The accelerating pace of mergers, acquisitions, and large-scale transformations hinge not just on strategic execution but also on the ability to engage and align people throughout the process. Yet many organizations underestimate the critical role of change management and communications—leading to disengaged employees, diminished productivity, and increased turnover. This oversight results in costly missteps that not only erode financial value, but stall growth and unravel operations. Research reveals that prioritizing strategic communication and change enablement is essential for a successful transition.
In this article we highlight some of the most poignant stats on the impact of poor change management practices and share key takeaways to enable smooth transitions.
The Risks of Poor Communication: Employee Engagement and Retention at Stake
Without effective communication, businesses face significant risks to engagement and retention:
- 95% of U.S. employees do not understand their company’s strategy (Harvard Business Review).
- Only 15% of employees are engaged at work, while disengaged employees experience 37% higher absenteeism, resulting in 18% lower productivity and 15% lower profitability (Gallup).
- Employee turnover is costly: Replacing a frontline employee costs 20% of their salary, while replacing a corporate employee can cost up to 200% (Center for American Progress).
- Disengaged employees cost organizations 18% of their annual salary in lost productivity (Gallup).
Key Insight:
M&A and transformation initiatives cannot afford disengagement. Without clear, consistent communication, employees feel disconnected—leading to decreased performance and higher attrition.
Internal Communication: A Direct Impact on Business Performance
The 2024 Employee Communication Impact Study underscores the influence of internal communication on satisfaction, retention, and overall business results:
- Employees satisfied with communication are 46% more likely to be happy in their roles.
- Regular updates matter: Employees receiving daily/weekly updates are 22% more likely to be engaged.
- Employees with high familiarity with company goals are 37% more likely to stay.
Key Insight:
In times of change, businesses must prioritize consistent, transparent communication to align employees with objectives and foster retention.
M&A Failure: The Cost of Neglecting Change Management
Mergers and acquisitions frequently falter due to cultural misalignment and communication gaps. Employees can be blindsided by shifting priorities and leadership changes. When communication gaps go unaddressed, productivity dips, and key talent exits. Promising acquisitions can transform into cautionary tales.
- People and culture issues are the most common causes of failed integrations.
- Organizations that track employee sentiment through People Impact Analytics reveal that poor communication exacerbates employee resistance, reducing integration success.
Key Insight:
Proactively managing people-related risks through structured change management and communication reduces the likelihood of integration failure.
Middle Managers: The Missing Link in Change Enablement
Middle managers play a pivotal role in disseminating company messaging, yet many are ill-equipped to manage change effectively:
- Supervisors are employees’ primary source of company information, but many lack the training to communicate effectively.
- Employees trust their immediate supervisors most for company updates, yet without the right tools, managers become a weak link in the communication chain
Key Insight:
Empowering managers with structured messaging and resources ensures a consistent, credible flow of information—minimizing misinformation and resistance.
The Cost of Ignoring Change Enablement
Organizations that fail to integrate communication into transformation strategies face tangible setbacks:
- High attrition: Uncertainty about roles post-merger significantly increases employee turnover.
- Lost productivity: A lack of clarity reduces engagement, leading to declines in output and innovation.
- Reputation damage: 61% of employees considering leaving cite poor internal communication as a factor, with 26% naming it a major cause (Staffbase). Employee dissatisfaction can spill into external reputation, affecting employer brand and investor confidence.
The Solution: Embedding Change and Communications into Business Strategy
To drive M&A and transformation success, organizations must:
- Align Leadership and Employees – Clear, unified messaging reinforces strategic objectives and builds trust.
- Prioritize Internal Communications as a Strategic Function – Employees must be informed before external stakeholders to prevent misinformation and uncertainty.
- Leverage Data-Driven People Impact Analytics – Real-time employee sentiment tracking enables proactive adjustments, reducing resistance.
- Equip Managers as Change Leaders – Training and structured toolkits empower frontline leaders to communicate effectively.
- Make Communication Two-Way – Open feedback loops foster transparency, inclusivity, and employee buy-in.
Communicate to Transform
The data is clear: Companies that integrate strategic communication and change management into their transformation efforts mitigate risk, retain top talent, and drive long-term success. Effective communication isn’t just about delivering updates—it’s about fostering clarity, engagement, and trust. Organizations that embrace structured, data-driven communication strategies will be the ones that thrive in an increasingly complex business landscape. If your organization is considering, or in the process of major transitions, contact E78 to learn how we can ensure a clear change management plan and maintain the value of your transaction.
