With a new round of mergers looming, employees should be prepared for changeKevin Van Paassen
Like marriages, corporate mergers can start out with blissful hopes. But in practice, there are always rough edges as organizations that have grown up separately try to adapt to life together.
This week, TMX Group Inc. and London Stock Exchange Group PLC trumpeted their proposed nuptials as a "merger of equals." But already critics, including Ontario Finance Minister Dwight Duncan, are warning that London would end up controlling the merged entity.
In many organizations, moving in together means major house cleaning, as happened this week at BCE Inc., which swept out five broadcast executives from newly acquired CTV Inc. as management signalled plans for a stronger focus on digital content.
These are only early examples of what could be a new round of merger mania, as companies looking for growth scoop up rivals they see as under-priced in the recovering economy.
Experts advise that even if you feel secure in your role, it's prudent to develop a strategy that will help you get beyond the uncertainty of a merger as quickly as possible and come out a survivor.
"My first piece of advice would be to update your résumé, because in many mergers, part of the synergy they want to get involves having fewer people doing the work," said Ann Frost, associate professor of organizational behaviour at University of Western Ontario's Ivey School of Business, who studies merging of workplace cultures.
"The people who are kept by the new organization are going to be the ones that have skills and knowledge considered essential for the new objectives. So now's not the time to be shy," Prof. Frost said. "You can't just quietly go about your job and expect people to notice. You've got to make sure that people know how valuable you are, whether that is talking to your manager or making sure that peer groups hear about the kinds of projects you are on and the success you are having."
Management will also be looking for immediate change, so you must also be able to show you are flexible and on board with what is likely to be a leaner organization. "You need to talk about how you used to do X, but now you are fully prepared to do Y," Prof. Frost said.
Any kind of job that is duplicated is at greatest risk in a merger. "There are not going to be two people sharing the executive suites in the new organization. And any kind of shared services will not have two operations, so as much as half of the staffs in areas like legal, finance and human resources will probably end up being eliminated," said Douglas Cumming, professor of finance and Ontario Research Chair at York University's Schulich School of Business, who studies corporate reorganization in venture capital acquisitions.
In most mergers, executives of the smaller organization and their management team think of leaving anyway, because they will no longer be able to control the direction of the company, Prof. Cumming said. "However... if you are able to survive the early job cutting, and the resulting organization becomes more efficient, evidence of large research studies shows mergers can increase employment and opportunities beyond the first year."
This means executives should ensure they have provisions in their contract covering protection and a buyout in case of a merger. "A decision may already have been made before an announcement is made, so you need to protect yourself ahead of time," said Carmine Domanico, president of Toronto-based mergers and restructuring consultancy Cristal International.
For those who aren't in the direct line of fire, a merger opens a prime opportunity to take on more responsibility and scope, Mr. Domanico said. "Be open minded and flexible, because companies are looking for adaptability and agility."
Generally, the bigger organization in a merger will become the dominant culture of the new organization. So if you're working at the smaller company, you should be a quick study of how your new colleagues do things.
This opens an opportunity to step forward and get involved in integration team to help move the organization integration along will give you higher visibility. It also means working very hard above and beyond your day-to-day job, but people will see you as part of the new team. And even if that doesn't happen, "you will have had experiences that are very transferable to your next employer," Mr. Domanico said.
"In a merger, sitting on the sidelines and watching the game is not the way to go."
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PREPARING FOR CHANGE
Here are tips from the pros to avoid being caught out in a merger:
Shun the rumour mill: Fears get overblown in the telling and lead to grumbling.
Raise your profile: Let management and colleagues know of your successes.
Network broadly: Even if you don't sense a merger risk, being well-connected keeps your options open and makes you a known quantity in the incoming organization.
Stay upbeat: Change is a given. Being open to new directions makes you valuable in any organization.
Be a source: Offer information to consultants reviewing which procedures and people should be kept in the new organization.
Get onto a transition team: Being involved in a temporary project will keep you in the organization and could lead to a new career in the long term.
Update your résumé: If you are told you aren't going to be a part of the new organization, look at it as an opportunity to take a new direction in your career.