Managing Mergers through Organisational Development

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by Martin Saville

The business pages have been buzzing recently with reports of a potential merger between UK finance powerhouse Barclays and Dutch banking giant ABN Amro worth an eye watering €63 billion. Amid the rumours that inevitably accompany any significant merger, there is much comment on potential horse-trading and bargaining over the various corporate entities that make up each company. There is also much scepticism about the wisdom of trying to combine two global companies that employ in excess of 210,000 people in 60+ countries.

This is because history is littered with mergers that have been undertaken hastily and without due attention to crucial human requirements. Typically, the focus has been on combining product lines and services rather than people and culture. Such mergers can foment resentment, lead to higher levels of staff churn and undermine the new company’s performance. When Vodafone bought Mannesman in 1999 - at the time, the largest corporate merger in history - it was accompanied by bitter negotiations, claims and counterclaims in a bidding battle that mixed big business with union uproar.

This raises the question: How can companies prepare better for such a momentous undertaking?

It is my experience that developing and implementing a comprehensive Organisational Development (OD) strategy can play a vital role in making the merger go as smoothly - and quickly - as possible. The Organisational Development approach ensures that human and cultural needs and changes are taken into account - and it is these factors that can prove critical in the success or failure of potential mergers.

The most common pitfall faced at the outset by most companies preparing for a major strategic shift such as a merger is that they focus solely on the two organisations as rational, operational machines. Systems are scrutinised, processes are pored over and resources are researched with a view to integrating them as tightly as possible. This is both sensible and necessary but it must not be undertaken in a vacuum.

The impact of informal, human systems should also be taken into consideration and this is where OD can make such a crucial difference. OD is absolutely focused on performance and output but is grounded in humanistic values and the cultural context. It also taps into the notion of the ‘wisdom of the many’. This means it becomes a collaborative process that takes into account the feelings and motivations of the many, not just the few - a ‘doing with’ experience as opposed to a ‘doing to’ one. In the context of a contentious merger, this sense of inclusiveness is key because people are more likely to buy into something that they themselves have helped create.

Also key, is the way in which OD’s systemic approach looks not just at individual parts but at the relationship between them and how these relationships affect the nature of the components. As a holistic discipline, it takes account of the entire environment in a way that traditional change management philosophies do not.