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Why Don’t Many Mergers Meet Expectations?


Why Don’t Many Mergers Meet Expectations?With a headline like: Most Heath System Mergers Don’t Meet Expectations – Will Lancaster General Health and U.Penn Be Different? Business Writer, Tim Stuhldreher of Lancaster Online isn’t making any current employees or future patients of either hospital system feel warm and fuzzy as he writes about a proposed merger. The big question for me is:

Why don’t many mergers meet expectations – for hospital systems or other businesses?

Why indeed? From my perspective, the less-than-expected mergers of late are no different than the TQM Total Quality Management reengineering initiatives of the 1980s and 1990s that were so completely logical but failed more often than not; The people part of the equation was ignored. In TQM initiatives of yore, the engineering, production and quality teams did amazing jobs in identifying ways to redesign and reengineer production floors, flows, and processes. Inefficiencies were identified and targeted, and enhanced efficiencies were well calculated. Yet for many organizations set to reap the rewards of massive enhancements and cost-savings, their initiatives often stalled at the outset due to employee resistance or slowness. What?? Why would employees sabotage enhancements and cost-savings? They didn't intentionally. They simply hadn't been brought or kept up to speed on what changes were going to be made. They hadn’t been asked to share their insights as to the proposed changes and their implications. They hadn't had time to process the need for the change, understand the proposed changes, internalize the proposed changes, and get ready for the new way of working. The employees at times felt they were indirectly being told, “What you used to do wasn't good enough even though we've been telling you for years you've been doing great work here. So now, here’s how we want you to do your same job differently. Get going and show us some improvements!” Confusing isn't it?

For any re-engineering initiative, change effort, or merger, the people have to be a part of the equation first, last, and constantly. The best calculations, engineering plans, and merger prospecti aren't worth the paper they're printed on if the people expected to implement the change, work through and after the change aren't a key part of it to ensure that what was good about the old isn't lost and what’s needed in the new is in fact, really needed. Talking about the financial benefits, merging best practices from each entity, and reaching a larger market aren't enough – those are the basics. Having a shared mission of “health-care” in this instance also, isn't enough. Duh. You’re hospital systems – providing health-care IS what you do. What will the combined “you” be able to do and do so well for the good of your patients, you can't but help join forces? Because if you can’t join forces and work together, all that’s really happening is one of the parties is being bought out by the other and taken over. That’s not a merger. That’s a takeover.

So why don't many mergers meet expectations? The people involved aren't the people involved. And the full picture of why the merger is being done isn't as clear as it needs to be for everyone involved from making it happen to reaping the rewards. Read the article on this proposed merger of the two hospital systems, then come back here and tell me what you think about my question:

Why don't many mergers meet expectations – for hospital systems or other businesses?

Copyright MMXIV Liz Weber, CMC, CSP - Weber Business Services, LLC.

Liz Weber CMCLiz Weber, CMC CSP

Liz Weber coaches, consults, and trains leadership teams. She specializes in strategic and succession planning, and leadership development.

Liz is one of fewer than 100 people in the U.S. to hold both the Certified Management Consultant (CMC) and Certified Speaking Professional (CSP) designations.

Contact Liz’s office at +1.717.597.8890 for more info on how Liz can help you, or click here to have Liz’s office contact you.

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One thought on “Why Don’t Many Mergers Meet Expectations?”

  1. Jeff says:

    Great post, Liz! That bit about the difference between a merger and a takeover makes a lot of sense. It's a very thin line. The church I attended proposed a "merger" with another local body a couple of months ago. Though it was probably very positive change, the way the merger was characterized made it sound more like a "takeover" than a merger. That certainly changed my outlook on it, and, not surprisingly, it didn't fly with the members of the other church.

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Posted by Liz Weber CMC on November 11, 2014 in Leadership Development and tagged , , , ,