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Mergers: Do you cut and run? March 8, 2007

Posted by Stacey Swift in Merger.

After our discussion in class today about organizational change and layoffs I found a very interesting article in the Wall Street Journal titled Managing Your Career: Do You Cut and Run Or Stay in Your Job After an Acquisition?  In 2005 MetLife bought a Travelers Life & Annuity, a Citigroup unit.  Employees of Travelers Life & Annuity, like Paul J. Higgins a successful vice president, were flown to Florida by MetLife for a weekend of luxury, food, and booze.  During this vacation they were told they would benefit from the merger.  However, after the merger took place Mr. Higgins ended up making $172,000 less than he previously did under Travelers Life & Annuity.  He then took MetLife to court claiming he would have quit had he known he would be receiving a pay cut.  Is MetLife responsible for this misunderstanding?

There has been a recent trend of mergers and acquisitions that bring about organization change.  The article explains it is very important to assess the expected change in order to make your best career move, “Many people ignore warning signs that a merged workplace is no longer the right fit because they overestimate their own value to the company.”   They say exclusion from meetings and e-mails is a warning sign you may get laid off in the process of merging and it is time to start a job search before you get laid off.  As we discussed in class, no one likes to fire someone, so employers find ways to get their employees to quit in order to avoid the dirty work. 

“Certain purchasers deliberately assign acquired staffers the most difficult or unpleasant tasks so they’ll quit and forfeit severance.  Getting invited to a “change-management” session may augur a switch to a position ‘you’re not going to like,” Ms. Zabriskie

Even if you do not get fired in the merging process, the “culture clashes”  may be to difficult to deal with and drive long time employees to quit.  How can one be sure they will be fired in the process of a merger?  How can organizations make the transition a smooth one to minimize culture clashes?



1. Lady - March 8, 2007

I actually just wrote my case memo on this topic when dealing with the merger between Upjohn and Pharmacia. It is true that there is difficulty in figuring out your job description (if you still have one) after the merger. My biggest suggestion is to be upfront during the negotiation phase of the merger. If I was about to merge with another company, I would want everything to be laid out for me, including job description and estimated salary. And I would even go as far as creating a binding contract so that no one could try to pull one over on me.

In regards to organizational culture, it is possible that the “culture” could change after the merger. For Upjohn and Pharmacia, I recommended allowing the cultures to mesh naturally without too much interference. But I had also suggested ways to keep everyone integrated with the nature and goals of the company. Things such as conferences, newsletters, and bi-weekly debriefing meetings might help with this. Also, I suggested an architectural layout that encourages interaction with all staff members such as lunch rooms with large tables, interactive community bulletin boards, and lounge areas activities that promote social gatherings and collaboration. Hopefully, this type of layout would allow people to become more comfortable with getting to know each other and working together.

2. Jordi - March 18, 2007

You can be sure you will be fired if you come to work in your birthday suit and make snide jokes about the merge! Most people would rather know if they won’t be fired or, more critically because it is harder to read, whether they will be in a new position less favorable to them. The article seems to make good suggestions. The problem is, digging around to see who is invited to various meetings or gets memos and who doesn’t doesn’t come easily to most people and can come across badly (you are snooping around, distrustful). In that case, just be direct and ask whoever should know what is happening. If they are honest, they may tell you they just don’t know. There may still be time for you to shape the post-merger company and your role in it. Keep your head up and look for how you can make a contribution. Be generous and positive, that will also help with the culture merging. If you do not get an honest answer after being direct, I would say you may want to start looking around. You may not need to leave, but suddenly, you know that the people you _should_ be able to trust are being opaque for no good reason.

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