As part of the new orthodoxy and with much encouragement from the government, the trend towards merged councils took a significant step today with proposals to create the UK's first "super council" with the the London boroughs of Westminster, Hammersmith & Fulham, and Kensington & Chelsea proposing to merge all their services, from schools and refuse collection to child protection.
Andy Sawford, chief executive of the Local Government Information Unit think tank has gone on record with stating that the merger would have to be well-managed if it was to achieve its aims: "It's not automatic that if you bring together three councils like this that things will be more effective and efficient, but clearly there are opportunities to make substantial savings."
And this is the rub.
Do not assume that just because you are going to have job losses and merged activities that costs savings will result.
According to data, between 50-80% of private sector mergers do not work with many destroying shareholder value.
This is sometimes due to a lack of strategic fit but more often, it seems to be related to poor post-deal integration.
We know less about the success of public sector mergers because the criteria for success are less obvious but also because, while there are some studies that evaluate individual mergers there has been little attempt to draw general lessons from the experience for the public sector as a whole.
Some of the reasons for failure include:
• The merger becomes an end in itself, rather than a step along the way to achieving some greater outcome.
• Difficulty in agreeing priorities and getting the balance right between establishing the new organisation, managing its day-to-day pressures/operations and demonstrating the added value the merger was supposed to bring.
• Lack of focus on people and culture while senior managers tackle the tangible and technical aspects of the merger rather than the softer, people focused elements. Staff may be left in a state of uncertainty about their jobs, with negative rumours starting to emerge. The result may be that some of the best staff leave even if they themselves have not been badly treated.
This is a potential receipe for conflict and organisations need to embed mediation for managing change for their organisation.
Justin Patten, Mediation Trainer