Case Studies
Mergers

Case Study: Youth Tennis Advantage

An Interview with Bob Lee, Board President

In Spring 2001, Strategic Solutions interviewed Bob Lee regarding the merger of two organizations located in the San Francisco Bay Area, both of which served youth through tennis and academic tutoring programs. The merger of National Junior Tennis League (NJTL) and the Youth Tennis Foundation (YTF) resulted in the formation in September 1999 of Youth Tennis Advantage (YTA). Prior to the merger, Bob had been President of the Board of NJTL, and then served as the first President of the merged entity, YTA.

While these were relatively small organizations — each having an annual budget less than $500,000 — the merger integration was complex and, in Bob’s words, “rocky.” At the time of our interview, two years post-merger, these difficulties had largely been overcome. “It’s smoothed out, and it’s truly a unified organization,” Bob told us. The integration period was characterized by numerous challenges — some common to mergers in general, some arising from the individual characteristics of the organizations involved.

Much of our interview with Bob focused on how these challenges had been handled. Below we discuss the highlights of the merger integration process, describing the challenges that arose, and the lessons that were learned in the process of addressing them. Additionally, we discuss the success factors that helped the board and staff through the rocky times, and that helped to eventually set the new organization on a smooth course. These “learnings” can be applied to other merger situations, helping to prevent similar issues from arising or to mitigate them should they arise.

Background

Prior to the merger, the National Junior Tennis League (NJTL) had an annual budget of $450,000 and a small administrative staff that included an executive director (ED), a director of programs, and two administrative support staff. In addition, it had about 25 staff members who were involved with tennis and tutoring, most of whom were part-time. The Youth Tennis Foundation (YTF) had a slightly larger budget of $480,000, three-four administrative staff including an ED, and 15-20 staff, also mainly part-time employees who were involved with the tennis and tutoring program. The merged organization, Youth Tennis Advantage (YTA), started with an annual budget between $800,000 and $900,000, and a total staff of more than 40, many of whom were part-time.

Challenges

Although their missions were similar, the two organizations had different programmatic emphases and approaches to achieving them . . . Despite the seeming similarity in the organizations’ programmatic focus, there were significant differences as well. YTF had one main program: the East Palo Alto Program. As Bob Lee explained, YTF “had a big focus on education, but they didn’t have many sites. Most of their money went to the East Palo Alto program, which was already established.” NJTL, on the other hand, was “more of a grassroots organization that proliferated lots of small sites.” Moreover, NJTL “included tutoring, but it was not a well developed part of the program.”

Cultural differences were enlarged by rumors . . . Additionally, there were significant differences in culture, perhaps more perceived than real. “NJTL felt that YTF was an organization of ‘hands off’ wealthy board members who were focused on a few very expensive programs. And, YTF viewed NJTL as a grassroots organization with lots of small sites that did not really penetrate the culture and lives of the kids whom they served. The fact of the matter is there was some truth in both descriptions, but neither was completely accurate; they were exaggerated.”

The departure of key staff led to significant instability . . . The two organizations’ staffs and boards began the merger integration process with a certain degree of distrust of each other and quickly became highly polarized. “There was very poor teamwork, very poor collaboration, and lots of personal agendas.” This was heightened by the departure of three key people: the two Executive Directors and the Program Director. “Because the merger process took quite a bit of time, and because there was some acrimony in that process, it created some hard feelings on the part of some of the board members. It took a while for those hard feelings to go away and for us to move on with our work.”

The new ED was an unknown quantity . . . A new ED was quickly hired, but because he was unknown in the tennis community, his presence served to heighten the levels of distrust. “That was a challenge because he was not known to either of the former organizations, and therefore had to establish himself. Because he didn’t come from the tennis community, the tennis people were somewhat suspect of him.”

Simultaneous with these changes, the board shifted the organization’s strategic focus . . . At the same time as the new ED was hired, the board decided to shift the focus of the organization. While this change alone may have caused difficulties among the staff, it was exacerbated by the departure of the prior EDs. Bob explained, “The board was telling the new ED: ‘We want a more balanced program. It’s been too heavily focused on tennis. We want the tutoring pumped up, the academic portion strengthened.’”

Compounding this, the change in strategic direction undermined the staff’s trust of the new ED . . . “ The new ED went full speed into doing that, which further increased the mistrust on the part of the tennis people toward this guy who’d been outside of tennis who was now putting an emphasis on the academic side of the program. There was a real backlash. They reacted as though he was going to weaken the true foundation and heritage of the organization. It created this kind of bipolar organization: academic vs. tennis.”

The need for communication was not sufficiently addressed and created major challenges . . . In any organizational change, particularly a merger or other major strategic restructuring effort, there is a heightened need for frequent, honest, clear, and two-way communication. Several factors converged to make communication even more important during this integration process. These factors included the shift in strategic direction and the polarization of the programs (academic and tennis). This, combined with the new ED’s unfamiliarity with either of the previous organizations, meant that he didn’t have a foundation of trust to draw on in making changes. Obtaining the support of the staff and board would require that the ED devote himself to developing relationships. Having numerous sites made this even more difficult.

Success Factors

Despite these challenges, when we spoke with Bob Lee two years after the merger took place, he reported that the consolidation was generally successful. A variety of actions served to help YTA reach a stable state.

The post-merger strategic planning process had several positive features . . . The newly formed YTA board had made the effort to create a strategic vision for the new organization, and Bob felt it had been quite useful. Sufficient time was set aside for planning and there was adequate representation of viewpoints. “If I had one piece of advice for somebody else approaching the same challenge, it would be to make sure you invest the time in building a common strategic vision.”

The planning process occurred once the boards and staffs had become familiar with each other, but before too much time had elapsed. Bob recommended holding the strategic planning session 6-12 months post-merger, which gives people enough time to get to know each other, but is not so far off that momentum is lost.

Bob thought it was absolutely critical that the staff was involved in the process. “The board is really just the funding source, while the staff is the operating element. If you’re going to talk about the strategic direction of an organization, you really have to involve the front-line staff because they have the knowledge. First and foremost, the quality of the thinking around the table is much better. Secondly, it creates certain positive legend that this is the way the strategic plan was developed. It’s a healthy memory for the organization to have that this is our plan, not a plan developed by somebody else for us.”

One major success factor was the involvement of the board leadership in coaching the ED . . . While the merger negotiation process typically requires significant involvement of the board leadership, the integration process can be even more demanding of their time and energy. In this case, Bob, as YTA’s first Board President, championed the integration. He struck a delicate balance in terms of his involvement, striving to not undermine the ED’s authority. “From my experience in the corporate world, I was sensitive to the fact that I did not want to wrestle away authority from him, and create confusion. I tried to make it clear that he was the ED and had responsibility for the operating elements. And that, as board president, I had responsibility for shaping the strategic side and for the funding. The ED and I had to meet more frequently, holding several meetings in-between board meetings.”

Another success factor was the board’s involvement with the staff . . . Coming from two different organizations, the staffs had their own biases going into the merger. Another board member stepped in and spent time with the staff, helping to bridge the differing perspectives.

A formal integration team was created to address the situation . . . The ED created an integration team consisting of staff from both “camps” — tennis and academic. These became his advisors and served to lessen the tension between the two groups.

Other lessons learned

With the benefit of hindsight and experience, Bob drew on the wisdom he gained through this challenging integration process and offered additional useful advice:

Value of an outside facilitator . . . In retrospect, Bob said it would have been helpful to have an outside facilitator help the organization with integration. Had they had such a resource, YTA may have been able to proactively address and even prevent problems, rather than react to problems when them became crises. “I think an outside facilitator could have helped to raise issues and to force us to resolve them more expeditiously. There could have been value in having a consultant come back post-merger a few times and do a temperature check, to give us feedback as to what was going well and what was not going well. We weren’t that disciplined to pause and check on that. Once you get into it, you start losing some of your objectivity.”

Reward the behavior you want and create the organizational culture you want . . . “ The organization needs to recognize individuals — whether at the board level or the operating level — who are doing the most towards facilitating the merger. It should be recognized when individuals go the extra step and live out the principles of the merger,” expressed Bob. “When an organization comes together, there is a search for the culture of the new organization. Certainly the elements of culture include what is honored, what is recognized, and what success looks like.”

Focus on the mission . . . Bob also learned that, “as quickly as possible you need to develop an external focus. A lot of the merger is internal, but you need to fairly quickly start refocusing yourself externally, to remind yourself why you are in business. You need to focus on the marketplace, fundraising, and the people you are serving.”

Have a plan that clarifies your goals and objectives, and use a “scorecard” to evaluate and report on progress . . . “ One other mechanism that helps to force integration is agreeing upon the right scorecard for the organization and its employees. The quintessential measure of your performance is your report card. How will the organization be measured? That question really brings out a lot of the differences around the table, and forces you to address them.” Bob went on to explain, “If you say ‘We’re going to have a report card, and it’s not going to be 21 items — it’s going to be three or four items that are the most important and most measurable, to let us know whether we’re making progress.’ This causes a team of people to begin to converge on what’s truly important. This forces integration. You need to cascade this down to the lowest working level employee in the organization so that everyone has some tie to what was discussed and agreed upon at the organizational level.”