When associations merge, previously separate groups of people must join forces and work together. This fusion of work styles, office traditions, and organizational structures is both critical to the success of a merger and the hardest to navigate. Here's how to make it work.
Last year, economic pressures compelled the Certification Board of Nuclear Cardiology and the Certification Board of Cardiovascular Computed Tomography to accelerate plans to merge. Outwardly, the two groups had only a short distance to cover in order to bring their medical-imaging certification programs together. They already had started working together, and unlike a traditional association, neither group had a membership base to answer to.
And yet, the merger process "was exhausting. Utterly exhausting. Even though the process actually went well," says Dawn Edgerton, CEO of the newly merged organization, now called the Council for Certification in Cardiovascular Imaging (CCCVI).
For Edgerton, the legal and financial mechanics of the merger turned out to be the easy part. The hardest part was building trust between the organizations, managing personalities and expectations, and overcoming different operating styles—in short, merging cultures.
"We had everything going for us," says Edgerton. "But even so, I think if the economy hadn't pressed the boards, it would have been a much longer merger period, and to me, it really highlights how hard it is to merge."
The economy likely served as a catalyst for many association mergers in the last few years, experts say. "Anecdotally, we're certainly hearing more about it and are coming across organizations looking for assistance in this area," says Julie Pietroburgo, Ph.D., associate professor in the Department of Public Administration and Policy Analysis at Southern Illinois University.
Yet Edgerton's experience is a reminder that a sense of urgency doesn't make a merger any simpler. Far more than the joining of two or more organizations to form one legal entity, a merger is also a union of people, with their own loyalties, practices, and expectations. Associations currently considering a merger as a means to a financial or strategic end must also factor cultural dynamics into the plan if the merger is to succeed. And for associations, the process of merging cultures extends beyond staff to include volunteers and members, as well.
"Culture isn't a word you're going to see in [merger] documents, but it's kind of implicit in everything that's there," says Pietroburgo. In her 2005 study of 11 association mergers, which she conducted with Stephen Wernet, Ph.D., of St. Louis University's School of Social Work, "the ability to merge culture and address cultural elements was the make-or-break issue as to whether the merger was a success."
Michelle Hanson, an attorney who assisted the CCCVI merger, prefers to not get involved with merging organizations until they have thought through the intangibles. "How do they feel about all these issues of loss of independence and loss of a board of directors?" she says. "Sort out those issues, and once you're getting to a comfort level on those, then it's time to turn attention to the legal mechanics."
The Elephant in the Room
Despite its central role in an organization's identity, much of an organization's culture tends to be ingrained rather than conscious, like an "elephant in the room" during merger negotiations.
In a typical example, a small association might fear losing its identity in a merger with a large association, leading to a push for equal representation on the new organization's board of directors even though, in practice, the new board is supposed to represent the combined membership rather than either of the predecessor organizations. Such cultural fault lines between merging organizations "tend to come up around issues of decision-making—how decisions are made, who's involved, the kind of process that they use in making decisions," says Wernet.
In Wernet and Pietroburgo's study, cultural differences figured prominently in the four association mergers that ultimately failed. By contrast, the organizations involved in the study's seven successful mergers devoted a great deal of time and care to building social capital. Typically, these mergers were preceded by a period of "precursor partnering" that helped build ties, such as cosponsoring events or sharing an operational function.
Nonprofit organizations such as associations have an advantage over their for-profit counterparts in that way, because they routinely collaborate on advocacy and joint projects, says Michael Wyland, a consultant with Sumption & Wyland. "It doesn't have to be speed dating. You can actually build a relationship first, and that can be done in a very open way and in a very nonthreatening way," he says.
According to merger experts as well as the Pietroburgo-Wernet study, successful mergers also tend to have a "change agent" or core of supporters who understand the need for the merger and are driven to see it through.
Such catalysts are usually executives or board leaders, but not always. In the case of CCCVI, Edgerton relied on the mentorship of a fellow association executive with merger experience, as well as third-party counsel from Hanson. Edgerton says the outside advice was critical in helping the negotiations stay focused on the new organization's mission.
Start With the Finish Line
One sector of the association community that has seen a clear increase in mergers in recent years is local Realtor associations. The National Association of Realtors reports 32 mergers among its roughly 1,300 local associations in the past three years. It saw just six mergers in the previous three-year period.
Jerry Matthews, an independent advisor to Realtor associations who also studies trends for NAR, says culture is one of the five potential deal-breakers in every merger he facilitates. "It's huge in that you have to overcome the apparent or real cultural differences between the two organizations," he says.
When Matthews helps local Realtor associations to merge, he pulls together not just executive staff and volunteer leaders but also major players in the local market, young Realtors with no leadership role, and old pros who recently retired.
He starts by asking the group to describe its vision for the new organization. "Before you do anything else, don't do financial statements, don't start talking about directors, don't start talking about who's going to keep their jobs," says Matthews. "Where are you going, and why are you doing it? Get that vision of that new organization nailed down."
Matthews challenges participants to focus on the needs of the combined membership, "getting them away from their own egos." The resulting vision provides the framework for solving potentially divisive issues more easily. "I'm building a new culture, and once you get the new culture and they see it and they feel it, now you can run with everything else, and a lot of questions get answered very, very quickly," he says.
During the conceptual stages of merger talks, both parties must be discreet. If confidentiality is breached too early, organizations can find themselves publicly defending a relationship that is not yet fully formed, a particular challenge in the age of social media.
Nonetheless, proactive communications are essential to avert rumors and set expectations. "If you don't have some kind of communication, everything looks like it's behind closed doors," says Wernet. "It looks like there may be private dealings, and that really undercuts the kind of confidence you need in nonprofit mergers to be successful."
While mergers often are referred to as a "marriage of equals," the journey can feel more like a divorce to stakeholders who stand to lose something, particularly if the merger is more like an acquisition with a clear "winner." Some staff will wonder: Do I get to keep my position? Who will be our CEO? Where will the organization be located? What does this mean about our mission? Why can't we continue to do things the way we always have?
Matthews recommends dedicating a subset of the merger discussion group to advising the group about how members may react to key merger elements and shaping messages accordingly, akin to the role of a marketing or public relations team. During periods of enforced silence, he suggests announcing when more information will become available. "You can only hold that for about 90 days," he says.
Advance, Then Retreat
Even if a merger goes through without a hitch, research indicates that the cultural transitions will take much longer. A 2007 study of for-profit mergers published in Harvard Business Review suggests that long-term morale issues, loss of talent, and reduced productivity can result if parties fail to adequately address the human side of a merger.
The newly minted Miami Association of Realtors offers an example of how two rival associations can successfully lay the groundwork for a smooth cultural transition. Past attempts at merging the two groups had failed, resulting in 12 years of uneasy relations leading up to 2010, when both organizations had finally had enough of working around each other, and the merger deal went through rapidly.
To many, the news came as a surprise. Teresa Kinney, RCE, CAE, former CEO of one of the merging groups who is now CEO of the new association, found herself having to quickly earn the trust and respect of a rival organization's staff. In this merger, Kinney's organization had become the predominant culture. "I think there was a lot of concern and uncertainty, above 'Am I even going to have a job,'" she says.
Kinney moved quickly to meet staff one on one and reassure them about their jobs and benefits. A week after the merger deal closed, she took the combined staff on a retreat to learn about each other's services and also to introduce employees from the other organization to her group's more interactive and entrepreneurial culture.
Kinney's new staff later told her that the retreat, in particular, was a tremendous help. "The retreat is the number-one thing that I would encourage every merged association to do with staff at the earliest possible time after the merger," she says.
Persistence Pays Off
Several years ago, after conducting a nationwide survey of local Realtor associations that had experienced a merger, Matthews came up with a list of 11 issues that the respondents said had been of critical importance to them during their merger. Matthews then went back and asked the groups to identify which of those issues, in retrospect, really "didn't matter."
The one that surprised him was the "perceived loss of culture, tradition, and the history of the organization."
"It disappeared after three years," Matthews says. "It disappeared because in almost all cases, this was a successful consolidation."
In other words, if the long-term price of a poorly handled merger of cultures is low morale, staff turnover, or loss of members, then the long-term reward for combining cultures with sensitivity may simply be that the elephant goes back to being just an elephant. "Time takes care of a lot," says Matthews. This aligns with Pietroburgo and Wernet's finding that the culture of a newly merged group can take two or three years to sort itself out.
Edgerton remembers her own epiphany. "If you can't change the culture, nothing you do strategically is going to have an effect, so we had to work to change the culture of singleness, of thinking one program has to go it alone, to one of joint cooperation and collaboration, and that a culture of going forward together is the one that will allow both to thrive," she says.
Keeping the two organizations separate "may have been cheaper, it would have been easier, but it would not have been best," Edgerton adds. "Best is to have the key players in the field working together."
Whitney Redding is a freelance writer in the Washington, DC, area. Email: firstname.lastname@example.org
Sidebar: Bowling Together
According to a 2005 case study of the U.S. Bowling Congress and an examination of 10 other association mergers by Southern Illinois University's Julie Pietroburgo, Ph.D., and St. Louis University's Stephen Wernet,Ph.D., the most successful mergers understand the role of culture in an organization—values, work style, shared meanings, and so on—and often are preceded by "precursor partnerships" to build ties, such as cosponsoring a conference. Other key elements of successful mergers include
- open and honest communication among the partners
- a leader and nucleus of like-minded individuals who can serve as the catalyst for change
- sufficient time for staff to adapt to the psychological and practical aspects of merging
- informal opportunities for the building of social capital among the people involved in the merger
- carryover of cultural remnants from the predecessor organizations, such as annual traditions.
During implementation, a well-planned transition with capable transition managers and the involvement of individuals at all levels of the organization also is critical.
Adapted from "Bowling Together: Anatomy of a Successful Association Merger" [PDF], by Julie Pietroburgo and Stephen Wernet, CUNY Working Papers Series, August 2008. Reprinted with permission.
Sidebar: The More Things Change …
When one or both organizations in a merger can't quite let go of something they associate with their identity—such as board composition, location, or the organization's name—experts use several approaches to keep the issue from becoming a divisive distraction:
- Err on the side of inclusiveness, at least for the transitional years. This builds trust while returning negotiators' attention to the larger task of building an organization that meets their shared vision.
- Replace previous practices with something entirely new. Instead of two old practices competing to continue, creating a new practice refocuses stakeholders on what they're building, not what they're losing.
- Let the next board address it. Some issues might be tabled for future decision. The unified leadership post-merger may be better able to proceed than separate groups pre-merger.
If all else fails, organizations can stop short of merging and stick to a strategic alliance.