How I kept my staff motivated during an acquisition

Upstream is one of Australia’s largest printed services companies. Chief executive and founder Neil Tilley began the firm to service the SME space, deliberately neglecting larger corporates, in order to foster better relationships with customers. It turns over nearly $130 million a year.

Last year the company was acquired by Fuji Xerox in a major transaction, one which Tilley says upset some of his staff at first.

Tilley says in order to maintain morale during such times, businesses need to maintain an open and honest culture that rewards questioning in order to avoid potential staff fallout.

You’ve had a busy year – how’s the business travelling?

The business is going very well for us. We’re on track to have our strongest year ever. We’ve deliberately chosen not to be a player in the Government space, or in very large corporate, and as a result we’ve been able to build relationships with our key clients.

So we concentrate on giving those guys a really good managed print service. We run a fleet of printed services, and give the customer what they want. This year I think we’ll do $130 million quite comfortably.

Can you go back to when you started thinking about a sale?

If you go back to when we started the business, back in 1995, we were very excited about how fast we were growing. But we got to the point a few years ago where we simply weren’t able to grow the business out of our own means any more.

We didn’t want to get into too much debt, which is one of the lessons we’ve learned. If you have too much debt then the market will kill you. We knew we had a strong feature, we’ve been funding the business privately for 15 years, and we were looking to get some capital, but the GFC made it harder to do that.

We found ourselves in this scenario, where we didn’t want to get bank funding, and we just looked at a number of opportunities before we decided to sell.

Did you consider anything else?

It’s a really interesting process. We started off saying that we didn’t want to lose control, and we started looking at private equity, but we came to the realisation that even if you sell 20-30% to someone, they really base they investment on whether you’ll agree to their agenda. You really do lose control of what you’re doing.

We also looked at listing, but it’s such a complex process, and we’re not a particularly small company but we wouldn’t have a significant market cap. It would be a lot of effort, and we just wanted to focus on running the business that we know well. We wanted to find a company whose interests were aligned with ours.

How did the staff fit into all this?

We’ve got plenty of staff. And one of the things we’ve always done is share with our staff the vision for what we want the business to be. Over the years, we’ve gotten a really good buy in from our staff who share the vision with is.

We made it completely clear that we wanted our staff to share in this vision, and we made it clear we weren’t changing that. We explained this was the next logical step in that vision, and we needed to do this to create career opportunities.

Was Xerox on board with this?

They wanted us to be independent. That was extremely important, and they’ve never asked us to do anything, or sell anything for them to the staff, or so on.

Were there many in opposition to the move?

There’s no doubt a lot of people worry. And you have to increase the amount of communication – at one stage I was writing a staff email every couple of days just addressing any concerns they had.

How did you address the problem?

The very first thing we did was that we just thought up a list of every conceivable question someone would ask us, we posted it on the internet, published it and gave it to everyone to read.

Did you do anything else?

We created an anonymous email system, where everyone in the company could go to the internal website, and anonymously ask a question of me that I commit to publically answer.

So you know, it could be something like, “I heard that x, y, z is going to happen, is that true?” And I would send an email out saying yes, it’s true, or no, it isn’t. We created a really transparent environment and an environment of communication.

Was there a big response?

We were getting dozens and dozens of questions. At first they were of quite a cynical nature. And then after a few weeks, the volume dropped off and the difficult nature of them dropped off as well.

What’s interesting is that we’ve actually continued that policy even to today. I got one the other day about the warehouse, and we quickly addressed something there. It’s been a great tool for us.

Did you find there was some sort of key to making it work?

The key is that you make it anonymous, and you make sure that employees can do it without fear of retribution.

What advice do you think other businesses should follow in a similar position?

You have to be totally open, and you’ve got to do a job of picking the right partner. We didn’t just put our business out there, and say, “We’re selling the company to so and so”. We asked these companies to tell us what the plans for our business were.

You need to sell your business with the mindset that there are more stakeholders than yourself in the business. You have to make sure when all the transactions are finished that it’s a better deal for staff, otherwise you can’t expect them to remain loyal to you.