Advantages and Disadvantages of Employees of Mergers

Companies typically merge to harness the power of both companies by creating a single company, which can strengthen the market share of the individual companies. Another reason for a merger may be one company buying out another. In any case, the merger usually has advantages for the company. This is not always the case for the employees of the company. While a company merger can have its advantages, there are disadvantages that could mean a loss of job security.

When two companies come together, it's likely new training will be required of the employees to ensure each set of employees (employees of the merging companies) are on the same page. New procedures can be a disadvantage to employees because it means re-learning a job they've already grown accustomed to doing. Employees who have been doing the job for many years, in particular, may have trouble adjusting to new systems and protocol.

A company merger can bring on a high level of stress among the employees on both sides of the merger. This is a disadvantage to employees, who may fear losing their jobs. When two companies come together, the merger may create an abundance of employees who are no longer needed. A company merger may mean doubling or tripling positions, which may mean either a change in some employee job titles or some employees.

A merger can have a positive impact on employees if their company was in trouble and there was already a fear of job loss. According to Siegal and Simons, "some economic theories predict that mergers and acquisitions can benefit workers. This allegedly occurs because the transaction constitutes a mechanism for stimulating additional investment in human capital and promoting “skill upgrading” of the work force. Merging with another company often creates a more stable company, which can help employees feel more secure in their jobs. Another advantage to a merger, particularly when it results in a more financially stable business, might be the possibility of a higher rate of pay.

Skilled and valuable employees may experience an early opportunity to move up the career ladder. What may have taken years in one company may not take as long, since a merger effectively expands the company. In the same way a merger could eliminate the need for some jobs or departments, it can create positions that may fall under your skill level. The advantage here is that you might find yourself eligible for a position you may not have expected quite so soon.