How Do Mergers and Acquisitions Affect Employee Engagement and Organisational Health?

Mergers are often heralded as strategic triumphs in boardrooms, but on the ground, they are experienced as ‘shocks to the system’. For leadership, the focus is frequently on operational synergy; for employees, the experience is defined by ambiguity.

Research from Advances in Research (2024) identifies a phenomenon known as 'Merger Syndrome'¹ - a state where employees face a perceived 'psychological strain', leading to feelings of job insecurity, loss of control and emotional detachment. Without a structured way to measure and address these feelings, the very talent that made the merger attractive can quickly become its biggest flight risk.

The 8-Factor Impact: What Happens During a Merger or Acquisition?

Using the Best Companies 8-Factors of Workplace Engagement, we can pinpoint exactly where the cracks typically appear during a merger and how proactive organisations can buck these trends to drive Organisational Health.

Organisational Health: Healthy organisations have performant People Leaders that build trust and, as a result, highly engaged employees.

1. The Common Decline: Leadership, My Manager, Wellbeing, Fair Deal and My Company

During a merger, these five Factors typically take the hardest hit.

• Leadership: Employees often feel a lack of Organisational Clarity (how well employees understand the ambitions, goals and strategies of company leadership) that must be communicated from leadership through to the people on the shop floor. If the ‘Why’ (the reason for the organisation’s existence, beyond profit) isn't clear, trust in the Executive Team erodes. A merger can often come with a change of plans or priorities and if employees aren’t clear on these then they begin to question what their purpose in the new system might be.
  
  • Solution: The Leadership team needs to ensure that they are communicating their plans clearly and regularly. This must then be regularly and repeatedly overcommunicated by managers.
• My Manager: While managers are the frontline defence, they are often as in the dark as their teams, leading to inconsistent messaging or a feeling that managers are not effectively supporting team members due to a lack of information being communicated from the top. This leads to trust between managers and their teams eroding, as individuals can feel that their manager is withholding information from them or that the managers themselves are not being kept informed.
  
  • Solution: Organisational Clarity is key not only for your ‘ground floor’ staff, but for the middle level too. In fact, as it is through your managers that your teams will receive this clarity, it is vital that managers understand and buy in to the organisation’s plans.
• Wellbeing: Employees usually feel a sense of psychological strain and loss of control that comes with a merger. This is where a lack of Organisational Clarity does the most damage. If it hasn't been communicated how a specific role fits into the shifting strategy, employees default to survival mode. The fear of redundancy and the absence of a clear purpose create a ‘gossip gap’, damaging Psychological Safety and making employees feel that their personal wellbeing is an afterthought to the corporate bottom line.
  
  • Solution: Ensure that employees understand the company’s aims and how their roles are vital to achieving these.
• Fair Deal: This decline is usually driven by the practical uncertainty of a transition: will my benefits change? Will pay structures be harmonised? When employees perceive a potential downgrade in their total reward package or see a lack of parity between the two merging entities, their sense of being treated fairly erodes rapidly.
  
  • Solution: To protect this Factor, organisations must prioritise transparency regarding any changes to terms and conditions as early as possible.
• My Company: The domino effect of a decline in how your employees feel about each of the above Factors means that your people will also feel less connected to the company as a whole. This results in a loss of productivity, and ultimately talent.
  
  • Solution: There’s no direct way to influence how your people feel about your organisation, rather this can be improved by focusing on improving conditions for the other Factors.

When leadership guidance is unclear, it creates a challenging ripple effect across the organisation.

Without a well-defined direction from the top, managers often find themselves lacking the necessary information to effectively guide their teams, which directly impacts their My Manager performance scores. This gap in clarity can lead to a decline in trust toward executives and weaken the sense of Psychological Safety, as employees naturally begin to feel uncertain about organisational stability.

Over time, this ongoing ambiguity strains employee Wellbeing, increasing the risk of burnout and leaving teams feeling overwhelmed. Ultimately, when overall wellbeing declines, it changes how employees perceive their compensation and recognition, often leaving them feeling that their efforts are underappreciated.

2. The Opportunity: My Team

On the other hand, mergers can sometimes strengthen certain areas if managed correctly. When external pressure increases, teams often ‘circle the wagons’, leading to an increase in peer-to-peer support (My Team).

Seeing strong My Team scores in your Employee Engagement data during a transition is a significant strategic opportunity. It indicates a high level of peer-to-peer trust and accountability that keeps operations running even when the view from the top is blurry. However, leadership must look closer: is this bond fuelled by a unified drive, or is it a defensive ‘us vs. them’ mentality?

While tight-knit teams can sometimes create silos or resistance to change, savvy leaders view these high scores as a map of the organisation's informal influencers. These influencers are the ‘bridge-builders’ who can help translate new corporate goals into local team actions.

Turning 'Silos' into 'Foundations'

Rather than viewing these insulated groups as obstacles, leaders can lean into this existing team pride. By identifying the people driving these high scores and involving them in early win projects, you can pivot that internal loyalty toward the new, unified organisation. The goal is to evolve the mindset from "protecting my immediate team" to "driving the new, high-performing culture", using the existing social capital as the foundation.

Case Study: UK Leisure & Hospitality Brand

How one organisation used data to navigate a 2025 merger.

The brand serves as a powerful example of how measuring Employee Engagement during a transition allows leadership to identify exactly where to intervene. Their 2024–2025 data, gathered from two surveys, one completed one month after their merger and the follow up a year later, reveals a fascinating story of bucking the trend in some areas while facing the reality of mergers and acquisitions in others.

8-Factor Score Changes During a Merger

The following table tracks the shift in score across four Best Companies Employee Engagement Factors, comparing the results of the initial post-merger survey with the follow-up 12 months later.

Where They Bucked the Trend

While most organisations see a decline in engagement during a merger, this brand actually saw an 8.2 point Best Companies Index (BCI) score increase. Why?

• Wellbeing & My Team: Instead of cutting extras to save costs during the merger, they doubled down on their Social Committee and Mental Health support.
• Communication as a Shield: By utilising a dedicated Facebook Group and daily briefings, they addressed the ‘gossip gap’ before it could be filled with negative assumptions.

Where They Need to Improve

• Organisational Clarity Around Pay and Benefits: While the company may have been effective in communicating their aims and strategies, they haven’t reassured employees about any potential changes to reward or bonus structures, leading to a decline in Fair Deal.

Common Employee Responses to the ‘Clarity Gap’

When leadership fails to provide a clear narrative, employees naturally default to protective behaviours:

1. The ‘Wait and See’ Approach: Decision-making stalls. Employees stop taking risks because they don't know if the ‘new way’ will penalise them.
2. The Gossip Cycle: Insufficient or inconsistent communication fuels misinformation. If you don't tell them what's happening, they will invent a version that is usually 10x worse than reality².
3. Silence is Not Compliance: A major pitfall for leaders is misreading a quiet workforce as an agreeable one. Often, silence is actually disengagement: employees have simply checked out and are updating their CVs.

The Road to Organisational Clarity

Our data shows that the most effective strategy for ensuring that employees remain engaged with the business is through providing Organisational Clarity.

The purpose of Organisational Clarity is not to provide assurance, but rather to offer transparency. When employees can understand the situation and see the vision for how the business aims to move forward, they are more equipped to help the organisation to achieve its aims.

The most successful organisations prioritise two-way communication - enabling their people to voice concerns and solutions, thereby creating ownership and buy-in - and empower frontline managers to overcommunicate Organisations Clarity. Here is the blueprint for maintaining engagement:

1. Ensure Organisational Clarity: Use the Clarity Index model to explain the "Why". Employees need to understand not just that things are changing, but how those changes benefit the collective future and how their roles can help the organisation to achieve its goals.
2. Highlighting Quick Wins: In the vacuum of a merger, small victories matter. Highlighting successful integrations reinforces that the new direction is viable.
3. Continuous Measurement: You cannot manage what you do not measure. Full surveys provide the deep-dive data, while Pulse surveys act as an early warning system for ‘hot spots’ of disengagement.

The Importance of Listening

Measuring Employee Engagement during a merger isn't just about collecting data for a board report; it is a signal to your employees that their experience matters. As seen with this Leisure & Hospitality Brand, even when factors like Fair Deal take a hit due to the natural uncertainty of a merger, an organisation can still thrive by strengthening in other factors.

A merger is, at its core, a collision of different cultures, legacy values and ways of working. Without intervention, this often leads to employees feeling siloed, retreating into the safety of ‘how we used to do things’. By focusing on My Company, leadership can bridge this gap, fostering a sense of Psychological Safety where employees feel secure enough to embrace a new, shared identity rather than protecting an old one.

By listening to the data and acting on it under the mantra of ‘you said, we listened, we improve together', leaders can transform a period of high anxiety into a moment of cultural evolution.

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