Let's Not Call Them Mergers

Most mergers really are not mergers at all. With few exceptions, the merging never actually occurs, and the event takes on the reality of the acquisition or closing that it really is, with disruption and unpleasantness for all parties involved. I received my education on mergers in third grade, when my elementary school 'merged' with another, and I ended up walking an extra mile to get to school each day.

The staffing software industry has seen two mergers recently. The most recent union involves UK-based Bond and US-based eEmpact, which has yet to get much of an airing, but the parties involved are claiming that they are 'joining forces' and creating a 'global powerhouse that no one will be able to compete with'.

A previous merger in the staffing industry involving PeopleSoft and Oracle similarly promised 'fusion' and 'synergy', but the result has fallen short. Thousands of employees that were busy supporting clients and executing on promises were let go. Clients requiring business critical improvements in their software were left hanging.

Oracle claims that it is providing a sound upgrade path for their affected clients, but software platforms do not mesh easily. Soon the cozy pillow talk of mutual benefits subsides, and the nasty task of porting a client from one environment to another begins. This is a very tough task since even the best IT people tend to have trouble handling two distinct platforms at the same time.

Platform problems extend beyond technology and can affect any merger. Repeatedly, here in the states, I have seen otherwise well-managed commercial staffing companies falter badly after acquiring a per-diem nursing company through acquisition. Healthcare staffing differs vastly in its order handling process - both client and nurse require constant communication for cancellations and confirmations. The platform complications extend to the back office where bill and pay rate calculations change in a heart beat based on the shift and department.

These incompatibilities do not always surface at the beginning of the merger. In fact, things may begin with a honeymoon period during which top management declares that the acquired company will continue to run as a separate business entity. After three months or so, the rumbling begins to get loud, and after six months, a complete management change and exodus of staff takes place.

The tragedy may unfold over a longer period as it did with HP's acquisition of Compaq, or as it did with the acquisition of Manpower by UK-based Blue Arrow in 1987, which actually resulted in the spin-out of the Manpower entity four years later. The reality is that the merging never takes place, so let's not call them mergers.

Gregg Dourgarian, CEO