How Do Mergers Affect Employees?

Mergers take place when two companies join their businesses to form one entity This may make the combined company stronger and more efficient when it leads to streamlining and reduced costs. The problem for employees is that this often involves reducing the workforce to eliminate redundancies. Nonetheless, some employees can emerge with more secure positions following a merger.

Employees often struggle to fit into a new office culture when companies merge. Mergers result in a new way of doing business, and employees sometimes resist the changes because they don't understand how they fit into the new business and office culture. This discomfort can dissipate as employees learn about the new company and its goals. Getting to know the new managers and the duties you're responsible for can bring a new understanding of how that aligns with the merged company's goals.

Mergers often lead to one company and its executive team taking the lead in managing the new business. That means executives who work for the subordinate company have to get use to a reduced role with the merged business. Top executives who are relegated to a less dominant team often have difficulty adjusting to their new roles, which can impact their potential to enjoy success there.

Merger announcements make employees cringe because layoffs usually follow company mergers. Some employees immediately look for new jobs rather than waiting to find out if they'll keep their jobs after a merger. However, mergers may increase job security for employees who aren't laid off. Companies merge partly because they anticipate creating a stronger business by combining finances and other resources. Employees' job security grows if a merger creates a more competitive business that's financially stable.

Mergers tend to have a negative impact on how employees view their employers. In an annual survey of 10,000 U.S. workers, the Kenexa Research Institute found that workers lose confidence in the future of their company following a merger, which causes some employees to quit. Yet Kenexa suggests that employees are less likely to quit when the new management team communicates a clear and forceful vision for the future of the merged company.