Introduction
A merger is a time-consuming and challenging process for all firms and individuals involved. It requires sufficient preparation before the partnership starts, as well as enough attention to it during the implementation. While mergers are believed to help organizations become stronger on the market, they also pose many risks to how these entities run (Sarala et al., 2019). One of these dangers lies in employees’ reaction to their company being either significantly changed or even dissolved and reshaped into a new business.
In theory, a successful merger is welcomed by employees who support and understand the need for expansion. In practice, however, workers are often uninformed about the changes and are left to wonder whether their job is safe (Zagelmeyer et al., 2018). Many reasons may lead employees to feel as though their company’s management does not include the staff in the merger implementation process. This paper explores the potential reasons behind such emotional responses and the outcomes that follow.
Merger Implementation Process
First, it is vital to understand what happens during a merger to discuss why employees may feel excluded. According to Rebner and Yeganeh (2019), a merger is envisioned as a synergy of two businesses, where the sum of their efforts creates more value than they could produce on their own. However, from an employee’s point of view, a merger is a source of uncertainty. As the firms start restructuring and employees from two entities are combined into one group, their place in the new company is challenged. Thus, it is vital to communicate to workers why a merger is happening and which results in it can bring.
Reasons Behind Employee Exclusion
Organizational Communication
One of the factors that strongly influence the merger implementation process is communication. According to Zagelmeyer et al. (2018), open and honest communication with employees is vital for any merger to proceed successfully. In some cases, management does not share the news of a merger with employees until it is already in progress (Zagelmeyer et al., 2018). As a result, workers may be shocked to find out that their job, duties, or position in the company is changing. A person who does not know the benefits of a merger is likely to feel distrust towards the business, managers, and even colleagues. Moreover, the lack of proper communication about the merger’s progression leaves the workers wondering whether their job is safe, thus alienating them from the process as a whole.
Ambiguity/Lack of Involvement
Another possible problem is the ambiguity when communicating about the merger and the inability of top management to involve the staff in it. Although employees may know about the merger process beforehand, they can be put in a position where they cannot do anything to advance it. For example, top management can refuse to take any suggestions for process improvement (Rebner & Yeganeh, 2019). In another case, managers can make all decisions about new job opportunities, transfers, and cuts without consulting the staff or asking for applications from those who would like to transfer or take on a new role in the merger. As an outcome, employees cannot participate in the merger in a meaningful way, while their insight into the daily minutia of completing tasks is ignored.
Lack of Knowledge Sharing
The third reason behind employees feeling excluded during the merger process is insufficient knowledge sharing. When two companies merge, they almost always pursue the goal of advancing in the market and improving their performance (Ameen et al., 2018). Therefore, it is possible to assume that they want workers to evolve as well, acquiring new skills and moving forward in their careers. However, managers can fail to set up knowledge exchanges between more and less skilled employees. They may also not acknowledge which departments are in need of training. As a result, the merger produces departments with varying levels of skill where employees are forced to deliver better results without the needed knowledge to meet this demand.
Outcomes
Cooperation
There are several adverse outcomes from the failure to engage employees and provide them with enough information about the merger and their new roles. The first one is resistance to change and cooperation, where workers from the two companies refuse to work together towards business unity. The factors mentioned above discourage collaboration in different ways; however, all of them negatively impact teamwork. For example, if top management does not communicate with employees about the merger, the latter can become suspicious of each other and the security of their position at the company. As a result, they may not share what they learn with coworkers.
Knowledge sharing is also closely tied to teamwork as it is the core of performing tasks at the same level of expertise. The ambiguity of management and the failure to involve workers in the process of merger implementation leaves employees without any chances to cooperate in the new system. They do not know enough or cannot do anything but perform their daily tasks. As a result, the staff from both organizations have no instances where they can connect.
Low Productivity
The second potential outcome of workers’ exclusion is a fall in productivity levels. It is apparent that motivation is a critical factor in increasing one’s desire to perform better (Zagelmeyer et al., 2018). Low motivation influenced by not being a part of the conversation may lead employees to stop working and detach from the organization (da Costa et al., 2021). As mergers are performed with the goal of increasing the profitability of participating organizations, decreased productivity is one of the worst outcomes of this process. In contrast, timely and honest communication with employees can increase their participation in the merger and improve their view of new employees and the business as a whole (Sarala et al., 2019). Therefore, productivity is strongly tied to well-thought-out strategies for involving employees in the implementation.
Low Retention Rates
Finally, the third negative outcome is low retention rates, as employees from both sides of the merger leave the new firm. Retention depends on many factors, including employees’ engagement with the business and shared visions for the future (Karanja et al., 2021). If the company fails to demonstrate the benefits of the merger, it also risks alienating workers driven by ideas that their old job had.
Conclusion
The merger implementation process requires businesses to prepare their employees for the upcoming changes. Workers want to be a part of their organization’s growth and feel valued and needed by their company. Therefore, it is essential to include them in the conversation about the merger and deliver well-crafted, honest, and timely messages about new goals and ideas. Otherwise, a large part of the business – its workers – can start losing their connection to the firm and disengage from sharing ideas with others and delivering good results. Some may leave the organization, which would also put a strain on the newly merged enterprise.
References
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Karanja, A. W., Mugambi, H. N., & Muriu, S. M. (2021). The role of communication in employee retention and its effects on organizational performance in mergers in Kenya: A case of Quick Mart Limited. Management and Economics Research Journal, 7(2), 1–10. Web.
Rebner, S., & Yeganeh, B. (2019). Mindful mergers & acquisitions. OD Practitioner, 51(1), 11-16.
Sarala, R. M., Vaara, E., & Junni, P. (2019). Beyond merger syndrome and cultural differences: New avenues for research on the “human side” of global mergers and acquisitions (M&As). Journal of World Business, 54(4), 307–321. Web.
Zagelmeyer, S., Sinkovics, R. R., Sinkovics, N., & Kusstatscher, V. (2018). Exploring the link between management communication and emotions in mergers and acquisitions. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l’Administration, 35(1), 93–106. Web.