Studies reveal that 50 to 70% of M&A
transactions ultimately fail to realize expected synergies and, in
fact, many actually dilute shareholder value. One of the causes of
M&A failures is that companies often neglect to adequately
consider the psychological impact of M&A on their
Will I be laid off? Will I be moved to a different position?
Will I get along with my new colleagues? Like downsizing and other
types of organizational change, M&A creates considerable
uncertainty and has widespread psychological effects on employees
in every level. A paper by People & Culture identifies the
following potential psychological issues and sources of stress for
employees face uncertainty about job prospects and impact on
– employees lose their old organizational identity
– employees must adjust to a new culture and form new
– employees face uncertainty about where they stand in the
– employees must adjust to changes in their jobs as certain
functions are changed to eliminate redundancies
Justice – employees lose trust if the company is
unfair or not transparent about who they promote or layoff
In fact, a study by researchers at the University of
Calgary reveals that there is a statistically significant
correlation between M&A activity and mental disorders.
Employees exposed to M&A activity were 2.8 times more likely to
have had a generalized anxiety disorder over the past year compared
to those who were not exposed to M&A activity. The researchers
stress that generalized anxiety disorder can eventually evolve into
Clearly, neglecting these issues can have severe consequences on
productivity and ultimately reduce shareholder value. Management
must be proactive in addressing these issues at all times during an
M&A transaction and not simply brush it off as a post-merger
matter for Human Resources.
The key to alleviating employee stress during M&A is
effective communication early and at all stages of the transaction.
While this may not always be practical given the commercially
sensitive nature of some information, management should proactively
inform employees (to the extent possible) about details which may
impact them. This reduces uncertainty and prevents the spread of
rumours which may be difficult to control after the fact.
Also, companies should adopt comprehensive mental health
policies and practices if they have not already done so. Guidance
for such policies is provided in the National Standard on Psychological Health and
Safety in the Workplace, published in 2013 by the Canadian
Standards Association and the Bureau de Normalisation du Quebec. A
recent study of financial institutions by the
Shareholder Association for Research & Education reveals that
very few companies currently comply with the national standard. Of
the 25 companies reviewed, only one company published a
comprehensive policy or instituted training for managers on
psychological health and safety matters.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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