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Amy Joyce: Life at Work

Mergers Can Mean Attitude Adjustment

Combining Cultures Poses a Challenge

By Amy Joyce
Washington Post Staff Writer
Sunday, February 27, 2005; Page F06

Changing jobs and moving houses are often cited as our major sources of stress. So how do employees handle mergers? Well, their jobs will probably change. They may lose their jobs. And they are probably moving, if not physically, then at least figuratively.

Hello, stress.

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As major corporations recently announced their merger intents -- Verizon Communications Inc. and MCI Inc., SBC Communications Inc. and AT&T Corp., Procter & Gamble Co. and Gillette Co. -- thousands of employees, no doubt, worried about their positions or what may happen to them after the company they know so well melds into another.

"I'm certainly going to [send] my résumé out," said one MCI employee who didn't want his name used, afraid he would be fired. "I guess morale won't be as high."

And if previous instances tell the tale, he's right. Morale generally isn't high right before or after a merger. Although companies have probably figured out the financial aspects to a merger, they don't think about the potential culture clash of two organizations.

How the merger might affect the people working within the companies is something too few organizations consider. And ignoring the people side can hurt the merger attempt, said Gary J. Bierc, president and chief executive of the Kingson Group Ltd., a risk management consulting company in Pasadena. "Often they don't think through the risk beyond the initial implications," he said.

Look at SBC and AT&T. The companies are completely different. There is SBC, a former Baby Bell, buying AT&T, "the old parent," he said. "Can you imagine the cultural risks there? What if the top five sales people from AT&T come into SBC and they're pooh-poohed? They'll take their ball and go somewhere else." And that, he said, will affect the bottom line.

If companies don't put time into workforce integration, they have only a 30 to 60 percent success rate, according to industry studies. If companies pay close attention to these issues, the success rate of business performance increases to nearly 90 percent, those studies show.

"Companies do a really good job with the financial due diligence," said Penny McBain, managing consultant with the Tysons Corner office of DBM, a career transition and human resources consulting firm. But on the human side, "they drop the ball."

She likens mergers to plate tectonics. In other words, mergers are two companies colliding with each other. And one typically subsumes the other.

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