 orging new partnerships, strategic alliances, and
coalitions is an accepted survival strategy among associations. Increasingly, however, associations are taking
this approach one step further by altogether consolidating or merging with other organizations. Organizations
that share a similar mission, represent the same industry or profession, or offer complementary products and services are
asking, "Can/should we come together to operate more efficiently, more effectively?" However, mergers and consolidations
are not easy to achieve; much depends on the partners and players. And, unfortunately, too often, parties come to the
merger table with differing expectations or preconceived notions about what the impending "marriage" is designed to do.
That's why expert facilitation is the key to any merger discussion.
According to Consensus Management Group, specializing in this type of facilitation, the number-one impediment to a
successful conclusion to merger discussions is lack of commitment to or fear of that outcome. Other obstacles tend to
revolve around staff vulnerability, which often leads to overt or covert sabotage of the merger process. However, with
staff as full participants in the process, a unified model can be shaped to meet the needs of the industry, or cause.
The challenge, therefore, is to fashion a unified organization that deals fairly with each party, provides a structure
and governance that responds to the needs, wants, and expectations of the current and prospective constituents of each
organization, and that is capable of achieving the vision of the industry.
The experience of two organizations in their marginally successful mergers efforts serve as excellent examples of
lessons learned and traps to avoid.
AT THE MERGER TABLE
Four major players in the beef industry began merger discussions as a result of growing concerns over a decline in the
beef market, and because beef industry members were questioning the value in belonging to several membership groups.
The National Cattlemen's Association (NCA), the Beef Industry Council (BIC), the U.S. Meat Export Federation (USMEF),
and the Cattlemen's Beef Board (CBB), began discussions to consolidate the four organizations to effectively and efficiently
implement a long-range plan by and for all segments of the beef industry.
At the table were four cultures, four missions, four structure and governance patterns, four sets of officers, four
staffs, and four funding mechanisms.
Three officers and the executive directors of each organization formed the Oversight Committee charged with developing
a consolidated organizational model. Agreeing to work in consensus mode, the player's vision for the new organization
was to "create a dynamic and profitable beef industry." This vision drove all discussions and became the template against
which all organizational decisions were measured.
Over the course of a year, the Oversight Committee worked with more than 500 members, leaders, and senior staff of
the four organizations to understand stakeholders' needs, eliminate duplicative efforts, sharpen the industry's focus,
meet a stringent set of legal requirements, and make recommendations that shaped the National Cattlemen's Beef Association
(NCBA).
In the end, however, because of legalities and trepidation, only two of the original four organizations are formally
uniting (NCBA is up and running in Colorado); the other two have closer working relationships and share some services.
Similarly, uniting four associations (the Boards of the American Academy of Industrial Hygiene (AAIH), the American
Board of Industrial Hygiene (ABIH), the American Conference of Governmental Industrial Hygienists (ACGIH), and the American
Industrial Hygiene Association (AIHA)) for the benefit of the profession and the members of the four organizations started
in 1995 with the formation of a Unification Task Force charged with conducting the necessary research and making recommendations
for a merger.
At the very first meeting, the task force set an overarching goal: "The preservation of the profession, not the preservation
of any special interest group." This was the criteria against which decisions about any organizational model would be tested. In
all, the task force developed and evaluated four models, agreeing that a consolidated model would best meet the needs of
the profession. The unanimous recommendation was a model that provided:
- one set of officers
- an 11-member board of directors
- one chief staff executive
- an opportunity for members to participate in special interest groups related to their technical or workplace area
of expertise
- local sections to assure a presence of the organization at the local level
- subsidiary corporations for development of workplace health and safety guidelines, and for the certification of industrial
hygienists
- a foundation
Special care was taken to assure that the credibility of scientific workplace guidelines would be maintained and to
ameliorate the concerns of government workers about involvement in an organization engaged in lobbying.
Three of the organizations agreed to proceed with the creation of a consolidated association, but one did not. A
subsequent attempt to jump start the process among the four groups was also unsuccessful. Since then one of the organizations
has adopted some the programs, services, and operational procedures designed for the consolidated organization. And,
after a hiatus of several months, three of the organizations are beginning formal discussions again.
LESSONS LEARNED
The experiences of the beef and industrial hygiene associations, as well as others with which Consensus Management Group
has worked, offer lessons for any organization considering merging or consolidating.
Earl Peterson, COO for the beef industry consolidation effort, notes, "Our motivation for considering merger was to implement
the industry's strategic plan...we thought consolidation would be the best way to get the job done. The players were
committed to the strategic plan but not to organizational change. Thus, politics became the focus rather than the plan."
Peterson says that this played out throughout the merger process. In addition, the groups encountered the following
problems:
- The inability to make progress from one merger meeting to the next, so that each meeting involved a repeat of
business from the previous meeting, which created problems for getting a buy-in from all parties.
- Information that came from the merger task force to the industry was really not what the people in the industry
wanted to hear, Rather, the reports represented what those at the merger table wanted to say.
- Organizational "dead time" between the last meeting of the merger task force and the merger vote by members of each
organization gave rise to saboteurs.
Lynn O'Donnell, executive director at the American Board of Industrial Hygiene, notes, "Although the professed goal was
consolidating for the good of the profession, overcoming turf issues and the concern of the smaller organization being
consumed by the larger proved insurmountable." It's worth noting that although the effort at consolidation has not yet
succeeded, the association developed a far better understanding of itself and of all the other parties.
What is more interesting is the inescapable fact that members will usually accept consolidation as a rational decision,
especially when leaders recommend it. More often it is the leaders' reservations that almost always stop the process cold
because they fear the future or assume they know what is best for the members.
As facilitators to the merger process, the authors continue to be struck by how hard it is to give up the past, to
think about what could be, and to take action toward a different future. It is equally remarkable how difficult it is
for leaders to risk the status quo even when they acknowledge that the well-being of an industry, trade, or profession
demands it.
Organizational consolidation is one way for associations to prepare to do business in the future. For some, it may be
the only way to survive.
For the beef industry and the industrial hygiene profession, a partially unified organization was eventually created. For those
considering the strategy of merger, it is an undertaking that demands a willingness to focus on what could be rather
than what is or what was.
Linda J. Shinn, CAE, and Dadie Perlov, CAE are the principals of the
Consensus Management Group (CMG), a consortium of management experts with hands-on consulting, facilitating,
and teaching experience. CMG offers custom-designed and outcome-focused programs, services and workshops, including
strategic planning, human resource design, structure and governance audits board/staff development, association
mergers, and executive search. CMG can be reached at (212) 712-2449 or (317) 815-8840 or by email at
dadie@virtualcmg.com or
lshinn@virtualcmg.com |
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Watch for the Snags
Associations considering mergers can ease negotiations by avoiding a number of
"snags" often encountered during the merger process. Following are 10 such snags, along with advice on how to avoid them.
SNAG ONE: PRECONDITIONS
The Scenario: The Fat Free Pastry Association (Party "A") agrees to a merger with the No Calorie Chocolate Guild
(Party "B"), as long as Party A's executive director is guaranteed the chief staff officer job in the new organization.
The Problem: Preconditions can pit associations against each other before unification discussions ever begin.
The Rule: Party A and Party B must both be willing to discuss and deal with all organizational matters. There
can be no stipulations prior to deliberations. This applies to programs and services, public policy, structure and governance,
fiscal and human resources, and image and identity issues.
SNAG TWO: PROMISES
The Scenario: Before merger talks begin, both Party A and Party B make promises to loyal leaders, key staff, and
their respective memberships, including pledges of leadership roles, job security, and lower dues.
The Problem: Promises are a close kin to preconditions. Merger talks can stall or fall apart when assurances are
made that cannot be kept.
The Rule: A clean slate, absent promises, is essential for any merger discussions.
SNAG THREE: ONE-SIDED COMMUNICATIONS
The Scenario: In an effort to rally industry or professional opinion on a particular issue, Party B divulges one-
sided information to internal or external media before any closure on the topic has been reached by the negotiators.
The Problem: Leaked information moves the discussion from the negotiating table to the public arena. Conversations
between parties at the merger table can become guarded.
The Rule: All communications within the negotiating team must be open, straightforward, and honest. Agreed upon
information from the negotiating team should be provided to association leadership, membership, staff, and the media in
a credible manner on a routine basis from a single source.
SNAG FOUR: LACK OF COMMITMENT
The Scenario: Party A does not truly believe that the two organizations will be better off consolidated or merged,
and therefore has a half-hearted interest in unification.
The Problem: Without commitment to the merger from both parties, it will be difficult to agree to any ground rules
and even more difficult to explore organizational models.
The Rule: Commitment to the merger should be determined at the outset of the discussions when the ground rules
are first developed. This assures that the discussions move smoothly and sets standards for all who are privy to the negotiations.
Even if parties to the talks do not agree that the two organizations should merge, there must be a commitment to develop
one or more credible unified models in order to determine if unification is preferable to the status quo or not.
SNAG FIVE: LONG GAPS BETWEEN MEETINGS
The Scenario: Six months elapse without a merger meeting.
The Problem: Long gaps between meeting can result in lost momentum, waning commitment, a rise in saboteurs, and rumor mongering.
The Rule: Establish and adhere to a timetable for merger discussions. Ideally, meetings should occur at least every
21-30 days, and a final outcome should be achieved in six to nine months.
SNAG SIX: CHANGING PLAYERS
The Scenario: Party B decides in midstream to change the players on its negotiating team.
The Problem: In addition to slowing the process, changing players in the middle of merger talks sets the stage
for acrimony, ill tempers, and reneging on deals.
The Rule: Parties to merger discussions should be selected based - in part - on their willingness to stick with
the negotiating process until all dialogue is finished. This helps those working together on the merger to forge a bond
and develop an understanding about organizational history, sacred cows, and skeletons in the closet. In addition, it helps
establish a working style that allows negotiators to agree to disagree. Most importantly, the parties build ownership of their work.
SNAG SEVEN: THE PRESS
The Scenario: The press gets wind of Party B's merger talks with Party A and begins talking to association members,
vendors and suppliers, or other organizational stakeholders with stories that are erroneous and egregious.
The Problem: The press can smell a story as soon as merger talks are underway. It's their business to not only
report the news, but make it. As a result, the press can pit one organization against the other.
The Rule: Parties to merger discussions should agree up front on the message to be given to the press, and by whom
and when. Each association party to merger talks should also appoint an organizational spokesperson to carry the message
to the press. In addition, that message should be the same across all organizations.
SNAG EIGHT: SABOTEURS AND RUMORS
The Scenario: Members of Party A's association - in opposition to a merger with Party B - subvert talks by spreading
rumors about the negotiations.
The Problem: Rumors pit one association against another or one negotiator against another and spreads misinformation.
The Rule: Associations should apprise all stakeholders - up front - about merger discussions, including the purpose
of the talks and any charge or instructions given to negotiators. Clear, credible, consistent and timely messages after
merger meetings go a long way toward allaying saboteurs and dispelling rumors.
SNAG NINE: STRAYING FROM THE TIMELINE
The Scenario: For various reasons, neither association is able to meet deadlines established in the negotiations timetable.
The Problem: Like long gaps between meetings, the inability to adhere to a timeline can stall merger talks, slow
momentum, and cause roadblocks. In addition, association stakeholders who oppose the merger can point to an elongated
timeline as a waste of association resources or as a sign of bad faith and leadership.
The Rule: A merger timeline should include the key agenda items for each scheduled negotiation session and targeted
closing date.
SNAG TEN: NOT LETTING GO
The Scenario: Party A is reluctant to give up its traditional way of doing business.
The Problem: In many instances, parts of an organization's past are dysfunctional or have obsolesced. If
unproductive "baggage" isn't shed, the merged organization could run into trouble.
The Rule: Remedies for unwillingness to say goodbye to the past are best designed through work toward a future
that demonstrates a "better buy" or that directly addresses past objections or dilemmas.
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Reprinted from Executive Update magazine,
June/July 1997, Posted with permission of the Greater Washington Society of Association
Executives.
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