Healthcare Quarterly

Healthcare Quarterly 3(1) September 1999 : 35-39.doi:10.12927/hcq..16959
Commentary

From Principles to Practice: The Management of Post-Merger Integration

Dianne Macfarlane and Dale Butterill

Abstract

It is practically a cliché to state that change in organizations is a way of life (Meyer et al. 1998), one with which healthcare organizations in Canada are very familiar. In the last decade, all provinces have developed plans and processes to reform their healthcare systems in an attempt to increase efficiency and effectiveness. One of the main mechanisms in these reforms exercises has been the restructuring of acute and other hospital - delivered healthcare services through the merger of two or more organizations.

In March 1997, Ontario's Health Services Restructuring Commission (HSRC) directed that the governance and management of Toronto's four largest addiction and mental health organizations be merged: the Addiction Research Foundation; the Clarke Institute of Psychiatry; the Donwood Institute; and the Queen Street Mental Health Centre. A steering committee was formed to undertake the implementation ofthe merger, and 11 months later, in March of 1998, their work was completed (See Garfinkel et al. 1999, for a detailed review of this process) and the new Centre for Addiction and Mental Health was launched.

The purpose of this article is to show how this newly merged organization incorporated accepted principles into a custom-designed approach to post-merger integration. The Centre for Addiction and Mental Health began by reviewing the relevant literature, interviewing senior managers in other merged Canadian healthcare organizations and identifying the salient principles that appear most closely related to successful mergers. These were used to develop the Centre's approach to planning and managing the post-merger integration in its first pivotal year. Recognizing that one year's experience is likely not a fully adequate base from which to draw conclusions about the success of the post-merger strategies, the discussion here is largely descriptive. Yet despite this limitation, we are able to point to encouraging signs that indicate the usefulness of the Centre's approach.

A REVIEW OF WHAT'S BEEN SAID AND DONE
As Ivancevich et al. (1987) note, the "closing of a merger marks the beginning of the transition stage." And transitions are difficult for organizations and the individuals in them because they "combine maximum uncertainty with minimum clarity" (McCann and Gilkey 1988). The first premise, at times articulated and at times not, upon which much of this literature is built is that the transition that is created by a change in an organization can and should be managed quite vigorously. There is also agreement that major transitions tend to be under- rather than overmanaged.

A second fundamental premise in the literature links an organization's success in effecting desired change with the successful transition of individuals within the organization. Bridges (1988, 1991) describes change as the "ends" or the road map showing where the organization wants to go, while transition is the process of leaving behind the old and ultimately identifying with the new organization. Capable transition management requires that employee reactions, sometimes intense and always varied, be seen as legitimate reflections ofwhete the individuals are in the process.

So, assuming that organizational change can and should be managed, and that having a conceptual framework for understanding the effect of such a change on an organization is helpful, how should organizations prepare for and implement change? What emerges are six underlying principles:

  1. The development of a clear, concise and accessible vision of the positive benefits the change is expected to achieve and the underlying values.
  2. The involvement of visible, strong, cohesive executive leadership throughout the post-merger integration process.
  3. The allocation of designated resources to support and coordinate the transition activities.
  4. Ongoing coinmunication that is varied, factual, open, honest, timely and preferably face to face.
  5. Collaboration with and involvement of as many of those affected by the change as early as possible.
  6. Attention to organizational culture from the outset, making every effort as soon as possible to articulate the attributes of the "desired" one, while respecting all the cultures that are coming together.

Having identified these six fundamental principles, the next task was to apply them to the designing of an appropriate process and structure for managing the Centre's post-merger integration.

APPLYING THE PRINCIPLES

1. VISION AND VALUES
To begin integration planning a context was necessary. It was very helpful that the pre-merger steering committee had spent considerable time early in its discussions developing statements that articulated the vision for the new organization and the values it would espouse. Widely consulted upon, both internally and externally, these statements emphasized important themes such as partnerships; collaboration; client-patient centred care; "best practices"; a comprehensive continuum of services including preventionlpromotion and advocacy; and accountability.

The question immediately facing the Centre was whether the steering committee's vision, values and commitment to partnership statements provided enough direction or required further elaboration through comprehensive strategic planning. Due to other priorities, the board and senior management decided to delay strategic planning for six months and to use the steering committee's guiding statements in the interim. Having followed that timetable, in April 1999 the board endorsed the Centre's first strategic plan, one that was highly consistent with the original vision and values. In retrospect, there is no actual evidence to suggest that deferring its start was detrimental to the first integration planning or operations.

One other decision taken by senior management just prior to the completion of the merger also helped to focus integration planning- the decision to organize the Centre on the basis of programs rather than disciplines. Thirteen addiction and mental health clinical programs of the Centre were identified. The context for the latter included the HSRC's directives regarding target populations and services, the expertise of the four founding organizations and the affiliation with the University ofToronto. The non-clinical program priorities were conveyed by the other corporate program ~ortfolios - research and community health and education.

2. EXECUTIVE LEADERSHIP
It is tempting when designing the corporate structure for a newly merged organization to create a single senior management position with responsibility for the transition or to retain an external consultant to assist in managing the process. Another tendency is to create a structure parallel to that of the senior management structure. These options were considered and rejected, and it was decided to embed the accountability for leading the planning and implementation of the postmerger integration in the Senior Management Group (SMG).

Terms of reference for this aspect of its role and responsibilities were developed, and included: developing a comprehensive set of transition planning principles and assumptions; convening a number of task forces and integration teams to assist in the planning and approving of their work plans and final reports; identifying an appropriate conceptual framework for the transition; ensuring appropriate internal and external communications; and developing macro-level indicators to monitor and evaluate the implementation of the post-merger integration. The SMG met weekly during the year, and transition planning was a regular agenda item for discussion and decision-making.

To connect the SMG more closely with the transition planning process, several individual senior managers cochaired six major task forces, whose work focused on pivotal Centre-wide issues.

3. DESIGNATED TRANSITION SUPPORTS
Having decided to have the SMG function as the steering committee for the post-merger transition, it was cleat that the team would require some support. A half-time external consultant was retained as a Special Advisor, Transition Planning, and a full-timeTransition Planning Coordinator was recruited through an internal competition. Along with a part-time administrative assistant, together they constituted the Transition Support Office (TSO) dul.ing the Centre's first year after the merger. The TSO reported to the Office of the President and functioned in a number of ways to support the senior management team. Specifically, it provided: strategic advice, facilitation and support in the design and implementation of a "best practices" transition process and structure; coordination of all transition and other Centre planning processes (e.g., strategic and program); operational support to the task forces and consulting support to integration teams; and preparation of regular progress reports on the transition for the board, staff and external stakeholders.

As the Centre neared the end of its first year of operation, the work of the task forces, integration teams and strategic planning was almost completed and most middle-management positions were filled. It became clear that the organization was coming to the natural end of the first phase of the post-merger integration, a year focused primarily on planning in a detailed way the implementation of the integration. In April 1999, therefore, the TSO was closed and a new position of Strategic Initiatives Coordinator was created and filled to ensure continuing support for the monitoring of the implementation of the many plans developed in Year One.

The largest single remaining planning process yet to be completed is that related to the development of the sites to support the organization's strategic plan. It is important to emphasize that the TSO did what it was intended to do - it supported a myriad of transition-related activities and processes, but did not lead or manage the transition. That was the SMG's role, and this clear division of responsibility and labour was an important factor in the success of the first year.

4. COMMUNICATIONS
Shortly after the merger took place, staff anxiety increased and the need for more and varied communication became apparent even though a number of mechanisms were in place, including a weekly internal newsletter. An anonymous telephone transition hot line was established with a commitment to respond to queries in the newsletter (helpful for two months or so, hut of little use after that). What appeared to be most needed were more opportunities for face-to-face, twoway communication. The Centre took a number of steps: regular breakfasts with the CEO and COO were instituted for small groups of staff, and the issues raised in these discussions were addressed in the newsletter; regular forums for middle managers were organized; all-staff meetings at each of the four sites were held; and senior managers were provided with overhead materials to inform their staffabout important new developments.

The effectiveness of these communication mechanisms is hard to judge, although it is likely that the demand for information and discussion during this kind of transition is almost impossible to meet. In retrospect, the Centre tried hard, but it may not have been better than "good enough." Although it was the Centre's intention to undertake an employee survey early in the fall of 1998, circumstances at that time dictated its postponement until 16 months after the merger. The survey selected encompassed a range of issues, including opinions about how staffviewed the Centre's efforts to keep them informed during the transition. The data would have been helpful in providing a baseline for monitoring. the transition over time.

All other things being equal, it is recommended that relatively early on in the post-merger transition, some method be instituted to capture systematically and dearly staffperceptions of communication efforts and to obtain suggestions for improvement.

5. COLLABORATION
During any merger, voluntary or imposed, it is important to provide as much opportunity as possible for those affected by the change to be involved in planning its implementation. Therefore, collaboration and involvement of staff in the design and structure of integration processes became a priority. To this end, six task forces with broad representation were struck to address six major cross-organizational issues: communications, culture, human resources, program management imdementation, operationallclinical performance indicators . and transition support strategies, each with a mandate to develop recommendations for the SMG. A general invitation to participate was extended to staff, and by the end of the process almost 200 staff had participated.

The TSO supported and coordinated the process hy:developing Terms of Reference, and transition planning principles; assisting with the composition of the task forces; and working closely with the co-chairs (one from senior management and one from middle management). Orientations were provided to the members of the task forces when the work began in May 1998. Each task force developed a work plan with timelines, convened a number of action groups to assist, used a variety of approaches to facilitate the building of trust and cohesion in the team and met a variety of challenges along the way. On several occasions the TSO brought the co-chairs together to ensure a coordinated approach to the overlapping issues.

The task forces presented their final reports to the SMG in January 1999, at which time all task force members were invited to attend a recognition lunch and asked ro participate in an evaluation of the process and structure. On balance, the participants valued the experience, and many became in their own ways "champions of change" within the Centre.

Their commitment is reflected in the decision hv four of the task forces to reconstitute them for the next phase - monitoring and evaluating the implementation of their recommendations.

The second structural component of the transition was a number of integration teams to develop specific plans for consolidating important Centre functions: the four addiction programs, research, human resources, lab services, pharmacy, volunteers, educational training, finance, library services, purchasing and materials management, creative and production services. Generic terms of reference were developed for these teams, and the relevant senior managers convened and led these processes. The breadth of membership and approach to the task varied considerably across the integration teams. While most teams completed their work by the target date, the results were uneven. In retrospect, these teams would have benefited from more direct support from the TSO.

Another process began in the summer of 1998 and provided an excellent team-building opportunity that fit quite nicely with the Centre's approach to integration - that is, preparation for the first Canadian College of Heath Services Accreditation survey in March 1999. At the time it seemed an almost impossible task, yet in retrospect it is clear that the "accreditation challenge" served the integration process well and contributed to morale when excellent results were received.

In summary, any process and structure that provides an appropriately supported opportunity for a cross-section of employees to work together as a new team on common issues is beneficial to the integration enterprise.

6. CULTURE
The four founding partners brought with them quite different organizational cultures. Not only were there important differences benveen the cultures of the addictions and mental health organizations, there were notable differences benveen the two addiction and between the two mental health organizations. Paying heed to the literature on the role of the culture variable in a successful merger, the Culture Task Force was convened to articulate the attributes of the new organization's desired work culture. Implicit in the Centre's approach to this task were three notions: each of the four cultures was deserving of respect; each of the cultures had positive aspects that could enhance the performance of the organization; and the culture of the new organization should combine existing cultures rather than have one or two dominate the others. Buono and Bowdirch (1989: 143) describe this type of cultural merger outcome as "cultural blending." It was difficult to know how best to do this work on culture.

The review of the literature and other merged organizations' experience uncovered a number of ready-made tools to facilitate the process. After considerable discussion, it was decided that the Culture Task Force would undertake its own process, using its membership as a microcosm of
the Centre to reach a consensus on the attributes of the Centre's desired culture. To do this, short histories of each of the four founding partners were developed and discussed; members' perceptions of their own and the three other organizations' cultures were systematically shared; several critical cultural attributes were identified (e.g., respect for diversity, participatory management style, collaboration and partnership) and agreed on over the course of several meetings and a one-day facilitated retreat; and, finally, these were articulated in the form of a Statement of Desired Culture.

The results were very satisfying for the task force members, and although it is premature to assess, the Centre is optimistic that the attention paid to culture, although not likely to eliminate all "culture dashes" and "welthey" tensions, will provide the basis for the emergence of a healthy and productive work culture over the next several years.

CONCLUSIONS
Comprehensive data for measuring the success of the first year post-merger integration are not at hand. The Centre's Balanced Scorecard - the first of its kind in the addiction and mental health field - indudes a number of indicators specific to the transition that are being monitored closely, but the data are at this point preliminary. And, as noted earlier, the results of the first employee survey are not yet known. However, there are signs that the Centre's approach to planning and managing the first phase of the post-merger transition was effective: a comprehensive strategic plan was completed and endorsed; the first accreditation survey report commented favourably on the post-merger progress made; an ambitious capital campaign was well underway; and funding for research increased by 20%. In addition, as a result of informal, spontaneous activity between and across programs and services, numerous smaller integration successes have been produced and documented.

Without more outcome data and "hindsight," it is risky to draw conclusions about the "success" of the post-merger integration. However, some observations about the process and structure of such endeavours can be offered: It is important to custom-design the process and structure, as there is no "one-size-fits-all" formula or approach. Firmly root the custom-design in clear principles - the six identified in this article appear highly relevant. Post-merger integration is more complex and challenging than pre-merger negotiations.

Perfection is not possible, as successful transitions are more "art than science." Successful organizational integration takes months and years, not days and weeks. A merger is a unique event in the life cycle of an organization and although it is stressful for the organization and the individuals in it, it also provides a profound and exciting opportunity for improvement. As the Centre entered its second year, the focus changed from planning the post-merger integration to implementing the many plans completed in the first year and moving closer to achieving its vision. There is a consensus that change initiatives frequently falter in this phase as the focus, energy and commitment required to manage the changeltransition in the short term fails to be sustained in the managing of organizational performance in the long term.

Moreover, that assumes that an organization will have the luxury of managing just one transition in the short term, not a likely reality for most healthcare organizations in the foreseeable future. As Jick (1991) notes:

"Implementation has less to do with implementing commandments and more to do with responding to the various voices within the organization, to the requirements of a particular situation and to the reality that change may never be a discrete phenomenon or a closed book."

Thus, a merger, like other kinds of major change, should be used as a vehicle for enhancing the organization's capacity to recognize and thrive on the continuing necessity of change. The practical principles applied in designing the first phase of its post-merger integration are consistent with that goal and have served well in achieving what many believe is a promising beginning for the Centre for Addiction and Mental Health.

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