With mergers, it’s employees that often lose out - What you can do amid fear of layoffs
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With mergers, it’s employees that often lose out - What you can do amid fear of layoffs

With mergers, it’s employees that often lose out - What you can do amid fear of layoffs

As shareholders pat themselves on the way to the bank after a successful merger, many employees are left to ponder their future, and if it's time to clear their desk.

  • Mergers bring with them a weighty sense of uncertainty
  • Cost cutting and redundancy often lead to many employees being laid off
  • Even at times like these, affected employees can take matters in their own hands - to a certain degree

As economic conditions tighten regionally and globally, companies are looking to merge or acquire other businesses to streamline operations and thin down their costs. 

The most recent, prominent example of this in the UAE is the merger between 3 high-profile banks: Abu Dhabi Commercial Bank (ADCB), Union National Bank (UNB) and Al Hilal Bank. The merger, which created the Gulf region’s biggest lender, will result in 2,000 jobs being cut, as per a Bloomberg report.

With Bloomberg reporting that more than 20 Gulf financial institutions with total assets exceeding $1 trillion are currently in merger talks, it might be time to consider what a potential company merger could mean for you as an employee.

Mergers: A win for the shareholder, but a loss for the paper-pusher

From the desire to combine two underperforming businesses into a united one, to eliminating competition, or wanting to increase market share, mergers are undertaken for many different reasons. No matter the reasoning behind it, one party always loses out: the employees. We’re not just talking low-level management and run of the mill desk jobs – it extends beyond that. When it comes to cutting the fat, few positions are safe. From Managing Directors to HR heads, in the name of cost-cutting and redundancy, no one is safe from that famed email: “Thank you for your service, but…” 

So while shareholders might be patting themselves on the back for the recent value rise of their shares, the little (and not so little) man will be busy clearing his desk. 

Understanding why mergers lead to layoffs

In the attempt to combine two businesses, there will naturally be an overlap in some positions, which will lead to redundant roles being cut. 

“The combined company doesn't need two HR departments, or two accounting departments, and it's administration areas that are most at risk,” Robert Nixon, writer and editor, explains on Quora.com. 

“On average, roughly 30% of employees are deemed redundant after a merger or acquisition in the same industry,” the Harvard Business Review (HBR) writes.

Mergers often happen to cut the fat during strenuous economy conditions, which means that the axe is much less discriminant in who gets to go. In an attempt to cut costs and stay competitive, very few roles are safe. 

If there is a way to cut costs, merging companies will do it, even if it means letting go of their most loyal and historied employees. 

Finding opportunity amidst job cuts 

Discovering that your company is merging with another can be quite the tough pill to swallow. The uncertainty of what’s to come next can fray the strongest of nerves, but employees need to realize that an action plan needs to put in place. 

First and foremost, be open to change. Do not appear as the pessimist in your team, challenging every new decision and culture change in the company. Be open to change, and encourage productive discussion when possible. 

“If the CEO or another senior executive is making an integration-related road show stop at your location, raise your hand after the speech and ask how to participate,” HBR advises. “Better yet, walk right up to the person as the meeting adjourns. No matter whom you approach, sell them on how you can contribute.” 

HBR continues: “Don’t be shy about promoting yourself or your capabilities—there is a lot going on for all involved, and you may need to turn up the volume to get noticed. Even if you don’t see a future for yourself in the post-transition organization, you can make a case that contributing to the integration process will be more valuable to the company than sitting around like a lame duck.”

When the axe drops, some employees are luckier than others. Those holding critical positions, or those with high-value, operations-relevant skills and experience can often rest easy. 

If you’re not of those more fortunate, consider this: “In some cases, the acquiring company will sit down with each employee and discuss current work responsibilities,” Stephanie Faris writes for Chron.com. “This is the chance for employees to stress any specialized skills that set them apart from others in their field.”

"There are types of employees who are required after the merger or acquisition takes place for a specified period of time who are basically involved in transition or merging a product or service within the new organization," David Reimer, Vice President, North American Delivery, DBM, a career management firm providing services to private and public companies, said. This extended time usually helps them prove their worth and perhaps get a fulltime position within the new organization.

While you might be lucky to realize that your employment will not be terminated nor changed, it might be that your job benefits will. There is not much you can do in this case, but weather the brunt of any benefit cuts you might incur. 

Sometimes, if you're lucky, mergers lead to the creation of some new jobs. You can cement a future with the combined company, at least in the short to mid term, if you successfully transition to these often crucial new positions. 

"As a best practice, most organizations give terminating employees preferential access to internal openings across the business entity over a finite period of time, whether those opportunities are in the legacy organization or the new organization," Reimer said.

When it’s time to call it quits

Sometimes, with the impending changes to company culture and operations, things might simply not work out for you anymore. You might not like the new direction of the company, or disagree on critical points with your new supervisor or manager. At times like this, you might realize that the only way this situation turns around is, in fact, out the door.  

Chron.com explains why a business’s best employees may consider leaving:

-Poor communication

-Loss of treasured team members

-Loyalty to terminated supervisors

-Uncertainty about status in the new organization

-Resistance to change

Professional life post a merger can often be an unpleasant thing. Stick by your strengths, be flexible and embrace the coming change. If you don’t see things turning around for the better, then it’s time to cut your losses and look for greener pastures. 

Author
Mark Anthony Karam

Mark Anthony Karam was an Editor at AMEinfo between 2018-2021. You can get in touch with him on LinkedIn here: linkedin.com/in/m-a-karam/

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