How Do Mergers Really Impact Employees? Seeking Your Insights and Experiences

Hi everyone,

I'm working on a project on the effects of a merger on employees. I need your help and input.

Thank you,

Regards,
Archana.

Hello,

I wish you would spell out the problem a little more clearly.

Merger is, as the word indicates, the coming together of two or more entities in such a manner that they become congruent in all possible ways. This does not generally or automatically happen; hence, we need to focus special attention on this issue.

If the two parts come together but maintain separate identities, the efficacy of their collective performance will be unsatisfactory. The two parts remain two parts artificially brought together. Unless they become one in spirit and soul, it is of little use.

Apart from technology, finance, markets, and related functions, if members of each organization remain isolated, their performance will suffer. The merging entities have to be harmonized for improved performance/results, which is one of the main reasons that justify a merger.

Human beings are central to organizational performance, and unifying them in spirit and culture is essential to results. We must remember the following points that would be material to the merger of human resources in the case of any merger.

The two independent entities have had independent existence, that is to say:

1. different management styles.
2. different compensation patterns and reward systems.
3. different work cultures.
4. different values systems.
5. different work systems.
6. different leadership styles, different communication freedom, and different levels of permissiveness, and many other axes along which these two can be differentiated.

It is these and such areas that demand serious attention. Nothing could or should be taken for granted as these are never written down, and the reality could be vastly different from what is written down in manuals and brochures. If smooth, seamless assimilation of human resources does not take place, the very purpose of the merger could be defeated.

The more the areas distinguishing one organization from the other, the better could be the efforts at assimilation. And in any case, the objective of the merger will automatically explain the line of action one may have to adopt!

With your one-line query, I suppose this reply will show you enough pointers, but if you need more assistance, kindly elaborate on your queries and receive a better response.

Regards,
Samvedan
August 22, 2008

Hi everybody,

Can you give me some examples of mergers where the concerned employees are adversely affected because of the merger? It's really urgent.

Thank you,
Sourav

Hi Abalan & Sourav,

The main challenges would be:

1. Managing the cultural differences of the two companies
2. Addressing the fears and apprehensions of the employees (with regard to job security, positions, policies, etc.) whose company has been acquired.
3. Retaining key talent.
4. Deciding power positions.
5. Deciding who should stay and who should go.
6. Managing the excess manpower (if applicable).
7. Managing ego clashes between the employees of the two companies.
8. Integrating the skill sets of the two companies into one profitable organization.
9. Timely communication of the changes to the employees.

I have worked on both sides of the table, and these were the main challenges we had faced during the transition period.

All in all, managing the HR issues is the biggest challenge in a merger, which determines the success or failure of the merger in the long run.

And Sourav, when two companies merge, it is mainly to grow into an even more profitable company together. They would want to have all talented people on board and take every step to make it profitable for the employees as well. So unless the people are extremely useless, I don't think employees will be adversely affected by a merger.