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The Crux of NFP Mergers


10 October 2013 at 9:29 am
Staff Reporter
Funding changes are already showing signs of change in the disability and the aged care sectors including Not for Profit mergers. But organisations need a ‘culture change’ to make sure the merger succeeds, says Change Management Professional, Claudia Perry-Beltrame.

Staff Reporter | 10 October 2013 at 9:29 am


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The Crux of NFP Mergers
10 October 2013 at 9:29 am

Funding changes are already showing signs of change in the disability and the aged care sectors including Not for Profit mergers. But organisations need a ‘culture change’ to make sure the merger succeeds, says Change Management Professional, Claudia Perry-Beltrame.

The funding changes are already showing signs of change in the disability and the aged care sectors. Recent articles about Disability Service Organisations Merging or aged care services rebranding show the fast movers and shakers of these sectors.

For any organisation impacted by these changes imagining a future state can be a challenge. A ‘Merger future’ is easy to imagine; a future of more mass, more reach, more access to clients, more services and less overheads of administrative resources are visible aspects of a merger. So why do up to 85% of mergers fail?

The major reason for this failure is not in bringing two structures together, it is in bringing the people together. All aspects of a structure change need a people change, a workplace culture change. Let’s elaborate.

Two organisations merge form two names to one. Easy it is just a rebranding exercise. No, it is not.  Most employees have an identity with their place of work. Losing the name is part of losing identity. If one name is adapted over the other, some people have lost their identity, while others have not.  This may create inequality and new unintended power structures.  Forging a new identity is vital for employees, clients, suppliers and partners.

Two organisations becoming one means a reduction or reshuffle of people, particularly at the top: two boards merge into one; two CEOs merge into one; and structure changes bring changes in managerial responsibility. Unresolved issues at this level will directly and negatively influence merger implementation. Dealing with fear, anxiety and other negative emotions is often a necessity; as is dealing with power struggles, loss of status and job insecurity. Transparent and fair processes, and open communications help build trust in those leading the change.

Many organisations have values, often only on a poster, rather than enacted within the organisation. Values on a poster are useless, unless employees know exactly what behaviours are associated with them.  So even when merging parties have the same values, the behaviours associated with these values may be quite different.

Behaviours relate to the way work is done:

  • the way leaders and managers role model, generate trust, encourage the heart and adapt to the new identity to support the shared vision;
  • the way employees are recruited, collaborate, celebrate achievements, and receive reward and recognition;
  • the way volunteers are selected, inducted and managed;
  • the way employees interact with clients; and
  • the way processes are used, adapted and adhered to.

Solid discussions around the meaning of values, and the beliefs and behaviours behind these values, are an imperative.

Merging organisations therefore should focus their attention more on the invisible, the people side of the merger, and take these into consideration when working out the visible aspects or the merger.

Ultimately, change depends on people for long term success.

For further reading: Disability Services Orgs Merge

About the Author: Claudia Perry-Beltrame is a Change Management Professional specialising in workplace culture and challenging the status quo and the Managing Director of Cultural Inspirations.

 

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One comment

  • Anonymous** Anonymous** says:

    Unfortunately, this is so true. It is quite disheartening in fact to witness first hand a behavior of a CEO of a federated association, dumbing down a partnership proposal of another CEO (same association, different state) in a distasteful way – totally contradictory to the values of the association. I guess part of the problem is the lack of accountability on the part of the CEO. Whilst there are stringent KPIs (Profit Targets, ROI, EBITDA, Employee Turnover etc) and a robust reporting framework that the board and the shareholders in the commercial sector require from the CEO, they are found wanting in some NFP organisations. Also, I think there is the issue of tenure. As these CEOs stay longer (>5 years) in the job, they get attached to the status quo and make them less responsive to vacillating customer/client preferences. Study shows (HBR) that the optimal tenure of a CEO is 4.8 years to maximise performance.

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