Case Studies
Mergers

Merger Implementation: Interview with Jan Masaoka

In October 1998, the Support Center for Nonprofit Management in San Francisco merged with the Nonprofit Development Center in San Jose. For over a year, the merged organization went by the name of the Support Center / Nonprofit Development Center. In January 2000, the organization took on its new name: CompassPoint Nonprofit Services.

We recently sat down with Jan Masaoka - formerly the Executive Director of the Support Center and now the Executive Director of CompassPoint - and asked her to share with us some advice for other organizations embarking on a merger implementation process. Here is what Jan had to say.

Be aware of the difficulties inherent in managing a multi-site organization

"I think that the major complicating matter for this merger was the fact that the pre-merger organizations were in two different locations, and we wanted to keep both locations (about 50 miles apart). So at the same time that you have the normal kinds of organizational things that might occur, you also have the adjustment to being in a two-site organization. Which is a different matter from a merger, and a really complicated thing. It would've been very different if we had moved everybody into one location. I have to say I don't think we were alerted to that. The literature and the conversations and such about merger are very focused on the organizational aspects, and so our attention was on those. And I think we did a good job with those. But I think that as a result, this one kind of snuck up and hit us in the sides. We did talk about it some in terms of the board meetings needing to rotate between the two locations, and we talked about using technology such as putting in a T1 line between the offices, but we didn't really understand what it would mean.

"At this point [March 2001] the merger has been done and gone a long time ago, over a year. The two-site issue will never go away, however. I mean sometimes I tell people we could be the first organization - for-profit, government, and nonprofit - in the history of the world not to have an issue between central and branch. But that's what it would take - being the first one in the history of the world! It's certainly not an overbearing issue, but it will always be there."

Bring in "new blood" for the merged organization's board

"We decided to have 11 people from each of the former boards on the [merged organization's] board. One decision that the board made, in retrospect probably not a good decision, was not to recruit new board members for a year, so that the original 22 would have a chance to get to know one another. The thought was to iron out some of the issues before recruiting new board members. And in addition, it was felt that 22 was too big a board. So people thought that in a year there would be some natural attrition and some people coming up on [the end of their] terms. Now I think we all realize it was a mistake, because it maintained a kind of 'us and them' longer than there had to be. Once we had new board members, that started to evaporate much more quickly, because there were people who weren't 'us' or 'them.'"

Plan for the costs involved - including the cost of making mistakes

"The biggest contributor to our success was almost half a million dollars from funders. Period. It costs a lot of money to do this type of thing. There are the obvious costs - legal costs and severance packages and upgrading benefits to the higher side of whoever's benefit was better. There is letterhead, technology, and equipment - the T1 line for example. And another thing - though this is a two-site matter rather than just a merger matter - the cost of transporting people to the other office is very expensive just for a meeting. And yet in the post-merger environment you need to do that. It's important for the San Francisco staff to have been to San Jose a couple of times in the first year, and vice-versa. It's an investment in the bigger platform.

"I think the big hidden costs are senior staff time, which is distracted - in our case taking away time from revenue producing activities - and the cost of making mistakes. And you're going to make mistakes - they're expected. I really think if I were to give people advice, I'd say that you have to have enough money to make mistakes. Every mistake is a $50,000 mistake. In fact to set up merger budgets that don't have a big pile of money just for blowing it is totally unrealistic."

As a leader, pay attention to the importance of engaging in symbolic acts

We asked Jan what she felt were the most important aspects of her role as leader of the post-merger organization, and of the implementation process.

"I think there were a lot of almost symbolic acts that were important for me to do. To be physically present in the San Jose office quite a bit. To have a lot of contact with NDC [Nonprofit Development Center] board members. To keep the San Francisco staff feeling like they weren't being abandoned by our senior staff. To make a lot of calls on nonprofits and funders and prospective partners myself in San Jose. Those kinds of things. Demonstrating my personal commitment to [making the merger work], to the board and to the staff. Not just saying it but demonstrating it was really a big deal. You need to get symbolic [and demonstrate] an organizational and personal commitment."

Think of what you are doing not as "implementing a merger", but as creating a new organization

"One of the things that I have thought is that implementing a merger was not a phrase that felt right, or that feels right. It's transforming an organization. It's creating a new organization. And in a certain way, that process is more continuous, more seamless with the old organization and with the new one. For example, I can say we implemented the name change… we had a work plan… this is the day the reception changed. And that's kind of that - it's done. Of course there are still little things that will always be around. We'll keep the Support Center domain name for 10 years. But a merger is much more about creating a new organization, and that means that it's not something that's implemented. It really is creating a new organization."