Integrate back-of-house functions
Back-of-house functions include any organisational activity, service or system that does not directly support service-users (e.g. HR, finance, payroll, ICT, marketing). When planning for a merger, the integration team must make decisions about which back of house-of-house functions should be combined, which should be maintained separately, and which should be outsourced. While checklists are unlikely to provide an exhaustive list of function requiring change, they are a useful starting point. Figure 22 lists common back-of-house function you should consider during a merger arranged in priority order (left to right).
As with physical assets, the driving principle for decisions about whether or not to integrate is ‘what are the functional needs of the organisation post-merger’? In the long run, the goal is complete integration of activities, services and systems, but you should not do everything at once. Focus on those functions which are business critical first (e.g. Finance, HR and training). The integration team should develop recommendations for which functions to integrate, and in what sequence. Consult closely with members from each organisation with relevant functional expertise. The Board, particularly if it is a skills-based board, should play an active role.
Enthusiasm for the merger will generate momentum to integrate back-of-house functions. However, it is advisable to start small with the aim of increasing trust and rapport. This is likely to shore up commitment from management who will require more detailed business cases to demonstrate to management the potential benefits of larger scale integration projects. Areas to cover include the financial savings from increased cost efficiency and improved service delivery that would be attained with economies of scale. The case is more compelling if you can demonstrate how integrating functions will align with the objectives of the merger and continual improvement in services. Figure 24 describes a process you can use to take a back-of-house integration project from concept to implementation.
After the high volume of work a merger generates, the merged organisation may find it has overlapping or redundant positions. Pooling resources and streamlining processes during systems integration can result in a loss of some back-of-house staff. This is not uncommon in not-for-profit mergers. Assess the skills and competencies needed for the staff mix of the merged organisation and the skills and competencies of existing staff.
Please feel free to leave questions or comments on this part of the merger toolkit.