Avoid merger mess
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.