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Things to consider in the run-up to a formal merger

Governance and leadership

The period leading up to a merger can be a confusing time so it is important that clear roles are agreed both to ensure that the process goes smoothly and to provide some stability during the transition. The composition of the board and the appointment of a chief executive for the merged organisation can be a hurdle to the process moving forward.

What interim governance arrangements do you need? The interim board could comprise all the trustees of the merging organisations or some of them. Giving thought to its composition may help you decide what the merged board should look like further down the line.

What criteria will you use to form the new board? Some trustees may see merger as a natural time to leave. This could also be a good time to refresh the board and ensure it is a manageable size, reflects its diverse stakeholder groups and includes a mix of skills. A trustee selection process is useful to help produce a shortlist of candidates.

Trustee job description and person specification

The appointment of a chief executive can be most difficult when trustees aim to appoint from the existing postholders. People associated with a particular organisation may have strong loyalty to its existing chief executive and the institutional knowledge they would bring with them into their new role if appointed. Appointing the chief executive early reduces uncertainty and gives focus to the leadership of the merged organisation.

Brand and identity

Organisations are often very proud of their brand, although it can be difficult to measure the value that it brings to their work. Organisational identity can be more of an issue where one organisation is absorbed into another, but if brand is considered a valuable asset, it can be preserved within a merged organisation. As an independent organisation, Working For A Charity built up a recognised brand which continues now that the organisation is part of NCVO. Volunteering England, a merger of three organisations, found it helpful to signal the fresh start with a new name and refer to 'creating a new organisation' rather than merging.

Rebranding will mean additional expenditure for new stationery etc and may involve consultancy costs. You may also consider advertising to explain and promote the new organisation.

Culture

    "Out of those charities that have merged, the most common barrier was considered to be culture clash, experienced in the case of 52% of respondents." (Mergers and Collaborations charities survey 2004, conducted by Nabarro Nathanson and PricewaterhouseCoopers in association with Charity Finance)

Although it is hard to quantify, organisational culture is important to voluntary and community organisations and should be factored into your decision-making. Mergers have faltered over differences in culture and cultural incompatibility can mean that assimilation will be difficult if a merger goes ahead. Merging organisations facing this challenge need to ask themselves whether cultural difference is a reason not to merge. Perhaps organisational culture needs to change because it is currently causing the organisation to fail to meet its aims.

However, incompatible culture is sometimes also used as a smokescreen to disguise issues such as:

  • the chairs or chief executives of the merging organisations not getting on
  • disagreement over the chief executive of the merged organisation
  • governance differences between organisations, such as a strongly democratic membership organisation and an organisation where trustees select themselves
  • different decision-making cultures, for example a flat structured organisation and one that is more hierarchical
  • different attitudes to service delivery 

In assessing organisational culture, consider:

  • attitude to risk
  • flexibility and tolerance of change
  • decision making approach
  • level of participation by staff and beneficiaries
  • management style
  • involvement of trustees
  • remuneration and reward systems 

Team working pre-merger

"We found social events as important as meetings so that people could find out what made each other tick!" (Dorit Braun, Chief Executive, Parentline Plus)

Encouraging staff to start working together while still in separate organisations can help integration post-merger. Working as the team you will become can help you identify and address areas of tension and begin to create the merged organisation.

Trustees and staff should work together, as well as in staff-only and trustee-only groups, to work out a single vision, mission and strategic aims. Looking at these areas together is not only a step towards a new business plan, but could help produce a sense of shared ownership in the future of the new organisation.

Page last edited Mar 15, 2016

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