Mergers and acquisitions: The human factor

This study explores the impact of mergers and acquisitions on employees in the insurance industry. Its purpose was to explore the morale and attitudes of a group of employees of the merged organization by interviewing those participants at the time of the merger and interviewing them again after a period of time (approximately one year), to ascertain if the participants' immediate reactions had been maintained or if their reactions had changed. The study explored how the management practices affected the employees' morale and attitudes at the time of the merger and approximately one year later.; Mature and overcapitalized, the insurance industry has been involved in merger and acquisitions activities to increase profit and revenue. Mergers allow companies to achieve greater economies of scale and permit a greater investment to modernize the existing technology. An easy way to expand market share is through a merger. And in spite of the large number of mergers, recent studies place the “success” rate of merged companies between thirty and sixty percent based on various business criteria. The success of a merger ultimately depends on the effective use of people.; To investigate the effect of a merger an initial study was conducted in an acquired insurance field claim office three months following the merger. This was done by conducting individual unstructured interviews with employees asking for their perceptions regarding how they perceived morale, how they perceived the management practices, and how they perceived their job satisfaction. A follow up study was conducted approximately one year later using the identical process and identical interview questionnaire.; In both studies there were similar findings regarding how the respondents perceived morale. There were more respondents who described morale in a negative way than a positive way. The respondent's description of either very poor or poor morale appear to stem from their fear of the significant changes, the insecurity associated with the merger which could eventually result in loss of jobs, the increased workloads due to increased turnover of employees, and a limited ability to function in an environment filled with uncertainty.; In both the initial study and follow up study there were more respondents with positive comments than negative comments regarding local management practices which were working well. A consistent negative perception seemed related to the need for improved communication resulting from corporate decisions, which were insufficiently communicated to employees.; While mergers and acquisitions continue to be very much a part of the business landscape, organizations continue to repeat the negative practices, which have been surfaced in this study. It is the culture of an organization which enhances trust, communication and a willingness to change on the part of employees. When companies' address the major concerns of employees as described in this study, before and during a merger, recognizing that what is being acquired is the intellectual capital, then mergers stand a greater chance for success.