Avoid merger mess

Winnipeg Free Press - Section H - - FRONT PAGE - BAR­BARA BOWES

MERG­ERS and ac­qui­si­tions have al­ways been a nor­mal busi­ness prac­tice as in­dus­try sec­tors go through eco­nomic re­struc­tur­ing as dic­tated by their growth or de­cline cy­cles. Merg­ers also oc­cur in the public sec­tor, as is the case of the re­cently an­nounced merg­ers of the re­gional health boards and two Crown cor­po­ra­tions, the Man­i­toba Liquor Con­trol Com­mis­sion and Man­i­toba Lot­ter­ies.

While it may not be ap­par­ent, there are al­ways good rea­sons for merg­ers and ac­qui­si­tions. Cor­po­rate ob­jec­tives typ­i­cally in­clude di­ver­si­fy­ing risk, di­ver­si­fy­ing prod­uct or ser­vice lines, and/or at­tain­ing com­pet­i­tive ad­van­tage. In oth­ers, the cor­po­rate ob­jec­tive is a con­sol­i­da­tion of re­sources and the op­por­tu­nity to cre­ate or­ga­ni­za­tional ef­fi­cien­cies by merg­ing func­tional de­part­ments.

How­ever, it’s also well known that many of these merg­ers and ac­qui­si­tions fail to meet their ob­jec­tives and sim­ply end up be­ing high-cost ven­tures that have a sig­nif­i­cantly neg­a­tive im­pact on em­ploy­ees and fail to im­prove ei­ther cus­tomer ser­vice or that all im­por­tant fi­nan­cial bot­tom line.

In ad­di­tion, re­search has shown that if rad­i­cal changes to an or­ga­ni­za­tion’s man­age­ment struc­ture and re­duc­tions in the work­force oc­cur too quickly dur­ing the merger process, then the risk of fail­ure dra­mat­i­cally in­creases.

Man­ag­ing a merger or ac­qui­si­tion is complicated be­cause it in­volves a high level of un­cer­tainty. Em­ploy­ees at all lev­els are anx­ious and of­ten feel they have no one to turn to for an­swers.

They feel pow­er­less and quickly move into ca­reer sur­vival mode with some be­ing able to weather the storm, hop­ing for an op­por­tu­nity, while oth­ers will suf­fer from chronic stress and worry about their job se­cu­rity. Fear and anger can soon in­fil­trate em­ployee morale. Then, when work re­duc­tions do oc­cur, em­ploy­ees also suf­fer from grief and loss as their col­leagues leave the or­ga­ni­za­tion.

One of the key rea­sons for this fail­ure is that se­nior lead­ers of­ten do not in­clude their hu­man re­source pro­fes­sion­als in the ini­tial strate­gic plan­ning of such a mas­sive change.

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