Tips and Answers to Your Questions
Integrating the New Organization

Challenges and Roadblocks to Successful Post-Merger Integration

The Nonprofit Mergers Workbook, Part II: Unifying the Organization After a Merger (co-authored by La Piana Associates’ staff) focuses on how to successfully integrate organizations post-merger. The book addresses the factors associated with successful integration overall, and then addresses each specific aspect of organizational integration, including board, management, staff and volunteers, programs, human resources, external communications and marketing, and systems (including finance, human resources, fundraising, facilities, and information systems).

The book addresses the challenges and roadblocks in each of these specific areas, while focusing on the flip-side — i.e., the positive: how to integrate each function successfully (tips for successful integration).

Overall, the key pitfalls in integration include:

• Focusing too much on details (e.g., new name, logo), and overlooking strategic issues involved in weaving organizations together and presenting them to constituents.
• Thinking the work is over once the agreement (the end of negotiations) is reached. In reality, the work is only starting!
• Overlooking the differences between organizational culture of the partners, and spending insufficient time on creating a new, integrated culture. Note: Cultural integration is critical. Aspects of this include: respect what was, keep the best, create what you want, address fears, deal with neutral-zone issues. (page 82).
• Replicating in the new organizations the processes and functions that existed in the previous entities (which did not work well and/or which won’t work well for the new org.)

Page 18 and 19 summarize Tips for Effective Change Leaders—these tips reflect what leaders need to do to avoid pitfalls. The following qualities and actions of the leader or champion support successful integration:

• Having a vision and the focus and conviction to realize it
• Explaining the change and why it was necessary
• Keeping everyone focused on the mission
• Having a plan for integration and communicating it broadly (being flexible to adapt the plan along the way)
• Showing respect for the old organization, but creating a new organizational culture
• Being an excellent communicator—a master at listening as well as persuading (making the case for the change); communicating honestly, clearly, concisely, and frequently.

Other qualities include:

• Having a positive attitude: Modeling a forward-looking and mission-oriented attitude.
• Acknowledging, absorbing, and attending to the emotions of the staff, while keeping the organization’s clients and the community served as the ultimate focus.
• Naming and dealing with staff resistance when it emerges. Knowing when to be patient and when to move quickly.
• Looking for “quick-wins” and celebrating these.
• Securing the buy-in of those who must directly implement the change, while gradually expanding to others throughout the organization. Get people involved, especially across the lines of the former organizations

In addition to the key role of the leader, integration is best effected when there is a plan and an integration team composed of staff and board (and volunteers) from the former organizations. The composition of the integration team is critical; if it appears to be unfairly dominated by one of the former organizations, this will create a roadblock to smooth integration.

Two aspects of organizations — people and communications — are most important to address effectively. They are interrelated and woven throughout all the other functions/areas of the organizations. As cited on page 37 of the workbook, “Studies have reported that 70 percent of mergers in the business sector fail, and that a good part of these failures are due to the ways management handles the people, emotions, and communications that surround merger.” (Note that the workbook draws on the vast literature from the business sector on merger integration and adapts these findings, grounded in the authors’ experience, to the nonprofit sector.)

A citation on page 48 is also relevant: “The best strategy in the world is ineffective unless properly communicated to the people whose support is needed to effect new policies.”

Roadblocks and challenges by function/area include:

Board (pages 74-75, and 76):

• Having one organization dominate the new board
• Lack of clarity in board/executive relationship
• Culture clash (different board cultures not recognized, new board culture not developed and/or not clearly articulated)

Management ( pages 90 and 92)

• Not recognizing and addressing resistance within management as soon as it surfaces
• Lack of clarity about the goal (integrated, well-functioning management team) and how to achieve it
• Lack of clarity about roles
• Lack of clear, consistent, honest communication

Staff (paid and volunteer) (pages 101 and 102)

• The biggest challenge in this area (and one which impacts the board and management integration, as well) is fear of, and resistance to, change
• Lack of clear, consistent, honest, timely, and accurate communications exacerbates this fear and the associated resistance

Programs(pages 110-111, and 112)

The challenges in integration of programs are largely related to other challenges, which are mainly related to “people” issues:

• Lack of proactive cultural integration
• Self-interest dominating over the understanding and acknowledgement of the benefits of combining programs

External communications and marketing (pages 123 and 125)

• Lack of a plan for external communications
• Not being proactive in communicating
• Not communicating with all stakeholders
• Lack of clear, consistent, timely, honest and accurate communications
• Lack of coordination in communications between the organizations during the negotiations and announcement phases
• Poor internal communication can undermine external communications efforts

Systems (some key challenges/roadblocks to smooth integration)

• Finance: Focusing on the day-to-day issues and ignoring the need to integrate functions (pages 132-133)
• Fundraising: Lack of clarity in roles and responsibilities of board (pages 135-136, and 137)
• Human resources: Not addressing resistance to change (pages 145)
• Information technology: Lack of training; underestimating time and effort required to merge systems; focusing on current systems (which one will be used?), rather than on what systems would be best (is there something better than what we have now?) (pages 148, 149)
• Facilities: (pages 153-154, and 158)

Excerpted from The Nonprofit Mergers Workbook Part II: Unifying the Organization after a Merger, by La Piana Associates. Copyright 2004 by La Piana Associates, Inc. Used with permission. For more information on Wilder foundation publications, call 1-800-274-6024. To order the Workbook, go to www.wilder.org/pubs/mergers_part_II/mergers_part_II_info.html