MANAGEMENT
Giuseppe Labianca BERTHIAUME CHAIR IN BUSINESS LEADERSHIP
The Effects of Mergers on Workplace Networks M anaging change? Integrating people during a transition? Networking across functions?
Timely issues for today’s organizations and all areas of expertise for one of Isenberg’s newest faculty members, Giuseppe (Joe) Labianca, the Berthiaume Chair in Business Leadership and coordinator of the management department’s PhD program. After spending 16 years in Kentucky, interspersed with research stints in Australia, Labianca is happy to be back in Massachusetts, near family. He has an undergraduate degree in psychology from Harvard University and a doctorate in business administration from Penn State. Labianca brings to Isenberg a rare and valuable data set—15 million emails exchanged during a merger between two consumer goods companies over a twoyear period. “We’d been working with the client studying their new product development and they let us know they were about to purchase a company and wanted to know if we wanted to study it as well,” Labianca recalls. “We said, ‘Would you give us access to all of your email data?’ and they were up for it. I don’t know of any other
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ISENBERG SCHOOL OF MANAGEMENT
organizational data set that’s as large and comprehensive.”
By using software to anonymize the messages and find communication patterns, Labianca and his team got a fascinating look at the merger in real time. Their findings to date have been published in a pair of articles in the Journal of Applied Psychology. Although the number of mergers and acquisitions have increased dramatically over the past decade, the vast majority fall short of expectations. An estimated 7-in-10 mergers fail to achieve their intended cost savings and business growth, according to Labianca. Many times, firms also lose talented people just when their expertise is most needed to integrate organizations and make the merger a success. In order to get better merger and acquisition (M&A) outcomes, the post-merger period needs more study, Labianca notes. “In any given year, a huge amount of M&A activity takes place—in the trillions of dollars—and companies always go into it thinking it’s going to go well. It very rarely does,” he says.
The team analyzed messages exchanged over a two-year period, spanning preand post-merger so they could compare “before” and “after” snapshots. In “Turnover During a Corporate Merger: How Workplace Network Change Influences Staying” (Journal of Applied Psychology), the research group discovered that people with clout—either because they had formal power or informal status—tended to quickly decide whether to leave or stay. If they decided to stay, they broadened their networks and forged relationships with colleagues in the other organization. “We saw that the more power someone has, the more likely they are to widen their network to be a broker sharing knowledge across the organization,” he says. This brokering behavior was valuable and relatively unusual. “Most of the time, people don’t want to change who they are talking to. They stick to their usual contacts,” he notes. But with high-power brokers, “their language and topic-use changed. They started incorporating language from further away from them in the organization.” In essence, they were “the ones doing the real work of integration by gathering
