How Do Mergers Affect Employees?

by Frances Burks; Updated September 26, 2017
Businesswoman working in office

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.

Office Culture

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.

Executives Roles

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.

Job Security

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.

Employee Confidence

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.

About the Author

Frances Burks has more than 15 years experience in writing positions, including work as a news analyst for executive briefings and as an Associated Press journalist. Burks has banking and business development experience, and she has written numerous articles on consumer issues and home improvement. Burks holds a bachelor's degree in political science from the University of Michigan.

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