Every merger has its human cost

IMAGINE your firm is taken over by a larger and more prestigious company. You fear your opposite number will be handed your job without further ado. You worry that your brand and company culture will be twisted like putty in the hands of your new bosses. Do you stay - or scramble out before it's all too late?

Surprisingly enough, many employees opt to take change squarely on the chin rather than chuck in the towel, according to new research. Even more surprisingly, those who stay are more likely to become the ultimate winners.

These are among the findings in a preliminary report produced by Roffey Park Management Institute director Linda Holbeche and her team, gleaned from eight months of research into the effects of mergers on personnel in several blue-chip companies.

Mergers and Acquisitions: Getting the People Bit Right, will appear in full format in September. "I was expecting that in a merger, there would be winners and losers in the initial job shuffle if you were on the wrong management team. It would be tough luck - the organisation acquired would be the poor relation, and those people - by and large - would not have as good opportunities as the organisation that acquired them," says Ms Holbeche.

But the reality was different. "What we found was that, given time, in some cases there had been a radical shift. The initial winners flew back down the pole and the losers were often hungrier. They were less complacent and more attuned to learning and trying new things, not just holding on to the old methods of performing."

There was also the phenomenon of "burying the babies". "We found that people in the losing organisation who had lots of brilliant ideas going on just went underground for about a year. When the organisation was a bit more stable, these people felt willing to bring them out - they had a strong sense of ownership," says Ms Holbeche.

One finding which companies would be wise to acknowledge is the fact that merger-change comes in waves; time is needed to prepare for it, manage it, communicate it and allow it to sink in. There are twin dangers in the early days: if you don't inform employees immediately that changes are afoot - and risk repercussions - the rumours are sure to fester.

Ms Holbeche tells the cautionary tale of the company which hired high- powered consultants to inform employees of developments, but shot itself in the foot by ending the initiative after six months.

"What we came across over and over again were the waves of change. People who have survived don't appreciate that others are just starting to be affected. You have all these paradoxes: you are firing but you also need to fire people up. How do you get rid of and take people with you in this new whizz-bang organisation?" she asks.

Companies which fared better through mergers were those with reassuring figureheads to steer them, instead of public casualties; firms which celebrated heroes, heroines and past achievements of both sides bonded faster than those which tried to impose a "brave new world" ethos.

Space was needed to nurture a third, new culture, the team found. "You don't necessarily need lots of synergies. You can actually encourage gentle competition within a conglomerate, but you do need real corporate commitment from senior managers, otherwise they end up fighting each other as well as the marketplace," says Holbeche.

She concludes that unless companies wake up to the needs of personnel in times of change, their human resources departments will be swamped with remedial work.

"More often than not, in the short term at least, it doesn't pay off [to merge] and it's often the human bit that goes wrong."

The preliminary report is available from Roffey Park, tel: 01293 851644