Perfect merger

One of the features of business life over the last few years has been the increasing tendency of companies to merge or acquire one another. Some of these unions are by mutual consent; others are hostile and raise the spectre of redundancies or even closures. Inevitably, all make for a period of considerable stress and uncertainty for the majority of employees.

Why do companies merge?
The benefits of a merger or takeover are often assessed solely on the basis of financial or production criteria. Whether the employees of the two companies are going to find it easy to work together is a minor consideration.

Yet staff satisfaction or otherwise are the very issues that can mean success or failure.

If the most talented staff leave because they are unhappy with the new regime, the value expected from the takeover will be eroded.

If employees fail to find a way of merging different systems – for example, invoice processing – the cost benefits of combining operations may soon evaporate.

Do employees have any legal rights?
Employees have some protection when the company they work for is taken over or merges. Their contracts of employment must be honoured and the terms and conditions agreed with the original employer must continue – even if these are better than those offered by the new employer to existing staff. If these rights are not honoured, employees can take their new employer to a tribunal.

If talented staff leave because they are unhappy with the new regime, the value expected from the takeover will be eroded

What makes a successful merger?
The most successful mergers and acquisitions are those that take active steps to deal with employees' uncertainty and stress, maintain morale and motivation and overcome any resistance to change through consensus. This is achieved by communicating as much as possible with staff: making them aware of developments before they are reported in the press; making sure they understand the reasons for any changes; what the benefits are and what the changes will mean for them; and how they will fit into the new organisation.

What if there are going to be job losses?
If structural changes are going to mean job losses or significant role changes, these should be handled as sensitively as possible. Employees should be consulted on the changes, either individually or through employee representatives. If redundancies are on the cards, there is a legal obligation to consult with staff first.

Detailed information should be provided on redundancy packages, with retraining or relocation packages available for those who will need to take on a new role or move.

Sensitivity to the values and culture of both organisations can help to prevent a "them-and-us" situation. People from both parties should be involved in decisions and every effort made to develop positive working relationships.