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Corporate mergers: Blessing or huge curse for employees?

Emmanuel Jinda

IN simple terms, a merger is when one company agrees to combine with another to cut costs, getting access to certain markets or reducing competition.

From a business point of view, benefits of such mergers can be manifold in view of the ever-changing market boundaries and elusive business targets in the contemporary business world.

Corporate mergers have become a critical task for management to create organisations capable of infusing products with irresistible functionality or better still, creating products that are needed by end users.

While the business case for mergers is often well-articulated, this is clearly a deceptive difficult task requiring radical change in the management of an organisation. What is harder to see or even harder to acknowledge is how the added momentum to companies actually impacts on employees.

Top American companies NEC and GTE are among the comparative cases that were analysed to understand the changing basis for such a merger in the 1970s. NEC articulated a strategic intent to exploit the convergence of computing and communications and called it “C&C”. Management adopted the appropriate strategic architecture, which C&C communicated to the whole organisation and the outside world during the mid 1970s.

However, years later it was evident that no strategic intent and architecture appear to exist at C&C. Although senior executives discussed the implications of the evolving technology industry, no commonly accepted view of which competencies would be required to compete in that industry were communicated widely. While significant work was done to identify key technologies, managers continued to act as if they were managing independent business units.

The C&C scenario revealed that poor management of the prerequisites of mergers has an impact on employees. Mergers have served as positive significant predictors of staff morale. On the other hand, working environment corporate governance policies have had a significant effect on employee engagement retention, job satisfaction, and workers’ zeal to take up new tasks.

For that reason, the study concluded that mergers have a significant effect on staff morale. If you are a staff member you have got two things to worry about. Losing your job:

There is no merger without layoffs because there are always redundancies when companies combine. Second worry to employees is that of losing their minds.

A merger can be well-thought-out and executed or the strategists can be mindless, resulting in time, resource and energy wastages. With most mergers an intense battle for control likely ensues. The excess staffs from each of the company are going to challenge each other for the right to remain in the new organisation and sometime it isn’t that good.

In addition to these tangles, there is a big challenge of corporate culture when a merger happens. Whose culture will prevail; think of NEC and GTE mentioned above. They ended up being run as two separate entities instead. There is need to be alert to the cultural and social issues and try to keep their sanity which is rarely done. Workers have in the majority been caught in the cross fire. For example, one employee was shocked when they were told one day that they were wearing a wrong pair of shoes. According to whom they wondered!

For mergers to be successful, there is also a need to focus on training all employees to be aware of the new processes, procedures and policies and again employees often find themselves in the hullabaloo.

Employees feel that mergers need to fully prepare staff for a cultural shift. More often than not the new culture impacts negatively on employees because they will not have been enculturated into it. Such uncertainty has often led employees to seek employment elsewhere or other employees to take an unmotivated attitude.

Employees often bemoan lack of communication on the new company’s vision and mission. If changes are mapped out in a clear manner, it keeps them informed, reduces uncertainty and minimises disruption. Employees feel doing it may even help them view the changes as positive.

Clearly mergers are not the most optimal time for employees. The time is filled with uncertainty even on new employment terms, new management style and competences required in the new organisation. Employees would want management to set aside time to discuss issues and seek clarity over roles and responsibilities. They feel there is not enough recognition and rewarding for employees in their roles of managing change.

Employees feel that such rewards do not have to be in the form of bonuses but can be small gifts or recognition among peers. They would want time set aside for them to connect with the new organisation.

Jinda is the managing consultant of PROSERVE Consulting Group, a leading supplier of professional human resources and management services locally, regionally and internationally. Tel: 263 773004143 or 263 242 772778 or visit our website at www.proservehr.com