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Only hard work wrings benefits from a merger

Rochester Business Journal
October 11, 2013

Five years ago, the Girl Scouts of Western New York created a new structure that brought together branches stretching across hundreds of miles of territory.
 
Though a merger was not an entirely new concept when the four regional branches of Girl Scouts started talks in 2008, the organizations had few blueprints to follow. Their merger was among the first in a new phase of consolidation, spurred by tighter finances after the recession and new state incentives.
 
The organization has now found that the merger has brought advantages, like cost savings from eliminating redundancies and new opportunities for girls in the programs. But the Girl Scouts of Western New York has also encountered some unforeseen challenges.
 
"It was tough going into this type of merger because there wasn't a lead organization that took control of what we were doing," says Cindy Odom, CEO of the Girl Scouts of Western New York. "It was four independent organizations coming together. When we started in July 2008, we started with nothing, no real road map, so we created everything ourselves."
 
The merger concept was developed with the help of consultants that studied nationwide trends and suggested a realignment, Odom says. In the end, it combined branches in Buffalo, Rochester, Jamestown and Niagara County into one organization.
 
The headquarters is now in Buffalo, but the organization maintains offices throughout the region, and its chief operating officer is in Rochester.
 
Mergers are growing in prominence as non-profit organizations seek ways to control costs and leverage resources to seek funding. The United Way of Greater Rochester Inc. offers help to these organizations through its Synergy Fund and in the last few years has seen 15 mergers completed.
 
Part of this process is following up with the organizations after a merger to see what assistance they might need or what problems they have encountered. This checkup often reveals issues the organization had not anticipated, says Patricia Davis, community investment director at the United Way.
 
For the Girl Scouts, the process of combining four branches into one unit was costlier than anticipated.
 
"There are a lot of groups that stress how organizations should look into mergers, but they don't see that it costs a lot of money," Odom says. "We spent well over $500,000 just in infrastructure, whether it was phone systems or IT. We save a lot in the long run, but we ended up with a $1.5 million deficit just from the merger."
 
While the Girl Scouts encountered costs they were not expecting, many other organizations have been surprised by the time commitment related to mergers, Davis says.
 
"People think it's going to be a matter of months to go through this, but depending on the complexity and the number of sources that need to approve and whether it needs state approval as well, these can take well over a year," she says.
 
The time needed to complete a merger can stretch out even further when compliance issues pop up, Davis adds. Some organizations that rely on membership have failed to realize that those members must approve board members, so they have entered the process with boards not legally entitled to approve a merger.
 
These kinds of kinks are not uncommon but take time to correct, Davis says.
 
"People can overcome the legality and framework with technical assistance," she says. "But the hardest part comes after the final document is approved, when you merge different cultures.
 
"Even in organizations like the Girl Scouts, where they all have the same values, people have a sense of ownership in their work and pride in their organization. All of a sudden they need to come together from separate organizations into a new structure, and it can be difficult."
 
Odom says the Girl Scouts of Western New York put much effort into making sure the new organization had a consistent culture without losing what made each branch unique.
 
"We've worked really hard to make sure people still have that local feel," she says.
 
There are plenty of advantages to offset the challenges, Odom says. Girls now have access to more resources, with members from Rochester able to go to camp in Randolph, Cattaraugus County. Overall, camp enrollment is up 13 percent, Odom adds.
 
But there are ongoing challenges, even years after the merger was completed. The sheer size of the organization presents some difficulties, Odom says.
 
"It can be taxing on the staff to work across such a large area," she says. "When we brought in speaker Judy Smith, for example, we had her in Buffalo one day and Rochester the next. It's more work for volunteers, but we remind them that we go all the way down to the Southern Tier, so we need to have big events in a central location."
 
Davis says the Girl Scouts of Western New York has paid attention to the effects on employees and volunteers, which is an important aspect of a successful merger.
 
"Organizations that go through this and come out stronger are the ones that really understand the pulse of their volunteers and have honest conversations of what their expectations are," she says. "This is especially true of core or founding volunteers. The closer you involve them in the process, the more they will buy in."
 
This approach is time-intensive but has important benefits as the merger is completed, Odom says.
 
"The part that is key to a successful merger is being mindful of people, monitoring staff morale and maintaining it," she says. "It's better and cheaper to maintain and retain your good employees and volunteers, even if it is more effort."

10/11/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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