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Tran tracks merging into one track as the sun sets.

06 July, 2023

Psychology of mergers

Many people think mergers are scary, and lots of mergers do fail. Creating a psychologically sound and positive merger experience is not only great for people, but is also sound business practice.

At Potenture, we suggest you start with:

A Shared Vision

If people don’t see the merger as the right fit or understand how it makes sense, they may feel uncertain and resistant. A compelling vision that provides a rationale for the merger and transformation will help people get on board.

Equity and Respect

The way people view those from the ‘other’ organisation makes a difference, with a common challenge the perception of status. Generally, those with a ‘lower’ status are more likely to support the merger if they are integrated and treated equally, but will resist if they feel they will be subject to prejudice.  Those with a ‘higher’ status will resist if they fear that the merger will ‘down-market’ their position.  By involving people in solving the problems of power dynamics and status in an equitable and respectful way, there can be a building of trust and mutual respect. This is the foundation for enduring healthy relationships.

Supportive Leadership

People often think of mergers as negative because of past experiences. Overcoming fear is important. This can be achieved by demonstrating supportive leadership behaviours that empathetically address the uncertainty people feel inclusive of answering questions, clarifying roles and reducing fiction through clear outcomes and process.

Engagement

There is a positive relationship between high levels of employee engagement and merger success.  Merger satisfaction can be uplifted over time by focusing on employee engagement, and most specifically the building of job satisfaction.

Cultural Sensitivity

High cultural difference between the merging organisations is related to high degrees of resistance to integration. This resistance comes from bias derived from the imposition of different cultural norms.  Cultural awareness can build appreciation and understanding of cultural differences and enable a more self-aware and culturally sensitive approach.

Identity

People feel a sense of identity with their organisation and will often resist change to the established symbols, rituals and habits.  Sensitivity to the central parts of an organisation’s identity is important, as is protecting history and building continuity.

Behaviours

In mergers, there is a tendency to see the views of those in the ‘other’ organisation as less important or credible. This can form behavioural barriers to creating new ways of thinking and working together.  Managing mergers successfully requires keen observation of the functional and dysfunctional behaviours that are arising and the management of these in a sophisticated manner to set new and higher standards of inclusivity.

Further reading