Making A Merger Full Of Heart Needs A Steady Hand And Plenty Of Brains

The Age

Tuesday September 2, 2008

Garry Jennings

The demands of "big science" will increase the demand for mergers, writes Garry Jennings.

WHAT makes a merger successful? The potential for any merger to go sour is great. They are risky ventures involving a lot of money, time and expertise. At every step, previous efforts could come undone, with success sometimes resting on seeming technicalities or misunderstandings.

This, as we have recently discovered, is as true for charities and other not-for-profit organisations as it is for financial institutions and other corporate entities. But its counterpoint is just as true: successful completion of a merger carries returns as substantial in the

not-for-profit sector as in the corporate arena, and it is this little-heard message we are keen to spread.

At its best, a merger brings together two organisations to create a critical mass of staff and assets greater and with more potential than before.

A higher public profile, greater capacity to pursue core business, and the efficiency of creating one entity from two are among the benefits.

The Baker Heart Research Institute and the International Diabetes Institute merged on July 1, creating the Baker IDI Heart and Diabetes Institute with an annual turnover of more than $72million and a workforce of more than 600 across three campuses.

The merger has made us one of the largest medical research institutes in Australia. There are few successful models of such large-scale mergers between medical research institutes.

We will see more, though, as the financial and political imperatives emerging under the Rudd Government and the demands of "big science" will make such moves necessary, and therefore more commonplace, over the next decade.

With new signage, stationery, a new organisational structure and staff now embracing the new entity, the efforts of the past 16 months are apparent to an external audience. While we have some work to do, in terms of greater public recognition of our new name and raising additional funds for our new facilities, the aim - creation of a new organisation more capable and valuable than the sum of its parts - is complete.

And, yes, all in 16 months and with sound and prompt use of the federal and state funding that enabled the move in the first place.

There is no ready road map for our journey of the past 16months - which began in earnest when the Federal Government approved our submission for merger funding in the 2007 budget.

Here is a checklist, by no means exhaustive, of the keys to our successful operation:

Pick your partner carefully. Cardiovascular disease is the most serious complication of the current diabetes and obesity epidemic, and the International Diabetes Institute complemented the Baker beautifully in this way.

Clearly identify your audience: we specified the internal and external stakeholders with whom we would be working through a very detailed process, a process where the imperatives at all times were transparency and expediency. Internally this involved our scientific community; members of our governance committees, and our senior management team. We took an unconventional route by exhaustive consultation in the first instance with our scientists. It is more common to begin with governance and then implement board-level decisions through management.

Make lists: The creation of checklists against checklists can sound tedious but are vital. There are many legal, statutory and other duties to be considered when creating a new organisation. Leaving something off your list can derail months of effort.

Identify your CEO, your board and its chair early and stick with them. There are inevitable sensitivities and anxieties that emerge among staff through the process of change. Who is to become the head of the new organisation is not an easy early decision but it is a critical one. Leadership is key and that message must not waiver.

Write your narrative. The rationale behind your merger is a story that must be written early, simply and clearly. It will develop and change to some extent but everyone from the car park attendant to the most senior scientists must be telling the same story and the message must be consistent.

Take your staff with you. Not everyone can have input into the key decisions, but it is crucial that staff at every level be informed of developments in the merger and as much as possible of the reasons behind changes.

Keep looking forward. Continue to set goals into the future well past the point of merger.

There are legal, constitutional, branding and staffing considerations at every step of this process. Legalities and other technicalities are very important but perhaps the greatest management lesson we have learned has to do with organisational culture. The importance of a good culture is discussed often in a merger and it has been our experience that culture changes slowly while mergers should happen quickly. We have tried to make a virtue of the differences in culture of the two groups we brought together - with an emphasis on picking the best of both and creating an entity that is distinctively new and fresh but incorporates the winning ingredients of its predecessors.

Professor Garry Jennings is director and CEO of the Baker IDI Heart and Diabetes Institute.

© 2008 The Age

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