Owners seek to merge companies for several reasons including combining breakeven or profitable companies to become more profitable, combining competitors for succession planning or combining for synergistic reasons.
The merging of two companies together can be extremely profitable and rewarding; however, there are many important factors to consider. The single most important factor is the compatibility of the two owners. Since it is not possible for a company to have two leaders, they must agree on what roles each will have going forward. Mergers work best when owners possess different areas of expertise such as sales, production, administration or a special skill required by the company.
Difficulties we may face
As management, we may face difficulties in communication with the employees at the beginning. The most important thing to remember during the merge of the two organizations is that communication should be a top priority. Thus, we have to make sure that we begin communicating in a two-way matter. Care must be taken to involve, encourage, and support these individuals through the early adjustment phases. It is also important to provide opportunities for members of the boards and staffs of the two organizations to get to know each other, and work together, as soon as possible. Open communication between the groups must also be nurtured at this young stage in the company's life because it is so important for this type of relationship to become habit and common place. Communication is utterly the most important tool that the young management teams and the employees will have in common.
We also need to pay serious attention to the cultural differences between the two organizations, and respect the way things have always been done by our partner. This is not to say that we cannot change anything. However, a cavalier attitude, scoffing at a less sophisticated system or staff, or an assumption that our organization's way of doing things will be the merged way of doing things can make a tense situation worse. People from each old organization should share their traditions and stories with their new colleagues, and everyone should contribute to the creation of new traditions and stories.
The New Strategies
Communication
One major issue that our upper management should deal with is communication. To be more specific, we must deal with it in a two-way matter. "Unfortunately, internal communication is frequently one-way, directed downward from the employer to the employee. Upward communication enables employees to say to management what they are saying to one another" (Wohlfarth, 1998).
We should be more open to our employees, allowing time to communicate in a give and take manner. We should also listen more to what employees have to say, rather than do the talking. According to Sharon Wohlfarth, "Whether personal or professional, relationships cannot exist without two-way communication. It is necessary for all members of the relationship to express themselves to the others" (Wohlfarth, 1998). We, as management, want to make our employees happy through communicating their concerns and problems to us. One can really gain knowledge about the other through a two-way communication. Moreover, we ought to allow feedback about our performance. " More than a few studies have revealed that catastrophic failure might have been prevented if the senior person had created a climate in which employees could feely provide input, rather than an environment in which they were forced to subjugate their thinking to my way or the highway"( Cassidy, 2002).
Interpersonal skills
Another issue we should think about enhancing is our interpersonal skills. These skills are a great value to both our employees and our clients. "Managing the technical environment offers a unique set of challenges. From directing the strong-willed, independent spirit of technical guru to leading fast-paced, innovation project teams, technical managers must rely on their interpersonal skills to retain valuable employees and communicate a sense of teamwork and corporate vision" (Work Relationships, 2000). Interpersonal skills can imply the difference between success and failure in actually getting the job done. These skills improve every aspect of the organization's working relationships. With the merge of the two companies, implementing people skills through the Shared Values course would be an excellent step. The course will not only help employees communicate better, but it will also help them deal with people from all over the world. "Cultivating the art of influence and the ability to connect is called people skills. If you can develop your people skills, you can talk to any corporate village in the world"(Brandau, 2003 ) These skills will be most useful for the merger because the employees who used to be competitors are now on the same team. "Your new knowledge and experience will come as you learn how to interface with diverse cultures and global counterparts while creating an environment where everyone is just one of us"(Brandau, 2003, p. 2 ).
Motivation
There might have been a motivation plan for each company before the merge, but we must make that plan even stronger. Motivating employees plays a significant role in the success of organizations. "Motivation is the willingness to do something and is conditioned by this action's ability to satisfy some need for the individual" (Robbins, 2000, p. 108 ). When people are not highly motivated, their performance drops and they rarely rise to their potentials. There are many ways that we can motivate our employees. We can begin by showing appreciation and giving credit where it is due. Feedback is very important between management and employees. Even the simplest feedback can be considered a big deal to employees. Another way to motivate our employees is by challenging them to an appropriate level. We should also give them a chance when opportunities prevail along with the challenges. Boosting the employees' morale will also make them feel good about themselves and their work. Furthermore, reward systems can be an excellent motivating method. Extra bonuses like a day off, extra pay, half a day off, lunch with management etc. can all motivate employees. "People who are motivated exert a greater effort to perform than those who are not motivated" ( Robbins, 2000, p. 108 ).
Steps and Questions
There are certain steps we must consider during the merge:
· Make employee benefit plans a priority
· Account for people within an organization as critical assets
· Define the values, philosophy, mission, and vision of the integrated organization
· Identify barriers to successful integration and strategies for eliminating these barriers
· Review and discuss organizational designs
· Create process development tools
· Draft policy statements that incorporate the core value of the new, combined entity
· Facilitate merger teams and train team members
· Develop a compensation structure and reward system for the new organization that reflects the values and drives performance towards the stated goals
Important questions to ask during the merger:
1. What is the background of the employees?
2. Where will the current employees fit into the new company that is going
to be created?
3. Do we need to upgrade employees' status? Do they still have the same
role with the company?
4. How many new people do we engage into the confusion of a merger? Entry
level positions are important because they bring fresh ideas into the
company, but the lack of experience can be very hurtful to the company.
5. How are conflicts to be dealt with when the merger occurs?
6. Can we take steps to prevent these problems from happening before the merger takes place? If not, what do we do?
7. Does the management team stay together during the merge? Are new people
needed?
Conclusion
Mergers can be absolutely devastating to a company, but can also help the company tremendously. There are many problems that the company will face with the merger of two different entities, but with the right training and management teams, these conflicts will be resolved. Communication between all levels of employees is essential to the harmonious existence of the company and communication in the end will be the way to resolve any conflicts that will arise. "A merger if nothing else is a risk, the time devoted to negotiations and diligence may be wasted. The organizations may not make good partners, the profits you may have counted not materialize, and tension between the merging groups may never subside. However, great risk often accompanies great potential rewards. The key to reaping the rewards is the ability to stay on track while handling the risk, the downsides and the setbacks" ( La Piana, 2002, p. 9 ).
References
Brandau, K. (2003). It's all about global people skills. Retrieved on October 4, 2003 from
Cassidy, M. (2002). Good people skills help managers retain good people. Retrieved on October 4, 2003 at
La Piana, D.(2002). Nonprofit Mergers: Is your organization ready for the road. Retrieved on October 8, 2003at
Naude, F. ( July 2003). FAQ about Oracle Corporation. Retrieved on October 7, 2003 from
PR Newswire (Jan 10, 2002). Oracle Enters 2002 With Powerhouse Product Lineup. Retrieved on October 8, 2003from
PeopleSoft Corporation (2003). Retrieved on October 8, 2003 from
Robbins, S. P. ( 2001 ). Organizational Behavior. Boston: Pearson.
Wohlfarth, S.(June 1998). Managers need two-way communication with workers. The Business Journals. Retrieved on October 4, 2003 from
Work relationships ( 2000) Interpersonal risk management: for technical managers and supervisors. Retrieved on October 05, 2003 from
