In an economy that places a premium on speed, classic corporate thinking often dictates that the quickest way to add products, channels or customers is to acquire rather than to build internally. Not surprisingly, worldwide Mergers, Acquisitions and Downsizings (“MADness”) are at an all time high. In the past five years, it is estimated that at least 9,500 deals were announced in the United States. Deal volume during the historic merger and acquisition wave of the years 1995 through 2000 totaled more than $12 trillion (Colvin and Selden, 2003, p. 5). However, only 20 to 25 percent of mergers and acquisitions turn out to be winners. Another 30 to 40 percent clearly fail, and the rest fall somewhere in between (Krattenmaker, 1999, p. 3). The majority of business combinations never produce the anticipated value, with increasing numbers ending in the business equivalent of divorce, break‐up or spin‐off. In fact, most organizations that downsize fail to realize long‐term cost savings or efficiencies beyond the cuts, necessitating multiple waves of layoffs and restructuring (Marks, 2003, p. 11).
The world's biggest, most successful companies, advised by highly educated Wall Street investment bankers, are leaders of today's failed mergers, acquisitions and downsizings. A recent example is the acquisition of Sterling Drugs by Eastman Kodak. This deal was done because some analysts at Kodak headquarters figured, “We use chemicals in processing film, and they use chemicals in making drugs–hey, that's synergy!” (Marks, 2003, p. 57). There proved to be no synergy between the firms, and Kodak eventually divested its interest in Sterling, resulting in a financial loss. In light of such dismal performance by the “experts”, can the success rate be improved? Is this process an opportunity for those in leadership to challenge their current thought process? Faulty strategy and economic forces are regularly blamed for the dismal performance, but if you trace the causes back to their roots, people issues often figure prominently in the failure of reorganization (Donahue, 2001, p. 3). The need for senior managers to challenge their own ways of thinking about these transactions is at the center of Mitchell Marks' book.
By challenging the common beliefs of executives in the business community, Marks builds a strong case for the need to pay attention to more than financial statements while the MADness is occurring. “Organizations are nothing but people, so to achieve organizational objectives, executives need to acknowledge human realities” (Marks, 2003, p. 57). When it comes to putting two companies, divisions or business units together, is it as easy as snapping Lego® pieces together? MADness is not child's play, and should take a much broader approach, allowing for, what Marks calls, “workplace recovery” to take place.
Workplace recovery is about “helping employees let go of the unintentional pain and consequences they experience during and after transitions while simultaneously helping organizations use transitions as opportunities to build new and better workplaces” (Marks, 2003, p. 56). For employees to move toward this recovery, they need two levels of intervention: organizational transition and individual adaptation (Marks, 2003, p. 57).
For years corporations have moved through organization MADness with more thought given to the financial result of the changes than the effect it will have on their workforce. The people‐based statistics, i.e. retention rates, forced and voluntary severance packages and job eliminations, are often camouflaged on the corporate balance sheet as “one‐time write‐offs”. Should organizations be concerned about the need to help those in the organization transition through MADness? As the author states, “Organizations need people's hearts and minds, not just their bones and muscles, to pull away from the pack and capitalize on emerging business opportunities” (Marks, 2003, p. 24). Dealing with the processual effects of MADness – or “transition” – is far more critical than change management. According to William Bridges, “Transition is the way that we all come to terms with change” (Bridges, 2001, p. 2). Without transition, change is mechanical, superficial, empty, and does not allow individuals to behave in an authentic manner (Bridges, 2001, p. 3). Like Bridges, Marks differentiates change from transition: “Change is a path to a known state: something discrete, with orderly, incremental and continuous steps” (Marks, 2003, p. 13). On the other hand, transition “is a path to an unknown state, something discontinuous that involves simultaneous and interactive changes and the selection of ‘breakthrough’ ways of thinking, organizing and doing business” (Marks, 2003, p. 13).
Workplace recovery is about “helping employees let go of the unintentional pain and consequences they experience during and after transitions while simultaneously helping organizations use transitions as opportunities to build new and better workplaces” (Marks, 2003, p. 57).
Surprisingly, however, Marks does not address power dynamics. An organization is composed of executives (tops), who have an overall responsibility for the system; a group of managers (middles); and several worker groups (bottoms), whose members work on various project assigned by tops, middles and customers (Oshry, 1995, p. 16). The dynamic interplay of these relationships creates a power struggle during normal times, which is amplified during times of MADness. What impact do these power dynamic have on MADness? Each of these groups has different needs. Tops live in a world of complexity, bottoms live in a world of invisibility, middles live in a world of tearing, and customers live in a world of neglect (Oshry, 1995, p. 17). During times of MADness, these dynamics become more visible and create stress at each level. I recall, during a time of post‐merger, meeting with executives and being instructed to create a list of all disgruntled employees and submit it to the Human Resource department so it could begin recruiting to replace the discontented employees. Because the sourcing and recruitment processes take time, the middles were instructed to keep the situation under control for the short term. The tops had no appetite to deal with the complexity of either the “change” or the “transition”.
As I write, doctors at the Children's Hospital at Montefiore Medical Center in New York are working to separate conjoined twins Carl and Clarence Aguirre (The New York Times). The procedure being used is part of a rare, gradual approach to separating joined twins using a series of operations rather than one multiple‐day procedure. Currently the doctors are in the fourth and final procedure in a series that has taken place over the last 11 months. Given the slight odds that both babies will survive this procedure, doctors have taken this new approach realizing, if successful, it will bring a major breakthrough in medical science. These babies are being separated so that they can live separately; their survival is at stake. The doctors are aware of the trauma of such a change and have intentionally decided to take a more gradual approach to improve the odds of their success. This story illustrates important lessons for corporate America about its current approach to MADness. Successful mergers, acquisitions and downsizings take time. When two entities come together, the union cannot be blended using a microwave, but rather the slow boil of a crock‐pot is needed. The additional time is needed to allow for true workplace recovery and to reduce the odds of losing good employees.
