In merger transactions, it is important to have a clear plan in place from the start—one that is communicated early and often to all who are involved.
ATLANTA, Nov. 18, 2016 — it’s fair to say that most people dislike change. A great deal of uncertainty comes with change, and people tend to focus on the negatives involved. They tend to harp on the challenges and pitfalls that change can bring, rather than the potential new opportunities that change can open up.
Take, for example, a proposed merger of the parking and transportation departments at a university. Such a seemingly small change can grow in complexity, becoming as challenging to implement as the much larger problems a giant corporation faces in changing its structure or merging with another company to achieve greater efficiencies.
Changes within the business world often must confront differences in corporate culture, physical and human resources, management styles, new and existing technologies, and administrative policies. Even though proposed changes can bring about extraordinary results, greater efficiencies and better service for patrons, people still tend not to favor them.
The challenges involved in corporate change, and particularly in corporate mergers or realignments go far beyond personnel realignment and the harmonizing of simple operations. The real key to success lies in the journey itself, ensuring en route that good programs and systems aren’t needlessly destroyed and that both corporate morale and the corporate mission are maintained.
Consider, for example, the corporate culture of each institution in a proposed corporate merger. Each can differ wildly. One leadership team may be easygoing and flexible, while the other may be top-down and autocratic. If both corporate cultures have been successful, it’s difficult to simply assume that one of them is necessarily better than the other. But corporate history, tradition and strong, independent leadership can clash, resulting in significant speed bumps that threaten to hinder the ability of the merged companies to comfortably evolve into a single, unified group.
On a more basic level, mergers also involve the vexing question of budgets, including cash flow, balance sheets and institutional accounting. In our university parking and transportation merger example, fees and fares are frequently allocated differently in each operation, even within the same institution. Harmonizing and simplifying both could prove vexing indeed.
Crucial decisions are also made during involving the corporate goals of the merged company–goals that made the proposed merger attractive in the first place. A merger is not generally implemented to merely increase a corporate budget or to add personnel. Instead, the usual impulse to merge is the notion of corporate synergy: the desire on the part of both institutions to streamline operations and eliminate waste, all with the end goal of providing better products or services to new and existing customers.
Aside from structural and accounting issues, another key issue between or among stakeholders in a merger is the delicate matter of personnel. Invariably, certain positions will be eliminated, if only due to simple duplication of effort; and, traditionally, most of those job cuts will be sustained either by the weaker partner or the company that is being acquired.
Employees on all levels already know this, and questions will quickly arise. Will jobs be eliminated? If so, which ones? Where will the new corporate headquarters and leadership team be located? How will performance and morale be monitored remotely? How will normal employee activities be accomplished when there is physical separation between operations?
Clear communications and compassion for those going negatively affected by these changes can help limit uncertainty and unfounded rumors from developing and undermining the merger process. But, perhaps more than any other benefit, a compassionate and human approach to major changes can help build a roster of advocates who will champion the changes and help promote and sustain them even after the merger transaction is completed.
Mergers and realignments can present incredible opportunities that would otherwise not be possible. In each case, there is an opportunity to start with a clean slate and make wholesale changes that can modernize operations, realign job functions and improve the daily routines for everyone involved.
But such major institutional and corporate events are also fraught with potential dangers. That makes it all the more important to have a clear plan in place from the start—one that is communicated early and often to all who are involved.
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