Case Studies
Mergers

River Watch and River Network

An Interview with Ken Margolis, former Executive Director of River Network

Background

In July 2001, Strategic Solutions interviewed Ken Margolis, Executive Director of River Network, about the merger between River Network and River Watch.

River Network, based in Oregon, was founded in 1988 to provide support to the hundreds of grassroots organizations (river guardians) across the country that work to conserve their local rivers. It directly acquires rivers for permanent protection, while also focusing on organizational development for nonprofit groups, tribes, and others working on water quality issues.

River Watch, based in Vermont, was founded about the same time to concentrate on water monitoring — helping citizens learn how to look at their waters to determine their condition, and then to be able to locate sources of pollution and contamination.

Both organizations were concerned with water quality, river health, and watershed health issues. River Watch provided river activists with tools to measure the health of their river, and River Network’s programs helped activists turn concern and information into action.

The importance of programmatic synthesis

In 1998, the program staff of River Network and River Watch met to discuss ways that they could strengthen their work through joint projects. It became clear that there was great synergy between the missions and programs of the two organizations. “What was interesting to each of us,” said Ken Margolis, the pre-merger Executive Director of River Network, “was that we had two separate but compatible missions.”

It also became clear that river protection could be better served if they did more than joint projects. Merger discussions began. At that time, River Network had a budget of $1.5 million and a staff of fifteen, and River Watch had a budget of approximately $650,000 and a staff of three.

The organizations were located on opposite sides of the country; had distinct organizational cultures, different programs, and separate boards; and had invested differently in the development of their infrastructure. Yet, Ken said, “putting the two organizations together seemed like putting two functions together that had to be together — the functions of information and action. It was really that functional fit, plus a lot of personal affection that grew up between our staff the more we worked together, that drove the merger.”

Building support for the process

As Executive Director of River Network, Ken Margolis, became the primary driver for the merger. He knew that if he wanted the merger to succeed, however, he would have to build a broad base of support for the process. “We really couldn’t have done it without a group of people championing it. And the thing I did right was not trying to own it, but to try to expand the group that was leading. If I had tried to make it my thing, it would have been much harder to build support and push the process along.” Ken drove the merger process in the early stages, but as it progressed, he had more and more allies on staff and some on the board who started to see the potential benefits. Having buy-in from a large group on both sides of the table really helped to build the momentum. “We had a growing cadre of leaders, and by the time we finished the process, there were about 90 percent of us in the organization who were leading on this.”

The potential merger would bring significant change to the way the organizations carried out their programs and, as Ken said, “change scares people.” Because River Network was the larger organization, there was fear among staff and board of River Watch that this could be a “hostile takeover.” At the same time, the staff of River Network worried that River Watch would slow them down and possibly drain resources. “My job,” Ken said, “was to build confidence, achieve clarity, and assuage doubts and fears.”

In order for staff and the board to sign on and become enthusiastic, Ken needed to show them that the merger would help both organizations achieve their mission. He described River Watch and River Network as “idealism-driven,” such that people’s loyalty is to the mission of the organization, not the organization itself. “When the staff started to see the ways that our two programs complemented each other, they could see the benefit of the potential merger and ways that a merged organization could be even more effective in fulfilling its mission.”

For example, River Watch staff started getting involved in River Network’s program to make changes in the management of water. River Watch’s program manager developed training workshops to show people how to get data or access to data to support claims of degradation of water quality to so that they could then enforce the Clean Water Act. “That happened almost spontaneously, and the two parts of our organization saw how useful they could be to each other.”

Ken referred to the first six months of this evolving relationship between the organizations — when staff and the boards were first exposed to the idea of merging and were formulating their opinions — as the period of “consensus-building.” “At that point, my job was to figure the whole thing out, and then to sell it to our staff and to the remainder of our board. We brought in David La Piana as an outside consultant when we began to formalize the discussions, which was just invaluable. David was masterly at helping identify the perceived leaders in each group and getting them to address their concerns. Once that important group was committed, the political obstacles were gone, and it was simply an exercise in problem solving. When people saw those they perceived as leaders and those they admired pushing this, others tended to fall in behind them.”

Negotiating the merger

A series of negotiations ensued, during which one strong board member from River Watch was very skeptical and asked a lot of hard questions. “But he really helped us because he kept us from avoiding any tough issues. He helped us come up with a revised set of by-laws that worked for both of us, and made some other changes in the way we governed.” As soon that was completed, that board member left, and so did other board members who were less comfortable being involved with a large organization. “But,” says Ken, “as a larger, bi-coastal organization, we cast a bigger shadow, and we were able to start going after board members with more repute and people who figure larger on the stage of events.”

During the negotiations, the boards of the two organizations decided that each year the chairman would alternate between the former River Watch and River Network boards so that there would be equal representation. “Now it doesn’t really seem necessary,” said Ken, “and in the years since the negotiations, the board has become unified enough that that distinction is not even made.” The board roles are now looked at as integrated functions in a single organization, and board members from both pre-merger organizations contribute important skills. “It turns out this guy who came on from River Watch is the most outstanding board member I have ever come across,” noted Ken.

While the new board was being formed and the implementation plans developed, Ken was also thinking about how to finance the merger and how to fund the merged organization. The Packard Foundation offered direct support for the merger, and long-time institutional funders, like the Hewlett and Surdna Foundations, were extremely supportive of the process. There were still direct costs to the organization, however, that were not covered by grants. “We had to do a lot of traveling,” Ken said. “You couldn’t get much further apart than Vermont and Oregon, so we spent a lot of money on travel — both time and air fare.”

And there were other fundraising challenges. “Some of our individual supporters with business backgrounds started out very skeptical, saying, ‘Mergers usually don’t work!’” But individuals needed to remain an important part of the base of support, especially when the fundraising goals escalated as the organizations not only merged, but then the combined organization grew. “We used to have to come up with a million and a half bucks a year, and now we have to come up with four million a year — and it’s a lot harder. It means you’ve got to change the way you look at your income stream and the way you go after it.”

Implementation

In September 1999, when negotiations had been completed, the boards of River Network and River Watch voted to merge. The new organization retained the name of River Network, and Ken Margolis stayed on as the post-merger Executive Director. The organization’s mission is to help people understand, protect, and restore rivers and their watersheds, and they aim to provide personalized assistance, training, and information to more than 500 partner groups through their watershed programs.

After the merger vote, the difficult work of implementation began. “I had to make an effort to bring the cultures together and help establish some kind of conventional rules of the road that everyone in the organization had to abide by. In the early days,” Ken explained, “River Watch staff tended to make their first commitment to the people they were training outside of the organization.” In order to establish effective teamwork within the organization, staff needed to shift their focus to the immediate needs of their internal teammates and to those of the organization. “It took about a year to change those behaviors.” That shift has allowed the organization to become more strategic in its decision making and more effective in its programming.

Implementation hit a few snags because River Watch and River Network did not have a formal transition team or transition manager or any kind of executive committee on the board. Tasks and oversight mechanisms were delegated to separate departments with little coordination. “We were a little late in recognizing that we needed a team to look at all parts of integration from the inception of the merger. Instead, we had integration tasks segregated departmentally.” It would have been useful, Ken acknowledged, to have had an integration management team in place. A few “stumbles” would have been avoided if this had been accomplished earlier in the implementation process.

In hindsight, Ken said, “there are a few things that we could have done earlier to avoid other stumbles.” For example, he says, “I probably should have been even more aggressive in bringing people together more often early in the process. I also could have tried to be more proactive in pinpointing where people felt there were problems, and then addressing those problems.” In some cases, Ken felt that he and the staff were “lackadaisical” — but it’s important, he said, to acknowledge that they were juggling their program responsibilities while building support for and planning to implement the merger. “But I think it might have paid off to work a little harder,” he noted, “on the questions that were of concern to people early in the process.”

In summer 2001, a year and a half after the merger, “there are some challenges in implementation that we still haven’t overcome completely.” Both organizations were very flat and horizontal, but “both organizations had a very strong bottom-up component in decision making.” River Watch and River Network, pre-merger, had small staffs that could support the democratic decision-making and management. The combined organization, however, with a staff of 40 working in four offices across the country, “needed a little more hierarchy, a little more discipline in decision making — and that’s a tremendous cultural change, especially for people who have been here for many years. It’s been very painful for some people. Change is difficult.”

In the merged organization, a management team makes decisions. Communicating decisions can be challenging in a larger, bi-coastal organization. “I think that communication has been the major cultural or operational problem with the merger. We still have some people who feel that they are further away from the center. And it’s a bigger circle now.”

One attempt to keep everyone in the loop is the organization’s Annual River Rally. The first post-merger convening was in Asilomar, California, and 340 people participated. Everyone on the new River Network staff was there for all or part of the event. “It is very expensive to involve everyone and kind of puts a strain on the organization — but it gives everyone a sense that they’re in at the center of what we do, and gives them direct contact with their partners and with their colleagues in the organization.”

Lessons learned

The staff of the merged River Network organization prides themselves for the way they work together and considers the organization a “learning organization.” Ken credits the merger with helping them see themselves as “one player in a very complex ecology of people associated with water use and water management and trying to improve the aquatic environment.”

He also credits the merger process with creating a more effective organization that is well positioned in the pursuit of its mission. “We’ve learned the importance of partnerships and working with others, and we are now involved in more than a half dozen partnerships with other groups — some similar to us, some very different. And we’re trying to develop more of those.”

Current Situation at River Network

The economic recession that hit the U.S. in late 2001, coupled with River Network’s rapid growth, led the organization into a significant financial crisis. Their post-merger budget was reduced from the original projected $5 million down to approximately $2.5 million. Over a several month period in 2002, the organization managed itself through a very severe reduction process. They had to lay off 20% of staff, and those who stayed took voluntary reductions in pay and benefits. Through these sharp cuts, the organization is now fiscally healthy and in the black, and they are replacing some reserve and capital funds that got spent down during the downsizing.

“So, we did face some skepticism,” Ken said, “and there were challenges in implementation, but I think we combated that because we’re now a few years into this, and it’s clearly a success. Functionally, the merger is total and complete. In their day-to-day working reality and their perception of our identity, I think staff and board see us as one unified group. The merger absolutely made us stronger by bringing together complementary functions, and those are now synthesized in a number of our programs.”