ASQ - Team and Workplace Excellence Forum

October 1999

Articles

Not So Common Sense

A Fresh Squeeze On Labor Relations

Toughening Up Today's Change Efforts

People Before Strategy: Four Types of Employees that Help or Hinder a Changing Corporate Culture

The Missing Link
Failed Mergers Linked to Poor Management of Workforce Issues

A Few Kind Words: The Importance of Positive Reinforcement

Tool Time
Assessing Management Tools



Columns

Turnabout Is Fair Play
by Peter Block


Features

Brief Cases

Diary of a Shutdown

Views for a Change

Pageturners

 

The Missing Link
Failed Mergers Linked to Poor Management of Workforce Issues

Last year there were more than 7,700 mergers in the United States valued at more than $1.2 trillion. Out of these, only roughly 30 percent are likely to achieve the goals that made the merger or acquisition seem like a good idea in the first place.

If the 80s were the decade of downsizing, then the 90s are the decade of merging. And much like successful redesign and downsizing projects, successful mergers must include two essential components: a strong financial / business strategy and an implementation plan for managing the human side of change.

The business press has chronicled the stories of mergers that did not meet expectations due to miscalculations on the human level - cultures that couldn't coincide; conflicting leadership styles; inadequate communication; loss of key talent - but there has been limited research into the extent and impact of not effectively managing change.

Right Management Consultants recently launched a study of 179 organizations that merged during the past few years to determine the effect of mis-managing change during a merger.

The companies in the survey ranged in size from those with less than 250 employees to companies with more than 10,000 employees. The study sought to uncover:
1. What aspects of workforce integration are most in need of improvement among companies merging and acquiring?
2. Is there a quantifiable relationship between the handling of merger and acquisition people issues and the achievement of company business objectives?

The Findings
According to the study, the majority of companies are having a very difficult time with people issues across the board. On average, only 30 percent of respondents said their companies had succeeded in areas such as cultural integration, employee retention or communication. Also, attainment of business objectives was found to be highly correlated to successfully dealing with workforce issues.

Almost all of the companies surveyed encountered problems with implementing the human aspects of the merger. All agreed that the speed of integration was critical, with some suggesting that the first six months are key. Also, more than 50 percent of the companies reported that management had failed to pay serious attention to important workforce problems.

Ignoring workforce issues has proved deadly for many attempted mergers. The Right Management study stresses this by identifying eight reasons mergers fail:
1. Key talent leaves
2. Lowered overall productivity and individual performance
3. Incomplete or infrequent communications
4. Placement errors
5. Management denial or inattention to key workforce problems
6. Lack of direction during implementation
7. Ignoring the "culture fit"
8. Poor management of remaining employees

The bottom-line is that companies that wish to successfully navigate through a merger or acquisition can not afford to adopt a "just do it" attitude. Instead, the key to success lies in addressing workforce issues before and during the merger.

October '99 News for a Change | Email Editor
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