Chester Spell

Chester S Spell Ph.D.

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The Rutgers-Rowan Merger: Can You Make a Faultline Go Away?

What group research tells us about the perils of mergers.

Posted Mar 14, 2012

By Chester Spell, Ph.D. and Katerina Bezrukova, Ph.D.

We've all heard about corporations merging, but how about universities? What if they are very different; say one is a research-oriented school over 200 years old, another is a teaching school that became a university less than 20 years ago. The ongoing proposal to merge a campus of Rutgers University with a regional school (Rowan University) is an interesting test of whether this can be done. This attempt has met intense opposition, especially on the Rutgers end. Looking at these feelings from a perspective of group faultlines might tell us not only about this case but shed light on any merger's chances for success.

The most basic faultline that has to be erased for a merger to occur is between the two organizations themselves. Rutgers is a research school, with an international reputation and network of alumni, and where students have an access to faculty research and get involved in cutting-edge science. Students and faculty have different expectations of such a place, in contrast to a school like Rowan University, where faculty spend more time on teaching. Expecting current students and faculty to accept such a change seems unlikely since the school they were accepted into (or the job they have) would be different from the merged one.

What does psychological science tell us about this? Splits, cliques, or factions are bad and counterproductive, most would say. Psychologists who study groups generally agree, finding that teams with distinct factions lead to a lot of conflict and coordination problems. But how about when a group split, (or to use the more recent term, a group faultline) is already there? Undoing such divisions between people might be harder than keeping splits from forming in the first place. On the level of business firms, that's probably why the challenges of merging two companies with different cultures and corporate personalities have been widely noted—its like bringing together two different teams of people. So, when two organizations merge, its essentially an attempt to erase a faultline that separates groups along lines of how people identify with a company. How easy is this to do? We know that about 70 percent of corporate mergers (no data available on academic mergers) fail according to Forbes.

Why do these mergers fail? Oftentimes, a merger is put together to make quick money and typically bring instant financial gains to upper management. Long-term consequences of mergers are often not considered or recognized. So you might ask "why would anyone think of merging universities in the first place." In the corporate world, the financial reasons are often clear, in the Rutgers case, things are less evident. The reason is somewhat in debate, with the analysis of one Rutgers finance professor, Eugene Pilotte, concluding that the purpose behind the merger is to rescue Rowan University from issues with excessive debt. "Rowan University has used up its borrowing capacity, and its partner, Cooper Health System, has a credit rating one step above non-investment grade," Pilotte said.

Why should the Rutgers-Rowan case be national news? Because public higher education is dependent on taxpayers' money and in the end it is they who are paying for any bad moves (see the financial bailout of 2008). In fact, we may see more of this since higher education is becoming less and less of a priority in state budgets and thus getting squeezed more by states across the US. It would be a tragedy if poorly thought-out academic mergers were a response to this funding dilemma.

Not all mergers are destined to fail. The good news is that psychologists have identified some of the factors determining the success or failure of mergers. Much of the resistance to a merger (and of erasing those faultlines) is often about uncertainty connected with change. In the Rutgers example, to date few specifics about tuition levels in the new school, layoff possibilities, schedules, or other details have been provided by Gov. Chris Christie or other politicians supporting the merger. It's nearly a given that not laying out details and specifying the impact on people connected to the separate organizations force them to remain on one side of the organizational faultline. In fact, if the reason for a merger or benefits to each side are not clear, maybe it should not happen at all. It seems like this may well be the case in the proposed Rutgers-Rowan merger.

In any event all this suggests that before trying to erase a faultline, one needs to have a well-thought out reason for the merger, communicate, clearly, to all people connected to the groups the reasons for the merger, and spell out as much as possible all the impacts on people in the groups ahead of time. The Rutgers case is a great ‘living laboratory' of an ongoing merger attempt that is meeting all sorts of challenges connected with how to make faultlines go away. Anyone interested in the understanding how to do (or not to do) mergers of large groups should stay tuned!