The Power of Empathy in M&A

Intro

Today, I'm here with Mark Goulston, an international bestselling author, thought leader, seasoned executive, serial entrepreneur and corporate consultant. Some of Mark's most popular books include “Just Listen”, “Talking To Crazy” and “Get Out of Your Own Way”. Mark's expertise IN applying psychiatric principles to inform organization growth, leadership, and success, make him uniquely qualified to discuss the growing need for empathy and change management in the M&A industry.

To start off, can you give me a quick little background about yourself?

I was trained as a clinical psychiatrist and one of my specialties was intervening with suicidal people for about 20 years. I'm a co-creator and moderator of a documentary that's won a couple of awards already called “Stay Alive - An Intimate Conversation About Suicide Prevention”. Where I interviewed Kevin Heinz, who jumped off the Golden Gate Bridge and survived. He speaks around the world and he's been saving lives by doing that. 

I think this correlates with your book “Just Listen’” when you describe the importance of understanding and empathizing with your workforce to motivate them and increase productivity for successful outcomes. That fits well with the M&A context because there's a big transition that happens. 

That’s important for improving their culture. One of the many tools and techniques that we offer is an exercise. This probably shouldn't happen immediately after the merger, because people from the acquired company are all worried about being laid-off. You can practice it once the eventual company settles in if you want to motivate your workforce.

The exercise is as follows. The CEO shares a hypothetical with everybody: If you were out meeting with your friends and asked them what their company is like and they say that they’ve won the lottery and how amazing their company is, you are probably going to ask them about your department in their company. And if that person would say that people who do the same job as you do get it the best, there's a good chance you’d want to be part of that company. Then, the CEO suggests: “ Going forward, I want to hear from all of you, what positive changes would we need to make, and keep with them consistently, and what negative things do we need to eliminate immediately, so that you too could say you’ve won the lottery to the people you meet?’’. 

This can be done anonymously and is especially potent if the majority of your workforce are millennials because a lot of millennials just jump from one company to another because there's a talent shortage.

That's an interesting point because, as you go through a transition such as an acquisition, a lot of that gets lost. The focus is so much on keeping things intact, preserving things, and being task-oriented versus putting a focus on the culture, individual satisfaction, and people's contribution to their work environment. 

After the companies merge, there's a lot of anxiety in the workforce, especially in the acquired company and they need to hear something from you, and it can't sound generic. Most of the CEOs would say that they often use word goals, meetings, and presentations.

However, if asked them how people react to those goals, and are they looking forward to sinking their teeth into those goals the answer I usually get is no. That's because goals are fine if you're at the top, but if you want and get through to your people, you have to get into their thinking, and a lot of people don't think about goals, they just try to get stuff done. Not everybody has goals, but everybody has needs. I will give an example of two CEOs. 

The first CEO says:’’ This is a great acquisition, there will be some changes and these are our goals for the year. We're going to be cutting costs and we'll work around that as best we can. Because our companies are coming together, the quality of our products is going to be great, and one of my goals is to make this a happy culture. ‘’If you're from the acquired company, you're probably already thinking how generic this sounds. 

The second CEO, who doesn’t use goals says: ‘’This merger is complete, I need your help, and here's what we need. For example, we’ve gotta make a lot of money so that we don't have layoffs and so that we don't have to tell you that you're not getting a bonus. The second thing we need your help with is we need to create products and services that consistently exceed people's expectations, so we've got to find a way to trigger investors, customers, and clients. The third thing that I need your help with is, we can't do one and two unless you really want to be here and make it work. We know you're under pressure, but that's going to be up to us to figure out how to do that.” This probably sounds much different than the first CEO.

Sounds like a much better approach to get alignment around what those big picture goals are across the company. 

When you invite and reach out for help it's honest. You've got to have a capacity for humility and believe in that. You are asking for help to make everything work, not just for the company, but for you and me. This way you enable people to choose to be involved, compared to when you try to hammer people with some pitch where they feel they have to agree with you. 

A lot of analytic people know how to be convincing, but they don't know how to be compelling. The problem with trying to convince people right out of the gate is that you're taking away their ability to choose to say yes, and instead you're pushing them to try something. They feel they have to say yes, and most people resent that. This way they lose a lot of deals, a lot of engagement because they're acting too convincing without being compelling, and compelling is a way of drawing people towards it.

You mention an interesting analogy surrounding your experience as an FBI hostage negotiation trainer, where you explained that harshest negotiators must be first-class noticers and listeners, and you compare this as an effective business strategy. Can you elaborate on this comparison? 

I had a mentor named Warren Bennis who told me about the expression “be a first-class noticer”. And what that means is that when you look, watch and see you're an observer, and you're not connected to what you're necessarily looking, watching, and seeing. You're passive. But if you're a first-class noticer, you're connected to it. 

This would apply well when it comes to negotiations in M&A. what your thoughts may be in applying a similar approach and in those circumstances?

You have to get comfortable and be respectful. If something makes sense and you're getting pushback, you're getting pushback because you're reminding them at least unconsciously of a bad decision that they made and don’t want to repeat.  So the more that you can surface that and get that out without really just trying to maneuver them, the more inclined they are to trust you. If you get someone to open up and trust you, you better not take advantage of them.

In our previous conversation, we talked about strategies of engaging talent to complete an organization's two main goals of revenue growth and expanding expectations. What are these strategies and what are their expected outcomes?

One of the strategies is to reach out to your talent and say that you need their help with at least two things. One is revenue growth, because if it goes the other way, people are going to have to pay not, not necessarily with money, but pay with their jobs and job security. I think employee loyalty is a unicorn, so you need to do everything you can to ensure, especially in top talent that they don’t leave. 

A lot of times what will cause them to stay is for them to know that they are being adequately compensated, and not getting less if they do check and compare themselves with any of their friends. Also, the more they can feel that they are learning things that they’ve never learned, that are going to help them become more successful, the more gratitude will they have. 

How about some of the other techniques? I know you mentioned listening and being vulnerable.

I think being vulnerable is when you say to someone ‘’I need your help’’. I call it assertive humility or assertive vulnerability. When you bare your neck in a way that's self-respecting as opposed to whining, people are drawn to that. 

There is another technique, originally developed by Marshall Goldsmith, and it goes like this: You meet someone from a different generation, culture, race, or from a different department. You are about to start working together, you don't know each other and you are different.

Due to these differences, I would never want to, intentionally or unintentionally tick you off, especially when you're around your people. Going forward, I would like to know what are the things that I must always do and what are the things that I must never do, so that I don't put you in an awkward position. 

I feel like this ties well with transactional versus transformational conversations.

I don't know if win-win works in a transactional situation. You aspire to that, but when push comes to shove, transformational questions are ones in which you're sincerely curious as opposed to opportunistic. A transformational question would be being curious and that's when instead of just focusing on the bottom line, you might say to someone in a complimentary way ‘’What was your thinking? That's amazing!’’

I think it's really important, especially when you're working with new teams, new people to have that type of approach and mindset. To make the conversation more inviting.

The more specific and curious you can be about something positive that they did, and how they came about it - that’s another way to build increasing loyalty in your talent. Silos are so narrow now, and people live in psychological silos, where “I'm competent” is hardwired to where “I'm confident”, which is hardwired to “where I feel in control”. If you take a person six degrees to the left or the right of where they feel competent, everything falls apart. That’s why a lot of people in silos will try to pull you into their thinking. 

It sounds like how an M&A works. It's all conducted through highly functional and technical silos.

They will resist being pulled into a different silo because they don't want to be drawn into something where they feel less competent, less confident, and less in control. That’s why it's especially important to do whatever you can to go into their silo and the way they think and you do so by asking ‘’What was your thinking? How did you come up with that solution?’’. They will love telling you that story because no one's curious about it.

If you're highly specialized and you're talking across silos, the other silo only cares about the bottom line for them, unless they're curious and unless they want to be educated. All they care about is what's immediately relevant to them and you need to be sensitive to not try to educate someone who couldn't care less.

What would you describe as the harm of the silos?

I have come up with a hypothesis that resistance to change doesn't exist. What exists is non-rational non-functional self-preservation. When you're talking to someone in a narrow technical or functional silo, their self-preservation is they want to stay in a silo where they feel competent.

What you feel is resistance to you is their need to keep feeling competent in whatever they're doing so they can feel confident and in control. So, instead of seeing them as resistant, if you go in there and you're complementary and curious about what they do, that sincere curiosity will cause them to lower their guard because they feel so appreciative and grateful that someone cares. 

Are there any other tips, or advice you would give in terms of practicing empathy and being able to reach people in terms of achieving goals and having a good work environment where people are aligned and things can come together well?

Marshall Goldsmith once said to focus on the future before someone ruins it because then people get defensive and critical. What you want to say to people is “I'd like our collaboration to not only run smoother but be something that both of us look forward to. From your end, in your experience, how should I be going forward so that you look forward to working with me?’’When they give you the answer, repeat it back to them. That causes them to listen to you because you're talking to them about them and you're being complimentary. 

You can’t have much confidence that it's not going to stray, so, what you’d want to suggest to them is that you’d like to check in with them every month, ask are you on track and working together collaboratively, talk about frustrations, disappointment, etc. You’ll want to let them know that you'll do your best to not be over-sensitive when they tell you what it is you did or didn't do, and ask if they could have the same approach with you. 

Can you share a little bit about how the power of thank you works? 

There are three things. The first thing you do is thank someone for what they did. So I want to thank you for interviewing me. The second thing is you ignore knowledge, the effort, or sacrifice that it took. So I want to thank you for trusting your audience to me because you're always wanting to bring value to them. The third thing is saying thank you for being understanding of the other side. So I want to thank you because you allowed me to express myself freely. 

Ending credits

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