Case Studies
Mergers

Post Merger Integration without Leadership

Directing the post-merger integration of two agencies without executive directors was one of the most challenging projects undertaken by La Piana Associates in 2003. Our research has shown that one of the most critical success factors in post-merger integration is the presence of an effective leader or internal champion. One year after this particular process began, we took a step back and reviewed our experience. Through this case study we will attempt to provide some insight into why internal leadership is so critical, and what challenges and opportunities can arise when the consultant takes on the leadership role instead.

The Situation

The two agencies in question had similar social service missions and were located in the same geographic area. Both had been through recent leadership transitions, and neither had an executive director during the post-merger planning and integration process. As a result, the newly formed interlocking board turned to La Piana Associates to provide interim leadership and integration consulting. The process was complicated by internal tensions, the need to physically move one agency into the offices of the other, very different approaches to the mission of the merged organization, and an ever-increasing demand for services alongside a diminishing resource base.

What challenges were posed?

Organizations that are successful need solid, thoughtful and intelligent leadership in normal times. During major organizational transitions - such as when a merger occurs - the requirement for competent leadership moves from being highly valued to absolutely critical. The normative role of leadership post-negotiation and during integration is to do the following:

• Provide certainty and reassurance that this was the right transition to make.
• Model an optimistic and positive attitude.
• Deal with crises and staff resistance.
• Champion the process and focus on the mission.
• Acknowledge the emotions of staff, show concern for them, nurture them, and appreciate them.
• Engage in symbolic acts that demonstrate commitment to the process and respect for the individuals involved.
• Pursue new projects, initiatives, or planning processes that get people excited and focus them on the future.
• Communicate.
• Help the board identify the organization's vision and direction.
• Bring cultures together.
• Make the difficult decisions, communicate them with certainty, and deal with the fall-out.

In this particular case, the lack of internal leadership presented several challenges:

Consultant as outsider

Consultants are never really members of client organizations. A consultant always stands as an outsider that brings his or her expertise to bear and provides services and insight for management and leadership to use. When the consultant attempts to move into the leadership role, there is no history or experience within the organization to create or contribute to a baseline of credibility, interpersonal investment, or relationship as a colleague.

Lack of content credibility

This particular organization had a very specific mission, and working with the specifics of that content area required expertise that the consultant did not have. A leader builds credibility and believability with staff when his or her credentials and expertise have been proven. As it was, the staff did not tend to trust leadership. When a temporary individual - without a sufficiently deep level of content knowledge - entered the system to act as a leader, then that distrust was magnified. Normal resistance was articulated as having a concern for the clients that the leadership had no knowledge of. Any decisions made by the interim leader were automatically thought to be erroneous.

Due to the lack of credibility there was an inability to contextualize the decisions made by management. Given the extraordinary challenges before the organization, a tremendous amount of energy went into resistance.

Engagement of the board in day to day activities

The interim leader had no real authority to make lasting decisions. As a result the board became deeply involved in day-to-day operational issues. This required them to reframe their own understanding of the role of the board, and more importantly, to reframe again and step back after a permanent ED was selected. The later was much more difficult than the former.

Managing multiple transitions simultaneously

The number of transitions that occurred during the integration was extraordinary, as was the complexity of the transitions. Roles were reassigned; systems developed and changed. The physical move involved many changes as well; issues around office space, office equipment, telecom and technology issues were all front-and-center. Addressing all of these challenges was all the more challenging due to the lack of belief in the interim leadership by the staff. They knew he was a short-term leader and did not have to live with the long-term consequences of the decisions made - and thus did not trust that his decisions were necessarily in the best long-term interest of the organization.

What opportunities were present?

While the situation was not ideal, and this was an extraordinarily challenging project, there were a few opportunities present that would ordinarily not have been available if a pre-selected executive director was in place during the process.

Consultant as a focal point for organizational anger

As difficult as the transition was, the consultant could effectively absorb the anxiety, anger and projections of the staff without any long term harm to the organization's health. It would have been challenging for any leader, no matter how skilled, to successfully maneuver this transition, given the scope and scale of the issues present. The consultant could be an effective placeholder for leadership by making all the difficult decisions, dealing with the fallout of those decisions, and setting the stage for his permanent replacement.

Greater clarity and options around new leadership

As the integration process progressed, the requirements for a new leader became more apparent. The skills, background, and capacity needed - even the definition of the role itself - became clearer as the integration process moved forward. The new ED had to be someone who had credibility with both the staff and the public, someone who could articulate the importance of the mission to everyone, and someone who had a proven track record of problem solving and teambuilding.

Setting the new leader up for success

By the time the new ED came on board, there was a hunger by the staff for someone who was going to be there for the long haul. This put her in a great position starting off. One of her greatest assets, in fact, was that she was not the consultant. Her experience and knowledge of the field fit well into the clear space created by the impending departure of the consultant, and there was a sense that her arrival would create a climate of hope and possibility. In addition, the management team's engagement in the hiring process helped to establish a sense of empowerment that was lacking up to that point, when the board had made the decision to hire a temporary outside consultant.

Resolution

A year post-merger the organization is doing very, very well. A new ED was hired, as discussed above, and the consultant provided ongoing services to her and the management team.

There was a great sense of relief after the new ED came on board. Part of it was that her skill, competence and collaborative approach with the staff improved morale. But even more critical was the sense of hope that she gave staff. The actual handing over of the reigns to someone new, the series of one-on-one meetings that she had with every staff member, and the increased communications efforts on the part of the management team all contributed to the creation of a healthy, cohesive and effective organization.