Minimising threats and Maximising rewards with the SCARF Model for change management
By Mark Blackwell
The success rate data on mergers and acquisitions is not great. Christensen et al noted “study after study puts the failure rate of mergers and acquisitions somewhere between 70% and 90%”. There are many reasons for this, notably poor logic on the strategic intent and desired business model, but cultural differences play a part. Following personal experience, I was intrigued as to whether learnings neuroscience might help nudge up the success rate. Applying the SCARF model to my experiences was insightful.
For the individuals in an organisation, both leaders and employees, Post Merger Integration can be one of the most stressful change management experiences. At best there is loss of productivity, but often more serious burnout and resignations depriving the new organisation of critical talent.
In his aptly named “Your Brain at Work”, David Rock gave us the SCARF framework to help us navigate through such transformations. Let us review the model through the lens of Post Merger Integration experiences.
So what is the SCARF model? In a group situation our brain is constantly monitoring five factors – and how it responds dictates our behaviour
The perception of being considered better or worse than others
The ability to predict future events
The level of control we feel able to exert over our own lives
The sense of feeling safe with others
The sense that we are being treated fairly with respect to others
Given our evolutionary history it should be no surprise the brain is more likely to interpret change in any one of these five as a threat to flee from rather than a reward to move towards. In periods of uncertainty, our brains rely on the fast-thinking instinctive parts of our brain whilst the slower, but more advanced conscious brain struggles to make rational sense of events.
Helping people through difficult change management situations is about enabling the mature, but slower brain be drawn to the situation, rather than the primitive emotional brain, particularly the amygdala, to see a threat and run away.
1. Status – the perception of being considered better or worse than others.
Let’s start with status. Threats to our social status elevate cortisol levels in the same way as happens with chronic anxiety and sleep deprivation.
Losing the number of direct reports in a new role could easily be interpreted as a demotion and threat to social status. Pumped up with their stress inducing hormone cortisol the individual will be ever more blinded to the reality without thoughtful intervention and support. A constructive two-way conversation could position the role change for what it was intended to be – a step up in status freeing time to focus on critical new opportunities requiring influence management skills to be developed.
Whilst role changes may be obvious, do not overlook the impact of changing job titles for the same role. Inadvertently individuals may sense a demotion, and loss of respect from peers. Spend time explaining how things work and what is valued in the new organisation. Emphasise how this relates to fairness and relatedness in the new organisation. More on these points to follow.
2. Certainty – the ability to predict future events
Unpredictability uses the same areas in the brain as physical pain. The energy demanding brain consumes far more resources than in a familiar environment and is perhaps less effective at decision making.
Despite all the due diligence efforts, the Post-Merger environment may not be what was expected, and the planned synergies may look a little tarnished. Meanwhile, more than before, the organisation is looking for directional clarity.
If the plan looks off course, then admit it, but be sure to engage all parties in the ongoing redirection efforts. If nothing else, being seen to engage people will have a positive impact on relatedness – but recognise the words “Can’t tell you now – but will tell you by 2!st June… ” can address the need for certainty and avoid the fight-flight-fright response.
More deeply, of course the future cannot be predicted – whether it be in a Post Merger Integration or at any other time. Therefore, do not worry about not being able to predict the future – worry about not engaging people to imagine scenarios of what the future might look like, and how to develop a strategy to thrive in this environment. As people envisage the future the joint ownership of the mission will emerge boosting a sense of relatedness.
Similarly, do not needlessly delay decision making in the belief that people need time to adapt. I recall surveying people several years after one integration, and there was strong feedback wishing the process had been faster and reduce the period of uncertainty.
3. Autonomy The level of control we feel able to exert over our own lives
By not having clarity of what is possible in a new role, or indeed a new role, the brain will interpret this as a threat to autonomy. Over-communicate what is possible, and be easy on people if they cross the line as they find their way. Find ways to encourage individual choice and decision making. And again over-communicate what is expected in roles in the new environment. Being promised more autonomy activates the reward system in the brain.
4. Relatedness. The sense of feeling safe with others
Being part of a “Tribe” had clear evolutionary advantage through strength in numbers and mutual dependency. Indeed, to help bonding the “feel-good” hormone oxytocin is produced and drawing us towards situations with this reward and building a sense of trust.
Yes, it is important to honour the heritage of the tribes people came from before the merger, otherwise people feel they are lost, but ultimately it is more important to build the new tribe.
I recall one integration where people would refer to their old organisation as “Legacy abc business”. As new organisations connected, there was a proliferation of legacy organisations, including the creation of new legacies that had otherwise been forgotten! Often this served to highlight the differences between people slowing the formation of a new tribe with its oxytocin production and trust.
Recall Google’s study on what makes a great team? Google discovered that the highest performing teams had one thing in common – they felt psychologically safe! Perhaps the reasoning is now clearer?
5. Fairness The sense that we are being treated fairly with respect to others
OK, the world is not always fair – but the emotional brain does not know this. Sensing unfairness the “chimp” brain retreats into defence mode. Eliminating a sense of unfairness can activate the reward centre of the brain.
When thinking rationally people understand the near inevitability of “executing on cost synergies” and its impact on jobs. However, it should now be clear that there is a strong demand for fairness, and may not choose to stay with an organisation that is not perceived to have a transparent and non-biased process. Conversely, individuals will be drawn to organisations that demonstrate fairness.
Arkaro’s team of experienced professionals have first-hand experience of post-merger integrations to complement their technical skills. Bringing this experience to Post Merger Integration work can help nudge up the probability of integration success.
 The Big Idea: The New M&A Playbook , Clayton M. Christensen et al (Harvard Business Review 2011)
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