The impact of supportive leadership on employee outcomes during organizational mergers: An organizational-level field study.

Abstract

Past merger and acquisition research has reported mixed findings on the impact of mergers on workforces. To address these ambiguities and advance merger research at the organizational level of analysis, we present a natural quasi-experiment focusing on mergers in the English National Health Service. Building on organizational support theory and conservation of resources theory, we propose that merger events represent environmental stressors, with negative implications for employees’ subjective (job satisfaction) and objective (absenteeism) outcomes. However, extending previous theorizing, we argue that by increasing their supportive leadership, midlevel management can compensate for the resource losses incurred during mergers, and in doing so, minimize the adverse impact on their workforces. We test our predictions in the context of multiple primary care trust mergers, which took place in 2006. We analyzed the annual staff surveys, combined with objective information on employee absenteeism, and compared merging organizations with nonmerging organizations before (2005) and after (2007) the mergers. As expected, employees of merging (vs. not merging) organizations showed stronger decreases in job satisfaction, and these decreases in subjective outcomes were associated with increases in absenteeism over the course of the merger process. However, consistent with our propositions, we found that increases in supportive leadership during the merger period served to mitigate these negative outcomes. Our results highlight the organizational-level implications of mergers and the role that midlevel management can play in compensating for the losses experienced during (stressful) merger events. We discuss the implications for dynamic models of merger integration and leadership during change.