Dealing with Disadvantages in Group Mergers

As members or leaders of an organization, how can we ensure that a merger with another group goes well?
Mergers happen in the business world, but also in groups that are trying to create social change. My own area of research is religious social change groups in Indonesia. In this context, we see mergers happen and see mergers fail. In 1973 four Islamic parties in Indonesia fused to form a single party named the Unity and Development Party (PPP). Instead of getting stronger by combining resources, the fusion weakened the political drive of the movement.

Why do mergers happen? For example, when facing a crisis, a political or organizational group can merge with another group to combine their power (as was the motivation for the Islamic groups in Indonesia). By doing this, they are more likely to overcome a crisis with their shared resources. However, this action brings about a challenge in managing how members feel about themselves.

This issue seems trivial, but the information below presents a different perspective.
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According to a KPMG study, 83% of merger deals within organisational contexts do not advance shareholders’ returns. Other studies concluded that mergers have a failure rate of 50 to 85 percent. Managing post-merger situations to get the ideal outcomes are often focused on environmental factors, values, and attitudes.  What is often overlooked is the role of leaders. For instance, many leaders of mergers and acquisitions assume the work climate will continue to develop as it had until the point of merger, but it most often does not.  Another important reason mergers commonly fail is that the identity changes that need to occur in group members are overlooked.

Below are a few approaches that we can use in supporting identity integration in merged organisations:
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1. Building trust by giving trust

Post-merger situations lead us to interact with people outside our normal organizational circles, and often, mutual trust has not been built. The tricky part of this situation is that trust is needed to form a group identity.  So how can we identify with others, if we do not trust them?

The growth of trust in an organisational setting is a gradual process that requires social interactions. If the goal is to build trust and make it a norm in our environment, the simplest way of doing this is by giving trust. Offering trust is a reciprocal action.
 
2. Boosting a sense of belonging through articulating similarities

To put it simply, belonging happens when you feel accepted as a member of a group. Post-merger situations can often be difficult because they require creating a sense of belonging to a newly merged group. A way of building a sense of belonging in such a group is to highlight the similarities between members of the newly merged group. It can be useful to focus on their shared goals and values, rather than on the differences and difficulties. When situations arise such that highlighting similarity may feel forced, a sense of belonging can come from using our own strengths to help others, and ask for help in return.

At this point, we also need to consider the different status concerns between the two groups merged. Research has found that the members of groups with lower status in a merger generally reported lower adjustment (e.g., less confidence in collaborating with new teammates, etc.) and a greater threat from the merger process. The solution offered for this issue is developing a new group identity that is complex, inclusive, and keeps positive images from both pre-merged groups.  Members of the high-status group need to communicate that they care about and value the lower status group and its members.
 
3. Reframing ‘us vs them’

When two different groups merge, the possibility of a ‘Us vs Them’ mentality may arise. This sort of mentality can be a serious obstacle in post-merger situations. Leaders can take an active role in shaping the group’s new identity: creating and embedding ‘a sense of us’ within the merged groups.   Cy Wakeman, the author of ‘Reality Based Leadership’, highlights an employee-based approach to overcome the ‘Us vs Them’ within a multi-group workplace situation. The approach is summarized into four steps: taking responsibility for what we can control, inviting people to take on their own responsibility, helping others to redirect their energy more productively, and actively participating in the efforts to generate a sense of ‘we-ness’.

Overall, merging groups together is a complex task – it brings with it advantages but also brings new challenges. Understanding how people create and manage their social identity will help in a post-merger context that requires identity change. Building interpersonal and intergroup trust, focusing on similarities and creating a new frame of we-ness might be effective approaches in leading a group fusion process.

-Susilo Wibisono