Could merger problems be eased by matchmaking?

Our coverage of RNIB and Guide Dogs failing to find a common
path this week and last leads back to an age-old question: why aren’t there
more mergers in the charity sector?

In our analysis on the subject, Richard Gutch and Craig
Dearden-Phillips both said that basically, for mergers to go ahead, charities
need two boards with a common vision, and a chief executive who’s not too
fussed if they leave their job, and if you haven’t got this, forget it.

There’s more on the same in an excellent blog, two years old but hardly out of date, by Karl Wilding of
the NCVO. He picks out five problems that prevent mergers: cost, cultural
mismatch, fundraising worries, distraction from mission and “most damningly, a
lack of share options to cushion the blow to departing members of the senior
management team”.

In other words, he says, a merger offers a high risk to a
chief executive and his senior management team, but a low reward.

Wilding quotes an article in the New York Times saying the same thing: in the private sector, if you negotiate a merger, you
get a bunch of share options and a plush consultancy job. In the charity
sector, you get a bunch of flowers and a P45.

There’s a clear pattern here. People respond to incentives,
and the incentives are strong for charity chief executives to put the kibosh on
mergers at the earliest possible level.

Most charity chief executives are relatively selfless and
mission-driven, compared to the leaders of for-profit organisations, but
expecting someone to fall on their sword for the good of their
organisation is surely starry-eyed naivety of an outstanding level.

So that’s the problem. What’s the solution?

You can’t pay them to go. Charity supporters and
beneficiaries hate hearing about that, and in any case, that also presents the
wrong incentive. But one suggestion I’ve heard which may work is a matchmaking
service for staff involved in mergers. Make sure that there’s someone out there
whose job is to find any departing staff a better job, and you’re more likely
to get their support for a merger.