An Ideal Marriage: Dow + Union Carbide
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Holmes Report

An Ideal Marriage: Dow + Union Carbide

Sixty percent of mergers fail. That’s what proprietary research commissioned by Dow revealed prior to Dow’s acquisition of Union Carbide Corporation (UCC) in February 2001.

Paul Holmes

Sixty percent of mergers fail.  That’s what proprietary research commissioned by Dow revealed prior to Dow’s acquisition of Union Carbide Corporation (UCC) in February 2001.  In the specter of job losses and transition, in an industry facing a major economic downturn, how do you maintain the loyalty and morale of employees at the parent company and the acquisition target?  According to CEOs and senior managers in the same survey, regular communication is most crucial in the wake of a merger or acquisition.  That is why Dow invested heavily in a communications plan that spanned all phases of the merger.
The marriage of two venerable forces in the chemical industry created an organization of more than 50,000 employees worldwide. Essential to making the merger a success, the “new Dow” had to knit together and educate personnel from distinct organizations into a singular work force that understood, accepted and welcomed the new goals, business strategy, values and ideas of the new company. Together, Dow and Ketchum created and executed an internal communications plan that educated employees about what the “new Dow” would look like, and prepared them for imminent changes, including downsizing and redefined jobs.
Commissioned third-party research to assess successes and failures of other “mega” mergers.  Poor internal communication was identified as a leading cause of merger failure.  Dow and Ketchum devised a rigorous, far-reaching communications plan to keep employees continually informed about how the merger would affect them.
Developed database on all UCC sites (based on public information; legal restrictions prevented direct access to employees prior to merger).  Findings were integrated into communications vehicles to ensure UCC audience would feel confident Dow knew as much as possible about the UCC environment prior to the first day of the merged company (Day One).
Gathered M&A “lessons learned” and conducted in-depth analyses throughout the planning period.  Mergers assessed included Exxon Mobil, BP Amoco, Daimler Chrysler, SBC/Ameritech. The team identified specific “dos and don’ts” for Dow/UCC communications pre- and post Day One.
Conducted a series of pre- and post-merger employee surveys to measure “change readiness” attitudes and perceptions to continually remain informed and react quickly to employee concerns.
Administered a study, executed by an outside consultancy, to measure and define the cultural differences between the two companies.  This gave the team action items to expedite the integration as seamlessly as possible.
Conducted focus groups/surveys to measure effectiveness of communications to employees, including comprehension, openness, credibility and preferred communication vehicles (email, meetings, audio messages, etc.).
1.    Achieve “change readiness” among employees, including preparation for downsizing, new leadership, delayering, changes in responsibilities, etc.
2.    Achieve satisfaction among a majority of employees that internal communications were handled comprehensively, openly and credibly, within two weeks of the merger.
3.    Increase usage of a merger INTRAnet from 10% of employees to 50% within two weeks of Day One.
4.     Keep post-merger resignations to a minimum (below 3%).
Create comprehensive research-based pre- and post-merger communications plan for employees.
Establish a merger INTRAnet site as the primary “line of defense” to answer questions instantly.
Train Dow leaders around the world to be effective, credible messengers with UCC employees.
Audience:  Employees of Union Carbide and Dow, approximately 20,000 and 30,000 respectively.
A nineteen-month lag time between merger announcement and merger approval led to employee anxiety and apprehension. Solution: Via information vehicles, Dow constantly assured employees that the merger process was ongoing and delays standard when two large, established institutions are involved.
Legal restrictions prohibited communications directly from Dow to UCC employees prior to Day One.
Solution: Union Carbide implemented an e-mail  “merger mailbox” to capture their employees’ concerns and sent questions to
Dow to develop answers. Answers were published on Union Carbide’s newly established merger INTRAnet site.
3.   Only 38 hours’ notice was provided by FTC before communications with employees had to begin.
Solution: Weekly meetings between Dow’s global communicators and Ketchum ensured critical preparations were
“good to go” in case of last-minute notification.
Pre Day One: Laying the groundwork; addressing concerns commenced two years prior to approval by FTC
·           Initiated weekly calls, led by Dow’s Public Affairs Day One communicator, among 30+ communicators worldwide to address all details of internal communication and continually act upon up-to-the-moment “learnings.”
·            Implemented a UCC “merger mailbox” to collect and answer UCC employee questions.
·           Trained internal spokespeople to ensure message alignment and accuracy of information; prepared necessary Q&A documents; developed and updated discrete INTRAnet site for spokespeople.
·            Published Newslines (INTRAnet bulletins) with 1) guidance for Dow employees on how to work with UCC employees after the merger; 2) updates on merger process and Day One details; 3) FAQs.
·            Conducted Human Resources Sessions for UCC employees to explain compensation and benefits programs.
·            Delivered Dow CEO audio message immediately following merger announcement via employee e-mail and phone voicemail.
Day One: Celebration and Information
·            Scripted and produced live satellite broadcast for Dow and UCC employees that was beamed to Dow and UCC employees worldwide.  The feed powerfully communicated the day’s excitement and relayed timely information via snappy graphics, music and quick cuts between Dow’s Midland, Michigan headquarters and the New York Stock Exchange where celebrations were taking place to commemorate the “new Dow.” The footage featured Dow CEO Mike Parker and UCC CEO Bill Joyce.  A member of Ketchum’s Communications Training Center played the role of Dow “reporter” for the live portion from the floor of the Exchange.  
·            Conducted in-person localized presentations by Dow leaders at 90 UCC sites.
·            Designed/produced tote bags for 30,000 Dow and UCC employees: UCC employee contents included a special commemorative brochure, hardhat stickers, a Dow pin, Dow baseball cap, employee guidebook, etc.
·            Produced series of Newsline articles: 14 in three days.
·            Created merger INTRAnet sites for Dow and UCC employees; after week one, two sites merged into one.
·           Sent Dow business cards on Day One to thousands of UCC employees; Dow signs hung at UCC sites within five days.
·            Produced commemorative edition of Around Dow, published in 12 languages.
·            Distributed digital audio message from CEO Michael Parker to all Dow employees via email.
Post Day One: Ongoing Communication
·            Published a post-close series of 20+ Newsline articles on individual businesses affected by the merger.
·            Conducted employee surveys conducted after 15 days and after 90 days to assess effectiveness of Day One communications and monitor opinions and attitudes.
·           Initiated UCC employee orientation and training on new systems and work process. 
Objective 1: Achieve “change readiness” among employees, including preparation for downsizing, delayering, new leadership, changes in responsibilities.
Result: Despite the magnitude of changes employees were experiencing at Day 90, employees remained positive about the merger overall.  In a survey of 3,200 employees, “change readiness” scores held steady or improved as of Day 90. Two-thirds of global employee survey respondents agreed that the internal communications tools used at Dow were effective.
Objective 2: Achieve satisfaction among a majority of employees that internal communications were handled comprehensively, openly and credibly, within two weeks of the merger.
Result: A Day 15 email survey revealed that 85% of respondents from Dow and UCC were satisfied or very satisfied with the way employee communications concerning the merger were handled, exceeding the satisfaction goal by 35%.
Objective 3: Increase usage of the merger INTRAnet from 10% of employees to 50% within two weeks of Day One.
Result: On Day One, the merger INTRAnet site registered five times the traffic of a normal weekday: 13,000 user sessions and 125,000 hits.  More than half of the traffic came from UCC employees using the INTRAnet.  The goal was reached, and today UCC employees use the INTRAnet at the same rate as Dow employees.
Objective 4: Keep post-merger resignations to a minimum (below 5%)
Results:   Less than 1% of employees resigned as of March 2001.
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