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Administration in Social Work
ISSN: 0364-3107 (Print) 1544-4376 (Online) Journal homepage: https://www.tandfonline.com/loi/wasw20
Managing Nonprofit Mergers: The Challenges
Facing Human Service Organizations
Amy D. Benton & Michael J. Austin
To cite this article: Amy D. Benton & Michael J. Austin (2010) Managing Nonprofit Mergers: The
Challenges Facing Human Service Organizations, Administration in Social Work, 34:5, 458-479
To link to this article: https://doi.org/10.1080/03643107.2010.518537
Published online: 09 Nov 2010.
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Administration in Social Work, 34:458â€“479, 2010
Copyright Â© Taylor & Francis Group, LLC
ISSN: 0364-3107 print/1544-4376 online
Managing Nonprofit Mergers: The Challenges
Facing Human Service Organizations
AMY D. BENTON
School of Social Work, Texas State University-San Marcos, San Marcos, Texas, USA
MICHAEL J. AUSTIN
Mack Center on Nonprofit Management in the Human Services, School of Social Welfare,
University of California, Berkeley, California, USA
A growing number of nonprofit organizations are considering
strategic restructuring opportunities in the form of mergers due
to the current social services environment of increasing competition and decreasing resources. Mergers can be viewed negatively
with the loss of an organizationâ€™s identity or positively as an opportunity to survive and enhance services. Drawing on the literature
from both the for-profit and the nonprofit sectors, this article examines the elements of successful mergers related to the nature of
the merger process and the role of the human element in all
aspects of the merger process. It concludes with recommendations
for managers considering a merger and suggestions for future
KEYWORDS nonprofit mergers, human service agencies, organizational change, leadership, staff involvement
Nonprofits are experiencing unprecedented funding cuts during the current recession (San Francisco Foundation, 2009). An increasing number of
nonprofit organizations are considering strategic restructuring opportunities in the form of mergers due to the current social services environment
Address correspondence to Michael J. Austin, Mack Center on Nonprofit Management in
the Human Services, Center for Social Services Research, School of Social Welfare, University
of California, Berkeley, 16 Haviland Hall, #7400, Berkeley, CA 94720-7400, USA. E-mail:
Managing Nonprofit Mergers 459
of increasing competition and decreasing resources (Campbell, 2009; San
Francisco Foundation, 2009; Ferris & Graddy, 2007; Norris-Tirrell, 2001).
Mergers can be viewed both positively and negatively. While mergers can
be viewed as â€œthe death of an organization or the failure of a missionâ€
(McCormick, 2001b, p.1), they also have been considered as alternatives to
organizational demise by creating an opportunity to enhance an organizationâ€™s ability to serve its clients and community (Norris-Tirrell, 2001; Yankey,
Jacobus, & Koney, 2001). Whether mergers are viewed as an alternative to
termination or an opportunity for growth and improvement, it is important
to understand the factors that lead to a successful merger.
This analysis of the merger literature related to success factors reflects
two dimensions, namely the nature of the merger process and the role of
the human element in all aspects of the merger process (Jemison & Sitkin,
1986; Marks & Mirvis, 1998). By understanding the nature of the merger process, organizational leaders, including executive management and the board,
can be better able to account for the time and energy needed. The human
element relates to such factors as staff reactions and behavior, leadership,
communication, organizational culture and identity. The successful management of these issues can positively influence post-merger growth and
improvement (Deetz, Tracy, & Simpson, 2001). The literature on for-profit
and nonprofit mergers has expanded significantly over the past thirty years
(Cartwright & Schoenberg, 2006). This analysis draws upon research in both
domains because many of the issues are universal and applicable to merger
success across sectors (Buono & Bowditch, 1989; Schmid, 1995). A stage
framework (pre-merger planning, merger integration, and post-merger consolidation) is often used to explain the merger process (Marks & Mirvis,
1998; Singer & Yankey, 1991; Taylor, Austin, & Caputo, 1992).
The first section of this analysis focuses on the pre-merger planning
process and the human factors relevant to making the decision to merge.
The second section addresses merger integration in the form of the merger
implementation process. The third section focuses on post-merger stabilization. Finally, the analysis concludes with implications for management
practice and future research.
MAKING THE DECISION TO MERGE
The first step in a merger process is making the decision to merge. During
this stage, organizations conduct exploratory discussions related to the
appropriateness of various restructuring options. Given that the board of
directors represents the organization as a legal entity, it is usually the board
that drives the merger process. However, in some cases, the merger idea
may be introduced by members of the organizationâ€™s executive management
460 A. D. Benton and M. J. Austin
(Campbell, 2008). Regardless, the board will be instrumental in addressing the legal obligations and the process for organizational dissolution if a
merger is finalized. Members of the board of directors are responsible for
drafting the agreement to merge and voting on it (Campbell, 2008; Yankey
et al., 2001).
Even in this preliminary stage, organizational leaders need to consider
the human element related to program, mission, and culture fit as well as the
uncertainty and stress experienced by staff. The focus in this stage cannot
solely be on the financial viability of possible partners. Organizations can
create a solid foundation from which to work toward their goals if they
begin with a clear, shared definition of merger to specify the driving forces
behind the merger and the potential challenges that need to be addressed
throughout the merger process.
Types of Organizational Restructuring
There are at least four terms, often used interchangeably, to describe the
different types of restructuring, namely mergers, alliances, acquisitions, and
consolidations (Buono & Bowditch, 1989). These terms can be arrayed on
a continuum of inter-organizational relations as noted in Figure 1 (Kohm &
LaPiana, 2003; Marks & Mirvis, 1998). For example, minimal change is represented on the left end of the continuum and maximum change on the right.
The factors that determine the location on the continuum include investment, autonomy, integration, and control. Minimal investment leads to little if
any integration. Alliances of separate organizations represent high autonomy
and control and minimal investment in restructuring. In contrast, mergers
and acquisitions feature high levels of investment and integration based on
adjustments in control and autonomy. Buono and Bowditch (1989) identified three dimensions that can be considered in the pursuit of an alliance,
merger, or acquisition: 1) purpose of restructuring (rescue or expansion),
2) emotional stance taken during the process (friendly or hostile), and 3)
degree of compatibility in forming the new entity. The interplay of these
dimensions illustrates the complexities in restructuring organizations in the
form of merger or acquisition. These dimensions point to the interaction of
FIGURE 1 Restructuring Types.
(Adapted from Kohm & LaPiana, 2003; Marks & Mirvis, 1998).
Managing Nonprofit Mergers 461
purpose and emotion, namely managementâ€™s motives for change and staffâ€™s
emotions unearthed by the process.
For the purposes of this analysis, mergers are defined as the combining of two or more organizations to create one new organization using
friendly, rather than hostile, strategies. In contrast, acquisitions are defined
as occurring when one organization is subsumed or acquired by another
organization, irrespective of friendly or hostile intent. Understanding the
difference between merger and acquisition can lead to better strategic decisions. This analysis focuses primarily on the factors needed to produce
successful mergers and does not address the factors involved in other types
Driving Forces for Mergers
In the merger literature, driving forces relate to the motives behind the decision to restructure. These forces are also linked to the projected goals for the
merger and can include: 1) improving the financial condition of the organization (survival, improve efficiency, reduce competition), 2) strengthening
community visibility (preserve or improve image, reputation, or standing),
and 3) enhancing client services (expansion and improvement of services,
increase client base, enhance staff expertise) (Durst & Newell, 2001; Kohm
& LaPiana, 2003). Motives define the organization and its environment during the pre-merger stage while goals define what organizational leaders
hope the post-merger organization and environment will look like. Mergers
may be the result of multiple motives and goals (Campbell, 2009; Durst
& Newell, 2001). For example, organizations may seek to improve their
financial condition and enhance client services.
The driving forces can be viewed as either internal or external to the
organization. Internal forces involve the organizationâ€™s style for decision
making (proactive vs. reactive) and the organizationâ€™s health (thriving vs.
at-risk of dissolution) (Norris-Tirrell, 2001). External forces represent the
social/economic climate and perceptions of funders and other stakeholders
regarding the viability of the organization (Norris-Tirrell, 2001). In a community climate of scarce resources, the perception of too much overlap or
redundancy in nonprofit services may lead funders to limit their support to
multiple organizations that offer similar services.
Golensky and DeRuiter (2002) provide a different approach to defining
driving forces when they focus on decision-making processes (e.g., anticipatory or reactive) and resource availability (e.g., sufficient and limited).
This approach aids in understanding the varied outcomes of mergers when
there are multiple motives. Resources are viewed as internal and external
where the social/economic climate is combined with the health of the organization. While the social/economic climate may be a driving force, it is not
likely to highlight different outcomes if it is the same across all organizations.
462 A. D. Benton and M. J. Austin
Therefore, other factors need to be taken into account when assessing the
driving forces that can influence a merger.
Mergers are mission-driven when the organizations are anticipating
future demands and also have sufficient resources to continue without merging. In an assessment of three mergers, Golensky and DeRuiter (2002) found
that the mission-driven merger resulted in a more effective process. Proactive
decision making and sufficient resources allowed for more time to be
focused on program- and client-related goals as well as more staff involvement. Mergers that involved organizations experiencing financial problems
chose the merger as a last resort and resulted in a more problematic process.
While proactive mergers are designed to enhance services and organizational
viability, reactive mergers often reflect deficiencies in both decision-making
style and resources.
Understanding the pre-merger stage helps to identify potential challenges. Some challenges may occur early in the process and then dissipate
(e.g., finding appropriate/relevant partners to explore the merger possibilities), while other challenges may require attention throughout (e.g., staff
uncertainty and stress).
IMPLEMENTING THE PROCESS
After the decision has been made to merge organizations, considerable planning is needed to integrate the merging organizations as reflected in a formal
merger plan and agreement. There is a tendency to underestimate the time
needed for thorough planning, especially attention to the human element in
this stage of the merger process (Marks & Mirvis, 1998; Yankey et al., 2001).
The major human element factors are: 1) merger leadership, 2) communication, 3) staff involvement, and 4) organizational culture. Each of these factors
is critical to merger failure or success and are defined below.
Leadership is an important factor in the merger planning process and is
drawn from both top management and the board of directors. The planning
stage can be particularly stressful for staff members who become aware of
the pending merger but do not know all the details (i.e., sense of being
in â€œlimboâ€) (Corwin, Weinstein, & Sweeney, 1991; Thach & Nyman, 2001).
For most organizational change to be successful, considerable time and
energy are required. A transition team is often used to facilitate the change
process, especially for determining the new organizationâ€™s structure and who
will be part of it (Marks & Mirvis, 2000; McLaughlin, 1998). The benefits of
forming a transition team include increased knowledge sharing and relationship building (Corwin et al., 1991; Marks & Mirvis, 2000). Participation
Managing Nonprofit Mergers 463
on a transition team allows staff members from different organizations to
get to know each other, begin to build trust, and find ways to address
The primary elements of a transition team include a steering committee, task forces, and a transition manager (Marks & Mirvis, 2000). Members
of the board of directors from each organization determine the specific elements and members of the transition team (McCormick, 2001a). The steering
committee typically includes board members and top management representatives from all participating organizations. The steering committee provides
leadership and oversight until the new management is officially in place.
This committee is responsible for: 1) setting the overall goals and direction,
2) determining the agenda for the task forces, 3) providing guidance, and
4) assessing task force recommendations to determine which recommendations to send to the boards and management teams for decision making.
Depending on the level of board involvement, some decisions may be
handled exclusively by top management. In addition, steering committee
members can serve as role models for how the merged organizations may
successfully work together (Marks & Mirvis, 2000).
A task force often includes representatives from all merging organizations and has a specific focus or agenda for its work. Separate task forces
may be formed to research the financial, administrative, and programmatic
systems of each organization. While task forces may be relatively small in
number, they can access the human resources of the combined staff population (e.g., through surveys and focus groups) for fact-finding and design
suggestions (Marks & Mirvis, 2000).
A transition manager (e.g., inside or outside facilitator) acts as the coordinator of the restructuring process. These coordinators have the task of
managing and supporting the restructuring process that includes coordinating the transition plan, monitoring the work of task forces, and ensuring
communications between workgroups and leadership (Marks & Mirvis,
2000). The clarity of role and responsibilities is essential for transition
The following key leadership activities need to be defined and understood as part of both understanding the merger process and addressing the
human element: 1) becoming knowledgeable about merger processes, 2)
supporting staff, and 3) recognizing the leadersâ€™ own emotional reactions to
change (Kavanagh & Ashkanasy, 2006; Thach & Nyman, 2001). Competent
leadership in a merger situation includes the knowledge of what to expect
during a restructuring process, the organizational culture issues, the time
required for successful change, and the nature of the organizational change
processes needed to address staff issues. Additionally, competent leaders
need to be aware of the pace of change and how it can influence outcomes
for stakeholders, including staff, donors, volunteers, and clients. While there
is often a desire to minimize the transition time, there is also a need for a
464 A. D. Benton and M. J. Austin
thorough and deliberative process (Jemison & Sitkin, 1986; Marks & Mirvis,
1998; McCormick, 2001a). Indeed, Kavanagh and Ashkanasy (2006) found
higher rates of staff satisfaction with mergers for organizations that used a
gradual approach (i.e., negotiations were thorough and conducted with one
organization at a time) than with organizations that used a quick, top-down
approach. In essence, a balance needs to be found between maintaining
momentum and allowing for sufficient time to promote involvement and
Organizational leaders need to be attuned to the merger stress and
uncertainty experienced by staff if they are to sustain or increase respect
for, and trust in, management (Nguyen & Kleiner, 2003). By providing emotional outlets and support for staff who are transferring their focus from
themselves to the task of restructuring, management can champion the
change and provide support during the restructuring process (Corwin et al.,
1991). Convening â€œall-staffâ€ meetings to answer questions or allotting space
for merger updates on the agenda of regularly held meetings are ways to
demonstrate support for staff.
Senior management needs to be a champion of change by expressing
support for a merger and framing it as an opportunity rather than a threat
(Deetz et al., 2001; Marks & Mirvis, 2000). However, it is also important to
recognize that leaders may be dealing with their own feelings of anxiety and
confusion about the change, especially the different ways that management
systems might be combined as well as the potential elimination of their own
positions (Corwin et al., 1991). Board members may also have mixed feelings about the merger and what it means for the organization they represent
(Basinger & Peterson, 2008). It is clear that both the board and management
need to foster support for the new organization because if staff perceive
them to be less committed or motivated, it will be more difficult to successfully complete a merger (Corwin et al., 1991; Kavanagh & Ashanasy, 2006;
A key tool for management is enhancing communication about the merger
process. Successful and sufficient communication can reduce stress and anxiety as well as increase trust and respect (Bartels, Douwes, de Jong, &
Pruyn, 2006; Basinger & Peterson, 2008). Therefore, an awareness of communication climates and methods and goals for positive communication are
essential for effective communications in the merger process.
The multidimensional nature of communications is captured in the
concept of communication climate (Bartels, et al., 2006; Cornett-DeVito
& Friedman, 1995). A positive climate includes the presence of clarity,
openness, and support that lead to continued or increased organizational
Managing Nonprofit Mergers 465
commitment and identity for staff and successful implementation of change.
A negative climate involves the absence of honest and direct communication, and can lead to staff members feeling vulnerable and distrustful of the
leaders of the change process (Bartels et al., 2006; Kavanagh & Ashkanasy,
2006). The frequent dissemination of candid and accurate information can
greatly reduce staff reliance on a rumor mill and distrust of management
(Campbell, 2008; McCormick, 2001b; Nguyen & Kleiner, 2003).
Organizations that engage in a successful merger often use a
stakeholder-oriented communication plan that focuses on staff, board,
clients, and the community (Giffords & Dina, 2003; McCormick, 2001b).
McCormick (2001b) noted that there is a need to sequence the process
of effective communication. The board of directors, which is ultimately
responsible for the oversight of an organization and makes the final decision whether to merge, needs to be fully informed regarding the details of
the merger. Therefore, it is often customary to release official information
to staff only after all board members have been notified. Similarly, all internal stakeholders need to be informed prior to any public announcements
A primary goal of communication is to explain the reasons for change;
the process generally includes: 1) sharing the vision and expected benefits,
2) describing the merger process, and 3) providing a projected timeline
for changes to occur (Giffords & Dina, 2003; McCormick, 2001b; Marks &
Mirvis, 1998). Early efforts to clarify and explain the merger can ease tensions
when decisions need to be revised at a later date. Attention to the overall
communications process can also increase managementâ€™s credibility.
A further goal of communication is to dispel rumors that can increase
staff anxiety and distrust. One approach is to designate specific staff liaisons
to serve as a communication link between management and staff so that
rumors can be shared with the merger steering committee in order to
address them through official communication mechanisms. The use of staff
liaisons allows staff members who are not directly involved in the merger to
voice concerns anonymously (Dickey, 2002). Anonymity may be important
to staff during a time of heightened stress and uncertainty. Staff may fear
retribution if they are perceived to be associated with a negative rumor or
feedback. Another method for handling anonymous questions is to set up
a hotline number (Marks & Mirvis, 1998; McCormick, 2001b; Schweiger &
Multiple methods of communication are recommended during a merger
to build a positive climate (e.g., weekly or monthly newsletters, staff meetings, and individual meetings). Formal communication vehicles need to be
followed up with informal in-person discussions to ensure that staff members get a clear account of decisions and the opportunity to understand
them (Marks & Mirvis, 1998). Clear and honest communication also needs to
466 A. D. Benton and M. J. Austin
be shared with those board members not directly involved with the merger
process (Basinger & Peterson, 2008; Campbell, 2008).
Furthermore, communication needs to be two-way, with merger leaders providing information to staff and board members, and staff and board
members having a mechanism for sharing reactions and ideas (Basinger &
Peterson, 2008; Dickey, 2002). It is also important to acknowledge what
is unknown rather than leaving gaps that can be filled by the rumor mill
(Nahavandi & Malekzadeh, 1993). Managers are perceived to be more credible and trustworthy when they admit that they do not have all the answers.
Staff may then choose to believe communications from top management
rather than the staff grapevine.
Staff Morale and Involvement
Staff can play a key role in the success or failure of a merger (Cartwright
& Cooper, 1993b; Field & Peck, 2003; Health Education Authority, 1999).
Mergers can produce a great deal of uncertainty and concern. The ways
in which staff manage or adapt during transition can influence merger
outcomes. Several studies identify the following staff concerns during a
merger: 1) losing their organizational identity or even their jobs; 2) identifying and sustaining the new organizational culture; and 3) the lack of
support during transition that can lead to increased anxiety and distrust,
and a resulting increase in absenteeism, turnover, and lowered productivity
(Brown & Humphreys, 2003; Singer & Yankey, 1991; Taylor et al., 1992).
Other concerns include the potential for a negative impact on service delivery, along with concerns about lack of fit between the proposed change
and the mission of the organization (Gulliver, Towell, & Peck, 2003; Taylor
et al., 1992).
Lowered morale and productivity can negatively affect services to clients
when staff member focus shifts from helping clients to taking care of
themselves (Buono & Bowditch, 1989). The time that staff members spend
worrying about merger outcomes is time taken away from their job duties.
Low morale can be contagious in environments where little support is coming from management. Staff members often turn to each other for support
and even find comfort in shared cynicism (Brown & Humphreys, 2003).
Along with uncertainty, a sense of perceived helplessness or lack of
power can contribute to staff anxiety (Marks & Mirvis, 1998). Management
can reduce some of this anxiety by involving staff in the merger process.
Morale can be improved if staff members feel that they have some influence
over the outcomes (Brown & Humphreys, 2003). Participation in task forces
and focus groups can decrease a sense of powerlessness and alleviate anxieties related to the merger process (Yankey et al., 2001). Management can
also involve staff by keeping them updated throughout the process and by
Managing Nonprofit Mergers 467
sharing new developments and proposed changes. However, any involvement of staff in the process needs to reflect a sincere desire that values their
participation. Management needs to support the capacities of staff members to engage in decision making and providing input (Cohen & Austin,
1997). If efforts to gather input are insincere, the staff may become disillusioned with the process and leaders can lose their support (Kavanagh &
While there may be a perception that nonprofit organizations are better
equipped to address the human side of mergers than for-profits, research
indicates it is just as easy for nonprofit organizations to give insufficient
attention to staff needs during a merger (Gulliver et al., 2003; Teram &
Igra, 2005). Management should not assume that the staffâ€™s commitment to
the agencyâ€™s mission or the field of practice is enough to get staff through
the process. Instead it is important to explore opportunities to support and
include staff in fact-finding, feedback, and decision-making opportunities
(Kohm & LaPiana, 2003; Marks & Mirvis, 1998). Nonprofits need to pay
attention to maintaining staff morale because they are usually unable to
use financial incentives to solve problems later in the process (Kohm & La
Since the reshaping of an organizationâ€™s culture can affect the outcome of
the merger, the process needs special attention during the merger-planning
phase (Carleton & Lineberry, 2004; McLaughlin, 1998). Failing to devote
sufficient time to examine the cultural differences between organizations
can negatively impact the merger process (Kavanagh & Ashkanasy, 2006;
Kohm & LaPiana, 2003; Marks & Mirvis, 1998). To successfully integrate
organizational cultures, leaders need to understand the nature of organizational cultures, the different types of culture change, and the challenges that
emerge when combining organizational cultures.
Organizational culture is the glue that binds people together (Nahavandi
& Malekzadeh, 1993). Organizational culture also includes office attire, policies and procedures, staff-management relationships, and decision-making
style (Kohm & LaPiana, 2003). Schein (1985) provides the most frequently
cited definition of organizational culture:
â€œa pattern of basic assumptionsâ€”invented, discovered, or developed by
a given group as it learns to cope with its problems of external adaptation
and internal integrationâ€”that has worked well enough to be considered
valid and, therefore, to be taught to new members as the correct way
to perceive, think, and feel in relation to those problemsâ€ (Schein, 1985,
468 A. D. Benton and M. J. Austin
Organizational culture is not static; it is always evolving to respond to changing conditions (Deetz et al., 2001). Mergers involve the blending of two or
more organizational cultures and this process can generate conflict (Carleton
& Lineberry, 2004; Kavanagh & Ashkanasy, 2006). This blending of different
organizational cultures often occurs at the board level as well as the staff
level. Similar to staff, boards will have values and traditions specific to their
pre-merger organization (Holland, 2006).
The changes that occur when organizational cultures come into close
contact with one another can be viewed as an acculturation process that
includes one or more of the following: 1) assimilation, 2) integration,
and 3) pluralism or separation (Cartwright & Cooper, 1993a; Nahavandi &
Malekzadeh, 1993; Marks & Mirvis, 1998). While assimilation is the adoption
of the dominant culture by the dominated organization, integration represents combining the best of both cultures, and pluralism is the continuation
of both cultures side by side. Some pluralism may be inevitable as individual departments or programs maintain subcultures. Assimilation may be
common in mergers based on a power imbalance. However, the integration
of organizational cultures is often the projected goal of a merger.
Cartwright and Cooper (1993a) state that merger success â€œrelies upon
the ability to create a coherent and unitary culture that combines elements
of both culturesâ€ (p. 67â€“68). The integration of two or more organizational
cultures can lead to a new common culture different from the cultures of
the previous organizations (Corwin et al, 1991; Marks & Mirvis, 1998). Yet,
a merger does not automatically lead to the integration of individual organizational cultures. Within the merger process, specific attention and energies
need to be devoted to organizational cultural issues to achieve the desired
level of acculturation.
One method for improving the outcomes of blended organizational
cultures is for each organization to engage in a process of â€œcultural due
diligenceâ€ similar to the legal and financial due diligence that involves full
disclosure and transparency (Carleton & Lineberry, 2004). Marks and Mirvis
(1998) describe an organizational learning activity that engages teams from
both organizations in a process of exploring their differences and similarities related to operational practices, technology, physical environment,
expectations, and intended goals. In the process, the teams describe their
own culture, their perceptions of the other organizationâ€™s culture, and finally
their perceptions of how they think the other organization perceives their
culture. The activity can uncover stereotypes as well as help to identify areas
of commonality (Marks & Mirvis, 1998). The outcome involves prioritizing
differences that require attention and the recommendations related to the
complexities of addressing the differences.
In summary, the merger implementation stage includes the technical
work needed to design a new organization and the management of the
human factors related to the planning and transition process. The behaviors
Managing Nonprofit Mergers 469
and activities of management set the tone and pace for the merger process. Leaders need to consider multiple modes of communication, various
methods for supporting and involving staff, and deal with the challenge
of blending organizational cultures. Building upon successful pre-merger
planning and merger implementation, the final stage is set, namely merger
After the planning and implementation stages are complete, the organization moves into the post-merger period with a focus on stabilization (Singer
& Yankey, 1991; Wernet & Jones, 1992). The time projected for blending
the newly merged organizations ranges from one to ten years (CornettDeVito & Friedman, 1995; Marks & Mirvis, 1998; Nguyen & Kleiner, 2003).
Management actions continue to influence staff ability to accept and adjust to
change. It is during the stabilization stage that staff members need to adjust
to new cultural and organizational elements that may strengthen or weaken
their organizational identity, job satisfaction, and organizational commitment
(van Knippenberg, van Knippenberg, Monden, & de Lima, 2002).
Similar to prior stages, leadership behaviors and activities continue to be
important during the post-merger stabilization phase, especially since the
newly merged organization is still in its infancy and requires flexible postmerger leadership (Marks & Mirvis, 1998). Even after the merger is official,
unanticipated changes still need to be implemented and staff continue to
need support to handle the associated stress (Taylor et al., 1992). Specifically,
staff should be provided an opportunity to mourn the loss of their premerger organization (Marks & Mirvis, 1998). Validating and allowing space
for staff to grieve can improve the ability of staff members to feel connected
to and supportive of the newly merged organization.
Actively combining staff from each pre-merger organization to work on
tasks together can help to break down competition and improve integration.
Continued competition between pre-merger groups can impede the integration (Brown & Humphreys, 2003). The new management team members
also need to work through their own confusion and grievances in order to
convince staff that integration is a viable outcome. As role models for the
values and vision of the newly merged organization, management needs to
emphasize the dual focus on building new work teams and developing the
organizationâ€™s new culture (Marks & Mirvis, 1998).
Ongoing support and leadership for the newly merged board of
directors is also crucial. Similar to the restructuring of organizations, boards
470 A. D. Benton and M. J. Austin
go through a restructuring process as well, with the need for decisions
regarding size, types of committees, and membership (Taylor et al., 1992;
Yankey et al., 2001). While the loss of board members may be inevitable after
the merger, organizations often do not want to lose their most active and
influential board members. This may be a time when board members question their fit with the new organization and its mission (Kohm & LaPiana,
2003; Yankey et al., 2001). There may be board members who were ambivalent about the merger decision. These members often need extra time to
see that the merger was in the best interest of their organization (Kohm &
LaPiana, 2003; McCormick, 2001a).
Organizational identity is an important human element to consider in the
merger process, especially in the post-merger stage. Identification with an
organization can either facilitate or impede integration during and after a
merger. Strong pre-merger affiliation can lead to defensive attitudes during
a merger because staff feel their organizational identity is being threatened
(Millward & Kryiakidou, 2004). Furthermore, both staff and board members who identify strongly with their pre-merger organization may find it
difficult to transfer loyalties to the newly merged organization (Kohm &
The two factors that can influence staff identification with a post-merger
organization are: 1) organizational dominance and continuity, and 2) status
of organization and permeability. Merger dominance can be seen as either a
larger organization dominating a smaller one or one organization perceived
as saving the other organization. In contrast, status can affect staff identity
in the form of increased prestige and/or job opportunities (Terry & Callan,
1998). For example, existing feelings of inferiority or identification with a
low status organization may be exacerbated in a merger process, leading
to less identification with, as well as less commitment to, the post-merger
organization (Terry, 2001). However, staff from a low-status organization
may support a merger if they see it as access to a higher status group.
Meanwhile, the high-status staff may feel like their positions are threatened
by the process of merging with the low-status group, fearing that they will
not be able to maintain their social standing.
Regardless of the pre-merger identity of staff (e.g., low status or
high status, dominant or dominated), it is clear that conflicts stemming
from dominance and status issues can be problematic in a merger process (Brown & Humphreys, 2003). Therefore managers need to understand
the power of organizational identity and how dominance and status can
influence staff attitudes and reactions, as well as their job satisfaction and
Managing Nonprofit Mergers 471
Staff Satisfaction and Organizational Commitment
As a merger affects organizational identity, individual commitment to the
organization and job satisfaction may also undergo changes (Gaertner,
Bachman, Dovidio, & Banker, 2001). Staff who feel disconnected or experience a loss of identification with the organization may be less inclined
to support goals and objectives and decide to leave the new organization.
Mass turnover following a merger can negatively impact service delivery
and the morale of remaining staff (van Dick, Ullrich, & Tissington, 2006).
However, some voluntary turnover after a merger is unavoidable due to
changes in leadership and mission, and it is realistic to expect a loss of staff
(Yankey et al., 2001). For example, staff from a small pre-merger nonprofit
may not be interested in working in a larger merged organization if they
perceive it as more bureaucratic (Kohm & LaPiana, 2003). Furthermore, it
may be in the best interest of the new organization for staff to leave if they
cannot accept the change (Health Education Authority, 1999). Staff members
who remain employed (despite decreased job satisfaction and organizational
commitment) may negatively influence staff members who are invested in
transitioning into the new organization.
Maintaining staff satisfaction and organizational commitment throughout the merger process can help management avoid high staff turnover and
reductions in service quality. Job satisfaction can be influenced by the quality of relationships, level of task achievement, and level of organizational
support (Gulliver et al., 2003). Organizational commitment involves staff
identification and feelings of security with, or loyalty toward, the merged
organization. The factors that influence job satisfaction and organizational
commitment in the merger stabilization stage include role clarity, trust, and
The loss of role clarity (e.g., clearly articulated job duties, responsibilities, and expectations) that can accompany uncertainty about a merger can
lead to increased levels of stress, often resulting in decreased job satisfaction. In addition, if staff members feel a sense of betrayal by their pre-merger
organization, they may not be able to trust or feel committed to the newly
merged organization (Teram & Igra, 2005). Similarly, if staff members believe
that their expectations were met as a result of receiving accurate and detailed
information over time, then they are likely to display higher levels of job
satisfaction (Fairfield-Sonn, Ogilvie, & DelVecchio, 2002).
Irrespective of how well a merger is managed, some turbulence and
unrest can be expected during the stabilization stage (Buono & Bowditch,
1989; McLaughlin, 1998). The distinctions between us and them can continue
for months or even years after formal integration (Covin, Sightler, Kolenko,
& Tudor, 1996; DelVecchio, 1999; Panchal & Cartwright, 2001; Singer &
Yankey, 1991). Management can play a key role in reducing competition and
unrest by supporting staff transition activities as part of developing a new
472 A. D. Benton and M. J. Austin
organizational culture. Organizational identity conflicts can be resolved as
staff and board members assess the merger outcomes and their role in the
new organization. Organizational leaders can keep turnover to a minimum
with the use of continuous staff support and communication. Merger stabilization occurs when the staff and board members who remain in the
merged organization invest their time and energy in the formation of the
SUMMARY AND IMPLICATIONS
As the nonprofit environment continues to be competitive, organizations will
continue to search for strategies that improve their sustainability and growth.
Merging can help organizations reduce competition and improve efficiency
and effectiveness. Provided that merger leaders have an awareness of the
process and the human elements involved, mergers can be a successful
method of intervention for nonprofit organizations to survive and thrive.
Given the current state of merger literature, the concluding section identifies
some issues for enhancing merger research and merger management.
Implications for Theory and Research
Studies that explored the occurrence of mergers and other restructuring
types often reflect local situations and may not be generalizable to the rest
of the United States. Therefore, a comprehensive database on the occurrence of nonprofit mergers is needed. Several universities support nonprofit
research institutes, and one of these institutes would be a logical location
for such a database. There is also a need for specific and consistently used
criteria for assessing merger outcomes related to merger goals (e.g., growth,
improved efficiency, or improved quality of services) (Marks & Mirvis, 1992).
In addition, there is a need for longitudinal studies of nonprofit mergers to capture data from all three stages to balance the preponderance of
post-merger studies that ask participants to reflect back on the pre-merger
environment. Given sufficient planning and funding, it could be possible to
gather information during all three stages of the merger process.
While the literature on mergers is primarily descriptive and prescriptive,
it could be strengthened by the development of a comprehensive theoretical
framework that would guide empirical research. An analysis of the different
frameworks for examining the various aspects of the merger process (e.g.,
driving forces or organizational identity) suggests that a more integrated
theoretical framework is needed. For example, the merger process could
be improved with the use of empirically based criteria for guiding decision
making. What are the elements of anticipatory decision making and what
happens in their presence or absence? What are the chances of merger
Managing Nonprofit Mergers 473
success without anticipatory decision making? Can a merger be successful
in some areas and not others? While the three-stage merger framework used
in this analysis provides a starting point for understanding mergers, there is
still inadequate theory to explain the multiple dimensions of mergers.
Building upon a three-stage framework, the conceptual map in Figure 2
provides one way to integrate the factors that relate to merger outcomes
by using Venn diagrams to depict the overlapping domains of leadership,
staff, and organizational environment. Leadership includes both the organizationâ€™s top managers and the board of directors. While the leaders and staff
are components of the organization, organizational environment refers to
external and internal factors that impact organizational culture and identity.
A comprehensive framework for studying mergers needs to include the three
domains of leadership, staff, and environment. For example, it is difficult to
understand staff attitudes and behavior without also looking at managerial
leadership practices and the impact of organizational issues. Similarly, strong
Merger Definition Communication Leadership Practices
Driving Forces Leadership Practices Staff Satisfaction
Initial Communication Staff Involvement & Morale Organizational Identity
Pre-Merger Implementation Post-Merger
Success or Failure
= STAFF = ORGANIZATIONAL
FIGURE 2 Conceptual Map of Merger Dynamics.
474 A. D. Benton and M. J. Austin
leadership is linked to merger outcomes, in part because of how it impacts
The interaction of the three domains can be found in each merger stage.
In the pre-merger stage, the impact of decision-making style is reflected in
the leadership practices as well as how staff members make decisions as
part of the organizationâ€™s culture. Beyond the pre-merger stage, the interrelatedness of the three domains can also be seen in the implementation
stage, where leadership behavior, staff reactions, and the organizational
environment combine to begin building the organizationâ€™s new culture that
ultimately defines the outcomes of the merger process.
Below each Venn diagram in Figure 2 are key concepts or challenges for
each stage of the merger that are influenced by the interrelatedness of staff,
organizational environment, and leadership. The arrows between stages
reflect the progression of the process, while each arrow leading to merger
outcomes reflects the ways in which each stage can impact the final outcome. In the pre-merger stage, poor decision making or different definitions
of restructuring (e.g., merger vs. acquisition) can influence the success of the
subsequent stages (Arrow 1). Similarly, if poor communication during the
implementation stage increases staff anxiety, leaders will experience greater
challenges in addressing staff satisfaction in the post-merger stage (Arrow 2).
Just as each stage influences the next stage (Arrows 1 & 2), each stage
can also have a direct impact on the final outcome. Research indicates that
mergers are more likely to be successful if driven by anticipatory rather than
reactionary decision making (Arrow 3). Similarly, a lack of staff involvement in the implementation stage can lead to failure despite attempts to
address staff commitment in the post-merger stage (Arrow 4). Finally, leadership practices in the post-merger stage and staff satisfaction with the
new organization can influence the long-term success or failure of the
merged organization (Arrow 5). The conceptual map illustrates how each
stage of a merger requires attention to the three domains and provides a
comprehensive framework for further research on mergers.
In summary, the conceptual map illustrated in Figure 2 provides a
comprehensive framework for understanding mergers, especially when combined with studies on the incidence of nonprofit mergers, the delineation of
criteria for evaluating merger outcomes, and longitudinal studies that include
the three major phases of the merger process. Based on this discussion of
research needs, the questions in Figure 3 constitute a beginning agenda for
future research on nonprofit mergers.
Implications for Managing Nonprofit Mergers
Some of the challenges facing those seeking to manage mergers are illustrated in a preliminary checklist of important merger factors noted in
Figure 4. While not listed in any priority, the checklist is divided into two
Managing Nonprofit Mergers 475
1. How can the framework illustrated by the conceptual map inform future research design?
2. Does the framework adequately address all domains and challenges in a nonprofit merger?
3. Building on the conceptual map, what more can be learned regarding how different domains
and stages overlap and influence each other and the final outcome?
4. How many nonprofit mergers occurred in the United States during the past year, during the
past 10 years?
5. How many of the restructuring processes reported for these time frames are truly mergers
(combining two or more organizations to create one new organization) and how many are
acquisitions (one organization being subsumed by another)?
6. What constitutes a comprehensive set of criteria for evaluating merger success or failure?
7. How could these criteria be operationalized and measured?
8. Can a merger be successful in some areas and not others? Are some areas more important than
others for a successful merger?
9. Given the constraints, how could researchers study the entire merger process, especially gaining
access to the pre-merger process?
10. What are the most effective methods for tracking and analyzing the merger process throughout
FIGURE 3 Future Research Questions.
Recommendations for Managing the Merger Process
Employ proactive decision making (e.g., explore merger options while financially stable, when
there is no threat of organization termination).
Establish goals prior to initiating the merger process (e.g., what are the desired outcomes?
Increased funding? Expanded client base?).
Select a compatible merger partner as reflected in mission, values, services, and organizational culture (e.g., similar or complementary client base, both organizations have team-oriented
Provide sufficient time and resources for planning, implementation, and stabilization.
Utilize a transition team and transition manager.
Recognize that integration processes can take several years either before or after the official
merger (e.g., time is needed for blending operations, budgets, cultures).
Recommendations for Managing the Human Element
Provide frequent, open, and honest communication with merger partner(s) and staff to develop
trust and respect (e.g., increase frequency of staff meetings, agency-wide memos).
Involve staff in planning and building the new organization (e.g., include staff on transition team,
use focus groups).
Create opportunities for staff to grieve the loss of the former organizations as well as celebrate
the new organization.
Recognize the differences & similarities in organizational cultures and employ activities specifically geared for blending cultures (e.g., provide team building activities, create cross-organization
Explore methods for maintaining staff job satisfaction throughout the merger process (e.g., build
trust and motivation).
Recognize the strength of organizational identity and work to minimize status or dominance
conflicts (e.g., encourage staff to perceive merger as opportunity to enhance identity).
FIGURE 4 Management Checklist for Successful Mergers.
476 A. D. Benton and M. J. Austin
components: managing the merger process and managing the human element. The major process themes include decision-making style, setting and
articulating clear merger goals, and providing sufficient resources throughout the process. The major human element themes are staff communication
and involvement along with organizational culture and identity.
In conclusion, this analysis of managing nonprofit mergers began with
a search for the key elements for assessing nonprofit and for-profit mergers.
It became clear that mergers could be assessed by using a three-stage framework, namely the pre-merger stage related to planning, the implementation
stage related to organizational redesign that involves communicating with
and involving staff as well as issues related to organizational culture, and
the post-merger stage that involves stabilization related to managing the
transition and continuing change.
Further research is needed on the factors relevant to successful and
unsuccessful mergers. The current descriptive and prescriptive literature
provides leaders with guidance on the human elements related to helping staff adjust to the changes while also managing their own anxieties and
confusion. Successful mergers can be achieved if: 1) sufficient time and
energy are provided for the merger process, 2) a vision of the new organization is developed, and 3) ongoing support of staff is provided throughout
the change process. Mergers can prove to be successful organizational
development strategies when they are based on a thorough examination
of options, proactive decision making, and considerable attention to the
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All our cheap essays are customized to meet your requirements and written from scratch. Our writers have a lot of experience with academic papers and know how to write them without plagiarism. Moreover, at our academic service, we have our own plagiarism-detection software which is designed to find similarities between completed papers and online sources. You can be sure that our custom-written papers are original and properly cited.
Our essay writing service has a 0% plagiarism tolerance. We are well aware of the dangers of plagiarism. Plagiarism is academic suicide. Our essay writing service ensures that all papers are original. We do not sell pre-written papers. All papers are written from scratch as per the instructions. We pass our papers through powerful anti-plagiarism software such as SafeAssign and TurnItIn.
Our cheap essay writing service tries to always be at its best performance level, so each customer who pays money for paper writing can be sure that he or she will get what is wanted. On the off chance that you don’t like your order, you can request a refund and we will return the money according to our money-back guarantee.
There can be a number of reasons why you might not like your order. If we honestly don’t meet your expectations, we will issue a refund. You can also request a free revision, if there are only slight inconsistencies in your order. Your writer will make the necessary amendments free of charge. You can find out more information by visiting our revision policy and money-back guarantee pages, or by contacting our support team via online chat or phone.
We know how important any deadline is to you; that’s why everyone in our company has their tasks and perform them promptly to provide you with the required assistance on time. We even have an urgent delivery option for short essays, term papers, or research papers needed within 8 to 24 hours.
We appreciate that you have chosen our cheap essay service, and will provide you with high-quality and low-cost custom essays, research papers, term papers, speeches, book reports, and other academic assignments for sale. We beat all deadlines. We can also handle urgent orders with deadlines as short as 1 hour. Our urgent paper writing service does not compromise on quality due to the short deadline. On the contrary, our essay writers have a lot of experience which comes in handy in such situations.
We provide affordable writing services for students around the world. That’s why we work without a break to help you at any time, wherever you are located. Contact us for cheap writing assistance. Our impeccable customer support team will answer all your questions and help you out with any issues.Proceed to order page
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more