on company revenue. Considering that firms spend three times as much on their salesforce as they do on advertising, it is important to understand how mergers can negatively affect your

salesforce, their OI, and company revenue, as well as how to mitigate these issues. The authors define external image as how people within the organization think people outside of the organization perceive the organization. External image is essentially your company’s reputation as perceived by your employees. Organizational identification, OI, is the extent to which your employees identify with your company. People look to their organization to fulfill three drives: positive self-esteem, consistency in personal attributes, and distinctiveness. The more the organization satisfies these needs, the more an employee will identify with the organization. When their organization merges with or acquires a firm with a poorer external image, employees perceive this disparity and tend to pull away from the firm to protect their own self-esteem, consistency, and distinctiveness. As a result, their identification with their organization decreases. Since OI is related to salesperson performance, as OI decreases, revenue also suffers. The authors found that in these mismatched mergers, OI decreased by 11% and revenue decreased by 3.4%. In addition, this type of image mismatch occurs in over 30% of M&As. According to the authors, several factors act as moderators, either aggravating or strengthening OI during a mismatch merger. At the managerial level, there are three factors. A manager can emphasize organizational culture, focusing on the company’s values, beliefs and aspirations. A manager can also communicate organizational distinctiveness, what sets the company apart from the competition. Finally, strategic intent emphasizes the vision and goals of the organization. Normally, it would be beneficial for a manager to focus on communicating all three of these factors to employees. However, during a time of difficult change- like during a mismatch merger- emphasizing culture or distinctiveness can exacerbate OI dilution. Instead, managers should focus on strategic intent, which helps salespeople to remember the purpose and necessity of the merger, protecting OI and sales performance.

Q1: Ramp Up with Baylor ProSales February 2019

We find the remaining two moderators at the sales person level: tenure and social inclusion. A tenured salesperson typically has a strong OI because they have a strong identity in the organization. Mismatch mergers threaten their self-esteem, resulting in decreased OI. On the contrary, social inclusion – which is the extent to which employees feel they are part of a team effort -- helps to mitigate negative effects of a merger because social inclusion leads to higher self-esteem, increased communication, and reduced uncertainty. Several practical implications result from this study. During a mismatch merger, managers can take three steps to keep OI high, ultimately protecting revenue: (1) managers should focus on the strategic intent of the project, reinforcing the purpose and the necessity of the merger; (2) managers should provide extra attention to sales people who have a long tenure as these team members are more likely to struggle with OI during a merger; and (3) managers should always foster social inclusion, but this is particularly important during a season like this. Social inclusion lifts self-esteem and minimizes confusion by increasing communication. So, in summary, merging with a firm of a different external image can have negative effects on salesperson OI, and thereby revenues. However, managers can combat this effect by communicating the strategic intent of the mission, focusing on helping tenured sales persons through the process, and fostering social inclusion. Reference Article Bommaraju, R., Michael Ahearne, Zachary R. Hall, Seshadri Tirunillai, and Son K. Lam (2017), “The Impact of Mergers and Acquisitions on the Sales Force” Journal of Marketing Research In-Press.