Case Studies
Mergers

Merger Implementation Case Study: Asian & Pacific Islander Wellness Center

Introduction:

Asian & Pacific Islander Wellness Center (A&PI Wellness Center) was formed in 1997 by the merger of the two leading Asian and Pacific Islander HIV/AIDS service organizations in San Francisco: Asian AIDS Project (AAP) and Living Well Project (LWP), founded in 1987 and 1989 respectively. AAP was the first program in the United States to provide HIV/AIDS prevention education and risk reduction services targeting Asian and Pacific Islander communities. LWP was the first gay-identified Asian and Pacific Islander HIV/AIDS program in the US and the first to provide case management, mental health, and buddy services to Asians and Pacific Islanders living with HIV/AIDS.

In early 1996, the San Francisco Department of Public Health granted $10,000 to AAP and LWP — collaborating competitors who had attempted initial merger discussions four years earlier — to conduct a merger feasibility study. The boards decided to move forward with the merger, and started meeting together on a regular basis with facilitation by David La Piana. Shortly prior to merger talks, AAP’s long-term Executive Director (ED), Vince Sales, left, and Tim Wolfred was hired as a half-time Interim ED while the search for a new ED was begun. LWP was led at the time by ED Steve Lew, who had announced his intention to leave the organization once the merger was complete. Thus, one of the first orders of post-merger business was to “broaden the net” of AAP’s ongoing ED search, asking the search firm to identify candidates to lead a much larger organization. Merger implementation began over the summer of 1996, and while some operations remained separate, program planning, fund development activities, and agency communications such as selecting a new name for the agency were initiated during this time.

I had to be a champion of the process. I embodied the merger, in fact, because I was the new person, and I was the great hope — an unrealistic great hope. And I had to be both the internal presence of the hope, as well as reassuring. My job was about reassuring — reassuring internally, reassuring clients, reassuring funders, reassuring community. We’re stronger. We’re better. We’re more efficient. - John Manzon-Santos

In October 1996, John Manzon-Santos was offered the position of ED of the newly formed A&PI Wellness Center. At the time, John was ED of a sister agency in New York City and planned to transition out of his role to begin his tenure at A&PI Wellness Center in early January 1997. In the interim period, October – December 1996, the merged board contracted with Steve Lew to be Acting ED of the merged organization. Steve headed an Interim Management Team which included former LWP Deputy Director Liz Schaffer as Administration Director, plus two managers from former AAP, Mara Torres as Program Director and Chisa Uyeki as Development Director. Together they worked to “practice” the merger and began integrating the staffs and establishing new policies and procedures.

Over five years later, A&PI Wellness Center has become a huge success under John’s leadership. The agency has become the most comprehensive HIV services organization in North America targeting A&PIs. With a staff of 50, fluent in 18 languages, and a budget of $3 million, A&PI Wellness Center embraces four braided identities: service provider, technical assistance specialist, community-based research site, and community center for A&PIs and their allies.

In May 2001, Strategic Solutions conducted two interviews to learn about the leadership behind the implementation process for the A&PI Wellness Center merger. We first sat down with John Manzon-Santos, and then with Steve Lew and Liz Schaffer together. We later conducted an email interview with Irl Barefield, a current board member, former board chair of A&PI Wellness Center, and a pre-merger board member and chair of AAP. In hindsight, their differing perspectives are quite instructive and add up to some helpful lessons regarding leadership, staff and management issues, and communication in the merger implementation process.

We asked Steve Lew and Liz Schaeffer to describe the early stages of the implementation process, coming out of merger negotiations between Asian AIDS Project and Living Well Project:

Steve: LWP was fortunate to have a stable management team, while AAP was in the midst of leadership transition on many levels – board chair, ED, and Program Director. In a lot of ways, it made sense for us [Steve and Liz from LWP] to take on leadership roles for the implementation activities that the merged board requested.

Liz And Steve was not interested in being executive director of the merged organization; that was well understood from the beginning.

Steve: Although, there were times that I had second thoughts about leaving the organization. While not a founder, I felt like one in many ways — but I was also clear that I did not want to lead an organization that was growing much larger. Liz was also planning a transition out of the organization.

	The next 6 months were very much about putting out a lot of fires. A lot of acting out. A lot of creating a new culture — really mourning the loss of both organizations, which were dead, and giving life to a third one. - John Manzon-Santos

Liz: We stayed in our roles to ensure that the merger happened.

Steve: I think it was important to note that we focused on what seemed essential for the early implementation of the merger; to keep the momentum going until the new ED was selected and came on board. We planned for an endpoint in our roles during the process.

Liz: We really intended to take a lot of the heat for John. We tried to absorb a lot of the shock that’s natural within a new organization, so we did difficult and controversial things. Every attempt was made to be consistent and fair, to communicate decision-making processes and rationale for changes. We were also keenly aware that even though we had two distinct structures and cultures, that our goal as a management team was to decide and communicate like a new organization. To act like a new organization. But in reality, I don’t think that happened as successfully, because Steve and I were deeply identified with LWP. Even though there were also former AAP staff on the management team, Steve and I had the positions with the most power as Interim Executive Director and Administration Director.

Steve: It’s important to say that the Interim Management Team worked quite effectively as a team together — we all valued and wanted to model group leadership and decision-making. Every major decision — and many of the decisions usually delegated to one role — were reviewed and agreed upon by the whole team. A striking example of this was the approach the team took in creating a merged supervision and program management structure. With a much larger staff, we needed to establish a line of associate directors, about six positions, to manage the staff teams and budgets.

Liz: We were also making a lot of decisions during the time of the ED search. But then once John was hired, we thought we had to try to defer some of those to him, or to keep him in the loop of our process. We would try to involve him while he was still in New York. In hindsight, if we had just continued to make decisions, it probably would’ve been easier. He could’ve unmade them, or done things differently. But it was hard to tell which processes needed to go forward. There was a little holding our breath at the end.

Steve: On one hand, knowing that we were interim, we could do things ahead of time because we wouldn’t necessarily have to be living in the organization. So we could make a decision that might not be popular. But there were some things where it felt like, “What are policy decisions that the new executive director needs to make?”

Liz: Some things I know we did because we felt like we couldn’t function with two separate personnel policies based on which organization hired you — everybody had to have the same policies for things such as access to health leave, sabbaticals, or attending conferences. That couldn’t wait, because it would have been totally unfair.

Steve: On the whole, I think the Interim Management Team did act on the right things — we put together a management structure and decided on the critical policies and procedures for the new organization to function consistently, respected the board mandate to maintain staff, and redeployed duplicate positions. We left the board and John with a merged budget, ongoing fundraising activities, and an organizational reserve. Just as important, the Interim Management Team made a huge effort to hear people out about the implementation process, to come to decisions together, and to speak as one. The four of us talked a lot about what it would take to model leadership for the new organization, and supported each other in practicing this!

Here is John: Manzon-Santos’s perspective about the merger implementation process and interim management structure in the months preceding his arrival.

John:: Without a doubt, mergers are complicated. My predecessors from both organizations did an exemplary job in getting the new organization on its feet. In terms of merger implementation, here’s the thing, though — there are mergers, and there are acquisitions. And while I think that this was a pretty good merger, one of the problems with implementation was that there was not equal leadership on both sides. Living Well was definitely in a stronger position. They had an executive director and deputy director who were there, who had been there, who were skilled, and who were a driving force.

At AAP, you had an interim ED who was there 20 hours a week. The [AAP] board had decided not to replace the outgoing ED in ’96, and I think that was a problem. They could’ve hired the ED, and then still gone forward with the merger. The ED could’ve been hired with the understanding that the merger would be a very likely trajectory — “this is the role that you’re going to play.”

The power imbalance really killed morale on the staff of Asian AIDS Project, because they felt a little sold into it by the board. The board wanted to do the right thing, and they saw for the long-term that merger was the best future for the organization’s mission. But I think in the process, it was hard. There was a lot of distrust from important staff on Asian AIDS Project side, which needed to be managed, and that may have been prevented by greater representation of AAP in the merger process.

In implementation of a merger, you cannot appreciate enough. You cannot reassure enough. You cannot over-communicate enough. At any step, people need to be acknowledged first. - John Manzon-Santos

So the merger didn’t seem like it could be a balanced thing. Now I say that acknowledging my own naiveté in merging — maybe in any relationship there’s always one side that’s a little more with it, or a little more of the driver. But it was hard in implementation to talk about how equal it was, when it wasn’t. And it’s easier to say that, the more time that passes. So one lesson learned: If it’s going to be a merger for real, and not look like a strong organization taking over a weaker one, make sure there are people leading on both sides. Structurally, AAP didn’t have the same level of presence, and by definition, could not have been at the table in the same way going into and through merger negotiations.

As an Interim Management Team, Steve and the Administration Director [Liz] came from Living Well, and the more junior directors for Development and Program came from AAP. From what I gleaned, the interim team had done a good job of coming together and communicating as one body. However, this structure, again, had an impact on Asian AIDS Project staff, who perceived that the more experienced members of the team set the agenda and drove more of the decision-making. To the team’s credit, in a merger — especially with such a quick timeline — things have to get done, and every decision can’t be hashed out. But every step is an opportunity for good faith in going forward. And when there were mis-steps, it really compromised the good faith that both staffs had to bring to the process.

The board also decided — and this was in order to get buy-in, especially from Asian AIDS Project — that nobody would lose their job as a result of the merger. And that was a hell of a mandate to implement, which I found out when I got there. And while there was minimal overlap when the agencies merged, there was overlap nonetheless. There were two accountants. There were two office managers.

SS: It was the organization-wide operational positions where you felt the most overlap?

John:: Yes, mostly there. The other place where you felt it was on the mid-management level. There were several people on staff who could and were willing to step up to mid-manager level with the right support. There were six positions created, and five of them went to Living Well staff and one to Asian AIDS Project staff. In retrospect, I would have done that differently — have three and three, even for an initial stabilization period. It was challenging to come into those interviews at the tail end while I was still transitioning from my former agency.

SS: So the allocation of management positions was determined by the board prior to you getting there?

John:: It was done by the Interim Management Team during the fall, October to December. So we had an Interim Management Team. We had 6 middle managers. We had staff. And then I came on January 1st. I’m working out of two sites, inheriting a mandate where no one could be let go as a direct result of the merger, even if it didn’t make the most business sense. We were $135,000 drawn on our $150,000 line of credit, and while we had good budget information on the expense side, the revenue side was slow.

So part of the implementation was digging us out of a hole — and realizing how expensive it was to remodel our site, while paying rent for two spaces. Bringing expenses into line meant agency-wide pay cuts in 1997 and reversing the very generous benefits plan fashioned during the merger. And we had to move forward with providing services and bringing in money. So the first 6 months were sheer hell. I had to figure out a way for everybody to keep their job even as we ran a deficit. And while $135,000 is not a huge deficit for a lot of organizations, our horizon didn’t look that great. When we did the [pre-merger] feasibility study, it turned out there were only 22 donors who overlapped — so that showed there was potential for the merged agency to cultivate a large pool of donors. But money didn’t come immediately, and it didn’t come at the levels we expected.

	Every step is an opportunity for good faith in going forward. And when there were missteps, it really compromised the good faith that both staffs had to come to. - John Manzon-Santos

Irl Barefield responds with yet a third perspective:

Irl: There is no question that LWP was larger than we were at AAP, both fiscally and in the number of staff, and there were some morale problems among former AAP staffers after the merger. But to understand why, I should mention that AAP very nearly declined to participate in the merger feasibility study in 1996 due to big cultural differences between the organizations. When the AAP board decided to go forward with the study, we were clear that staff should be treated with respect and dignity — without mistaking them for the organization’s constituents. I think AAP staff understood this distinction very well, too. And as a board that really did not like to micromanage, we were sufficiently comfortable with the commitment and savvy of our staff to let them advise us on merger. Had the staff thought that a merger with LWP was unworkable or unwise, the AAP board would have trusted their judgment and not gone forward.

I also believe it is crucial to stress that the basic management of AAP did not suffer under the expert leadership of Tim Wolfred, who ensured that client services and job performance were not negatively affected. What did suffer from the absence of an ED’s daily full-time presence, however, was AAP staff’s sense of inclusion and knowledge around merger planning. And this was problematic in an organization that historically was far less hierarchical and more democratic than LWP. But the board knew that the departure of AAP’s executive director meant a re-examination of merger was ripe. If it was going to happen, that was the right time.

In the end, this meant that when the AAP board voted to go forward with talks, both AAP staff and board were comfortable that AAP’s mission would be served by merging. And I’m glad to see our bet paid off. It’s a tribute to the staff members of AAP that they knew very well that the perception would be that of an acquisition, but that the reality for their clients is what would matter – they would in the end be able to perform their jobs and serve their clients better.

We then asked John: to tell us more about his early tenure as ED of the merged organization, beginning with his arrival in January 1997:

John:: At first, we were operating out of two different sites. We were supposed to have moved into this [current] site to time it with the merger, but it took a lot longer than we thought. It was supposed to happen in October, then in December, then in March. Finally in June ’97 we moved in. So for the first 6 months, I was shuttling back and forth, which was a pain, and didn’t help to implement the merger.

During that period, I think the Interim Management Team made a good decision to shuffle the departments, so there was a logical clustering of functions. That was important, given that we couldn’t just move into the new site. I emphasize this notion of practicing merger. There was a big space on this floor [in the current building] that was available to us. So our staff meetings were held in that room — reminding staff that we were on a track toward merging, that this is going to be our new home. There were also separate staff meetings that were not of an operational nature, but of a “merger support” nature. Facilitators were made available to work with the two staffs, to talk about organization-specific issues that came up.

The next 6 months were very much about putting out a lot of fires. A lot of acting out. A lot of creating a new culture — really mourning the loss of both organizations, which were dead, and giving life to a third one. That was really hard. And there was no immediate attrition. People definitely stayed through the first 6 months, which is to the credit of a really committed group of staff. But then it became clear that people needed to go, and people weren’t leaving quickly enough. As ED, there were a lot of family dynamics … you know, people “working” me — trying to get me to favor one over the other. That was constant. It went with the territory, so I wasn’t surprised.

After John: began as ED at A&PI Wellness Center, Steve remained on staff at the organization for a little over a year, first as director of a national technical assistance program and then as development director. We asked Steve what it was like having both of them working together for a while.

Steve: Overall for me, it was a pretty good experience. I felt like I was of use to work on donor maintenance and assisting John in development strategy. And we had this technical assistance program that didn’t fit in closely with the other programs, so I felt like I could work there for a while. In a lot of ways, both positions were removed from all of the problematic stuff, so I didn’t feel like I needed to be in the loop, and I didn’t have to be seen as a decision-maker. I was actually off the management team during that time.

The last part, as development director was more difficult, because that’s when I needed to join the management team. At that point, I began feeling as though John: was not taking a position on implementing some of the processes that I thought we had set in place. It felt like maybe it would have been better for me not to have been there, because there was only so much I could have done. At the same time, I also did some coaching with John, particularly around development. And while I thought I was being helpful, I don’t know if it was really helpful to him. I think in some ways it was overwhelming to him, because it was still the former ED looking over his shoulder.

Here is John’s perspective on the situation:

John:: I think Steve’s continuation after I came on was both positive and negative. I think we enabled each other. In the most positive light, I really wanted to honor Steve’s role in it all — both for Living Well and for the merger — and make his transition as clean as possible once he was ready. But arguably, he just shouldn’t have been there, for me to spread my wings and to not have really divisive allegiances. There just was not a smooth transition. Regardless of what Steve did or said to support me, certain staff continued to view him as the ED.

That said, it was my call to keep him on in two different capacities. First of all as Director of the National Program, and then for another 6 months to a year as Director of Development. So the functions were essential — but it wasn’t his leadership as much as his skills that were helpful to me.

SS: What was your role as a leader?

John:: I had to be a champion of the process. I embodied the merger, in fact, because I was the new person, and I was the “great hope” — an unrealistic great hope. My job was about reassuring — reassuring internally, reassuring clients, reassuring funders, reassuring community: “We’re stronger, we’re better, we’re more efficient.” We had to keep up positive language. That was a constant. I had to be a constant presence, and every action was under a magnifying glass. And my position and my orientation was, “This is the best thing to happen in a long time, and we’re doing it in the right way.”

And I do feel that there are worse mergers that I’ve heard about, really bad situations. And I think there are at least two ways to go. One is for someone to come in and do kind of a hatchet job and then get out, so it’s the next person that’s really the hope and the new and all that’s good. Then the “sacrificial lamb” has this brief tenure. But I came in not necessarily saying I’ll be the sacrificial lamb, but I would say, “It will be hard at first, then it will be fine.”

We then asked Steve and Liz who they would identify as a champion in the merger implementation proceSS:

Steve: I think that we didn’t have a champion for the merger right after it happened. As the LWP ED, I was passionate about stating the case for merger and the need for organizational change to achieve it. Once I became interim ED for the merged agency, it felt more important to talk about the current change rather than the future vision and to stress my transitional role with staff. The Interim Management Team was a unified voice for what needed to happen during the interim and how — but as an interim team, we didn’t feel we had the mandate to articulate the vision for the new organization and the importance of organizational change. Now in hindsight, I wonder if John knew he was going to be looked to as the merger champion, rather than just a new ED of an organization?

Liz: A complex organization, whether it was a merger or not.

The process would have benefited from us thinking about what needed to be developed with the board. They were used to running two small, or smaller, organizations. I was in most of the board meetings and never heard people actually challenge themselves or acknowledge the fact that, “We’re running a much larger organization now. What does that mean?” - Steve Lew

Steve: Throughout the ED search, we made a huge effort to sell each candidate on the organization and the merger. We had two candidates, both of them I knew, and I realized if we were going to get a committed candidate, we needed to get them enthused. So in some ways, I could have made the mistake of over-selling. Tim, Liz, and I really made an attempt [throughout the hiring process] of trying to give John a lot of information, so it may not have felt like he could have owned the process himself. He may not have gotten that he was stepping into something he was going to have to put his own imprint on right away.

Liz: I thought John was going to come in and be very demonstrative, very strong. That was what affected me. I imagined that, we talked about him doing that. He’s done many, many, many things since he’s been here. But when he arrived, he was in data gathering mode and we should’ve expected that. I remember personally feeling, and other people feeling, sort of disappointed in this. And I wonder if we made it too hard for him? If we were not realistic? It’s not realistic for somebody to come into an organization and change it right away. They need to learn it first. And John did a good job of learning the organization.

But I do know that we had given people hope that when John came, all would be better. So I think that’s one thing I would have liked to have done better — I feel if maybe we had taken a little more of the monkey on. That’s what I would say to the interim person who is doing this — that the new person is not going to be the Messiah. Don’t even think about them. Better to just do something and make a big mistake of it, and then let them do their own thing. But you [Steve] were trying to be respectful, though it may have made it harder in managing people’s expectations.

We then asked Steve and Liz to tell us what other factors may have detracted from the implementation proceSS:

Steve: There were several cultural issues, as well as how people talked about their agency culture. While we invested quite a bit in outside facilitation and hearing people out, I remember it was difficult to discern and finesse the differences in terms of policies and procedures. Or how the Interim Management Team acted on and communicated decisions. The reality was that people from both AAP and LWP were feeling like some of their agency culture or values were threatened with the merging of programs and personnel. I remember hearing people out, seeing them cry and rage and grieve, and my instinct was that this was needed — to grieve the loss of two vibrant community organizations, families in a way. I thought there were going to be conflicts for a good period of time. The Interim Management Team tried to utilize what experience we had from the AIDS epidemic, with accepting loss and change. We also worked with the “stages of change” model in communicating and decision-making. It was still challenging and looking back, we probably needed to be more decisive in implementing needed changes.

Also, the board did not change significantly from pre-merger to post-merger for almost a couple years.

SS: Did everyone from both boards come together to make the new board?

Steve: One or two people stepped off the Living Well board in order to make the composite board. But there was no board recruitment until maybe a year past John being there. I think in a way, some outside perspective would’ve been helpful. And to have a stronger voice from the board championing the merger.

Liz: But I also think it would’ve been hard for Steve and me to be recruiting more members, when other people viewed us as being part of one of the organizations.

SS: You would have had to work with your board to do that recruiting, maybe.

Liz: Yes, and the board was just learning how to be together.

Steve: They were also fatigued. The merger decision-making process that David La Piana facilitated was demanding, and the two boards rose to the challenge, meeting sometimes weekly to resolve questions, to get to a decision. People were clearly aware that the merger decision is one of the most important decisions a board can make. By the end of this process, though, several of them were ready to go — and then they had to sign up for being the board of a much larger organization. A lot of them weren’t up for it, so they became very passive. Supportive in words, but in terms of really thinking about governance of a much larger organization, that wasn’t happening so much. It was more about, “How do we keep the peace?”

The process would have benefited from us thinking about what needed to be developed with the board. They were used to running two small, or smaller, organizations. I was in most of the board meetings and never heard people actually challenge themselves or acknowledge the fact that, “We’re running a much larger organization now. What does that mean?” I think that boards need a lot of support in the post-merger stage. To get the board ready so that they get off on good footing. Perhaps more candid discussion between the Interim Management Team and the board would have helped us all in exercising post-merger leadership.

Here is Irl’s perspective as a board member:

Irl: The post-merger board was in an odd procedural position, since AAP and LWP still existed as legal entities. The AAP board was voted onto LWP’s board, and LWP’s board was voted onto AAP’s board. So procedurally, the same set of people constituted two different boards with responsibilities to two different organizational missions — all while trying to create, embrace, and interpret the new mission of a new organization. I don’t think we were passive, though, and there were some really rough discussions that took place in executive session without staff present. I will say, however, that we probably could have used some outside assistance to help us along!

Now, here are Liz & Steve’s thoughts about some factors that aided merger implementation.

Liz: We were very lucky, because we had already identified a new site that we were moving into. Steve and I negotiated our lease in the summer. Once we were merged, we started having staff meetings there with all staff, because we needed a facility that was common in every way.

SS: So that helped, having the new location?

Liz: Oh definitely, because it wasn’t either place. Obviously the new site could have been ready when we finished the merger negotiations — that would have been much better. If the site would have been ready October 1st, we would have been moving further along. Or even in January; June was just TOO late!

Steve: I thought having external assistance was also important. We had a couple facilitated meetings as well as one-on-one sessions to help staff process dealing with the change. The fact was that most staff and board members were very focused upon mission — the epidemic wasn’t going away, and we all felt compelled to keep the work going.

John: mentioned a few other success factors:

John:: In November ’96, we unveiled our new name and merger at a fundraising event. The name was chosen by a staff vote, which was important in terms of implementation. Because I think, certainly in nonprofits, it’s really about people — people need to be respected through it all. And giving people a voice on even what we were going to be called was important because there was a certain amount of resistance to merging.

Also, the staffs were really committed. I’d say that half the staff today was around pre-merger, which I think is a pretty big percentage in a merger. That continuity makes a big difference. I mean it depends on who you ask, too. Our #1 concern throughout all the drama was making it as seamless for clients as possible. That was all of our higher aim ... that was the prize we could keep our eye on. So no matter what was happening here on staff, it was not about bringing it into the street. And for our clients, there was a lot of value in merging — we could do more, for more people, and do a better job of it. That was something that our stakeholders “got,” even when there was difficult stuff to manage. People saw that the mission was important and valuable and relevant.

We then asked John: to talk to us about leadership within the organization during the implementation proceSS:

John:: Nonprofit staff bring their own indigenous leadership. Being truly community-based means representing and hiring from the community. And in an organization like ours — one that prides itself on being multi-ethic and diverse in multiple ways — it means that we attract staff who are often leaders in their own communities, regardless of their title or place on the organizational chart. In a process like a merger, it is critical to recognize this leadership — and always keep in mind their influence on organizational culture. If embraced, it can be a tremendously positive influence on moving a process forward.

During the merger, I think some staff felt like we were very corporate looking — although arguably, it was necessary to have an ED in a merger to focus on structural clarity, especially with an agency that had doubled in size. At times, though, we didn’t emphasize enough what each person brought to the whole. People have to be respected and honored for their role in bringing the organization to this point.

And we’re a nonprofit — focusing on people, not profit. That’s in our language, our values. In any implementation of a merger, you cannot appreciate enough. You cannot reassure enough. You cannot over-communicate enough. I mean, we need everybody on the team. And competitive salary and benefits definitely need to be in place, that’s great — but you better check first with staff to find out what really matters. At any step of merger implementation or planning, people need to be acknowledged first.

Finally, we asked John: if there was anything he’d change in hindsight.

John:: I think there should’ve been more documentation of the process to really do case studies. I think that would’ve been really helpful for others. As a technical assistance provider ourselves, we have an identity of sharing technology and lessons learned. In this agency, everything we do can be shared in either a peer supportive way or a model way. The merger should be no different — it was our approach to making services more responsive to the community.