Change leadership tops change management in CVS-Aetna merger

January 12, 2018 | Holly Pennebaker | HCI
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Not too long ago, the mega-merger of health care giants CVS Health and Aetna was proposed and the $69 billion deal could mean big change for consumers AND employees of the two companies alike.

Sure, it’s a big decision for any company that provides medical and pharmacy benefits to employees, especially when it staffs hundreds, if not thousands of workers, and serves millions of consumers.

The decision’s impact moves inside company walls, reaching each employee that works for both organizations involved in the merger.

It hits home – in a big way – for employees and their families when it comes to accessing health care, as well as the deal’s potential impact on their jobs. When change enters the workplace, it can oftentimes bring pain along, too.

Will jobs be affected by the merger, which is said to potentially reshape the American healthcare system as we know it … and as scary as it sounds, will jobs be lost?

Job takeover: It’s a fear instilled among plenty of employees who endure a merger or acquisition. When Aetna wanted to buy insurance rival Humana in 2015, many who worked for the Louisville, Kentucky-based company went to work in fear every day, wondering if they’d still have a job once the merger was said and done. The Justice Department ended up going to court to prevent the Aetna purchase from happening, and Humana’s team was untouched.

Needless to say, those fear-filled weeks were far from ideal employee experiences Humana’s people. As you can imagine, perhaps Aetna and CVS employees are feeling the same heat, now faced with this proposed consolidation.

“We know from Neuroscience research that to the brain, change equals pain,” Barbara Trautlein says.

Trautlein is founder and principal of Change Catalysts, LLC, and knows plenty about successful and sustainable change management and leadership development.

She says that in times of change, “we have less cognitive resources available to us, and so we hunker down, focusing on what has made us successful and safe in the past.”

If leaders practice what they preach in employee experience, shouldn’t they make mergers and acquisitions easy and pleasant for employees? It only makes sense to be transparent, to fully disclose what the deal means for workers, and if management is able, help employees feel more comfortable about what changes will come once the deal goes through.

“What leaders do during change has a huge impact on whether and how quickly people transition from viewing change as a threat or an opportunity,” Trautlein says.

Leaders should manage change well, potentially bringing home benefits like better engagement and retention and higher performance, all leading to a bigger bottom line. When change is poorly managed, leaders can expect to experience some pitfalls like poor integration of cultures, the loss of key talent, low engagement and weak financial performance.

READ: Transform from HR Professional to Business Leader

Leaders cannot expect a smooth transition, let alone a good employee experience when they leave their employees in the dark.

On too many occasions, organizations fail to let leaders lead change and empower them to guide their people through uncertainty. The heads of the company get too wrapped up in managing change instead of leading change, and this too often comes at times when their people most need guidance and support.

“[Organizations] miss the opportunity during major organizational changes to leverage all the many activities that are required to plan and integrate acquisitions as projects that high-potential leaders could take on in conjunction with executives, creating a ‘leaders-developing-leaders’ mentoring culture,” Trautlein says.

WATCH: Strategies to Successfully Lead Change and Build a Better Culture

Since Sunday, Dec. 3 when CVS announced its plans to buy Aetna, one can only hope leaders haven’t gotten too caught up in the separation of drug benefits and medical coverage, negotiation of new drug prices, and the potential for increased or decreased drug costs. Aetna’s proposal means a “lower overall cost” for patients, as Aetna CEO Mark Bertolini tells Reuters. He’s expected to join the board of CVS if the deal is approved.

There was no considerable mention of what impact the merger might have on the jobs of CVS and Aetna employees. HCI reached out to a Reuters M&A reporter who was part of the Bertolini interview, but the reporter declined to comment.

Quite possibly in this case, CVS and Aetna are different enough that the merger won’t affect employees’ jobs. Even so, resistance to change among employees can be expected with the possible transformation that’s in store for both companies.

Resistance can be a good thing, according to Trautlein, who says resistance is natural and should be expected when transformations take place.

“We should surface it, honor it, and explore it – not shame it, blame it or seek to prevent or eradicate it,” she said.

When employees resist change, leaders don’t have to see it as a sign of hesitation, or as a sign that something is wrong. Instead, leaders should use resistance as a source of insight into how their people are responding to change and better manage the transition. Resistance to change does not necessarily mean that employees don’t understand what’s happening, that they don’t want change to happen, or that they’re unable to ride out the transformation’s ups and downs.

Trautlein says, “The implications for HR professionals are to keep their fingers on the pulse of their people, and through multiple methods continuously deliver messages that increase the probability that people

  • get it (the ‘why’ and the ‘what’ of the change – how is it going to help our business, our customers and our bottom line?)
  • want it (the ‘who’ of the change – how is it going to impact me, our people and our culture?)
  • can do it (the ‘how’ of the change – what’s expected of me, what do I need to do differently, and how can I get the training and the tools I need to succeed).”

When a possible major merger is on the horizon, it’s a chance for leaders to put their leadership skills to work. Employees will rely on their immediate supervisors for updates on the merger, and also for support, so real leadership must spread from the top of the company to each staff member, creating conditions for trust, transparency and retainment of top talent.

“So often, executives do not foster partnerships with managers in the middle and supervisors on the front lines to jointly lead change together,” Trautlein says. “Therefore, managers are not adequately equipped or empowered to deliver messages about the change that would answer questions, quell fears and foster continued engagement.”

If you’re in management of CVS or Aetna, or any company coming up on a merger or acquisition, the time of uncertainty could be the perfect chance to show off your skills. Think about making a strategic contribution – what can you do to make a difference while major change is on the table – when HR professionals aren’t yet involved in the merger process? Even though mergers and acquisitions are financially and legally set up for success, they fall short of effective integration of company cultures, according to Trautlein. They just don’t mix, and so big goals get missed, like management’s early participation, cultural assimilation, and the distribution of adequate information pertaining to all changes, big and small.

“This is where forward-thinking and acting HR professionals can make a huge difference, by helping their organizations be aware of this critical success and failure factor, and by crafting a plan to do something about it,” Trautlein said.

WATCH: Develop Change Intelligence to Lead Organizational Change

The CVS proposed purchase of Aetna on Dec. 3 rocked the health care industry, potentially opening the doors for 22 million Aetna subscribers who would gain a wide range of related services at CVS locations nationwide.

The deal could also become the catalyst for additional mergers in health care, including possible competition from Amazon.com.

Competitively speaking, the deal could push Aetna ahead of the nation’s largest insurer, UnitedHealth Group.

As for employees, the vertical merger is not expected to result in many redundancies because CVS and Aetna are quite different businesses, soon to unite under one roof. If the two companies were more so direct competitors, then employees might have more to worry about.

When in doubt, it’s important for employees to remember that middle management is there to help.

Mergers and acquisitions call on leaders to lead change, foster trust between management and their people, and provide thorough answers to all employees’ questions.

As CVS posted on its website on Dec. 3, CVS Health President and Chief Executive Officer Larry J. Merlo said, “This combination brings together the expertise of two great companies to remake the consumer health care experience.”

“We look forward to working with the talented people at Aetna to position the combined company as America’s front door to quality healthcare, integrating more closely the work of doctors, pharmacists, other health care professionals and health benefits companies.”

Bertolini added, “Aetna has a talented and dedicated group of employees working to build a healthier world every day. Our combined company will be more competitive in the marketplace.”