Working Under a Black Cloud: How to Sustain Organizational Identification after amerger*

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1 British Journal of Management, Vol. 17, S69 S79 (2006) DOI: /j x Working Under a Black Cloud: How to Sustain Organizational Identification after amerger* Rolf van Dick, Johannes Ullrich w and Patrick A. Tissington Aston Business School, Aston University, Work and Organizational Psychology Group, Aston Triangle, Birmingham B4 7ET, UK, Birmingham, UK, and w Philipps-University, Department of Psychology, Gutenberg Str18, Marburg, Germany Corresponding author [email protected] This article argues against the merger folklore that maintains that a merger negatively affects well-being and work attitudes primarily through the threat of job insecurity. We hold that the workplace is not only a resource for fulfilling a person s financial needs, but that it is an important component of the self-concept in terms of identification with the organization, as explained by social identity theory. We unravel the key concepts of the social identity approach relevant to the analysis of mergers and review evidence from previous studies. Then, we present a study conducted during a merger to substantiate our ideas about the effects of post-merger organizational identification above and beyond the effects of perceived job insecurity. We recommend that managers should account for these psychological effects through the provision of continuity and specific types of communication. Introduction Mergers and acquisitions are popular strategic means for organizations to enhance profitability or to survive amid ever more fierce global competition. The frequency of organizational mergers sharply increased at the end of the last century, while their size and degree of internationalization also escalated. These developments, in conjunction with a high rate of financial failure, have made merger an issue of public concern beyond boardrooms and the business press. The news of an upcoming merger is something everybody in the organizations concerned obsesses about much *We would like to thank Lucy Chamberlain and Ulrich Wagner for constructive comments on an earlier version of the present paper. Parts of this paper were presented at the 12 th European Congress on Work and Organizational Psychology. Istanbul, May A previous version was published in the Aston Business School s working paper series (RP 0419). like the weather. In fact, in psychological terms a merger has an effect similar to that of a black cloud in the sky; people take appropriate precautions and sometimes, if this is an option, retreat from the scene. Likewise, the announcement of a merger often meets with apprehension and concerns such as Will the transaction create value? amongst shareholders or Will I keep my job? amongst employees. Both groups of people start to think twice about their investments in the enterprise. In the worst case, they retreat (for instance by withdrawing financial support or in various ways withdrawing their labour). This article presents several reasons for these negative reactions by employees to mergers. One very obvious reason is the fear of losing one s job, with all the damaging implications for personal wellbeing and security. However, beyond these personally relevant issues, we argue that, from a social identity perspective, a merger creates a threat to the organization s identity and thus the employees social identification with their orga- r 2006 British Academy of Management

2 S70 nizations. This in turn has negative consequences for employees collective identity and self-esteem. The article will unravel these ideas, describe how they align with the social identity perspective in general and then present an empirical study illustrating and supporting our arguments. R. van Dick, J. Ullrich and P. A. Tissington Explaining negative reactions to mergers It seems relatively easy to explain why a merger so often provokes negative reactions. From the perspective of psychological learning theories, it could be argued that a formerly neutral or positive stimulus (the announcement of a merger) has, through personal experience or extensive vicarious conditioning in the media, acquired the negative valence of events such as the destruction of shareholder value and lay-offs. If the material damage implied by the merger were the whole story, minimizing this would be the only intervention possible by managers wishing to gain employee support for the change process. Indeed it should be emphasized that avoiding massive lay-offs and enabling workers to cope with the necessary amount of uncertainty and stress are factors of paramount importance in making a merger succeed (Cartwright and Panchal, 2001; Hogan and Overmyer-Day, 1994). In the present article, however, our goal is to complement this perspective with an easily overlooked point. Mergers affect the lives of people not only in material ways, because people working in organizations (as opposed to shareholders who may well expect no more from an organization than financial return on investment) have needs above and beyond their pay cheque and the basic issue of job security. Drawing on social identity theory, we will show how fulfilment of these social needs is in part related to processes of organizational identification. Mounting evidence suggests that employee reactions to a merger vary in a systematic fashion depending on how much the merger is perceived to corrupt the pre-merger organization s identity, and thereby to pose a threat to the employees organizational identification. Before we review such evidence from previous studies, we set the stage by unravelling the key concepts of the social identity approach relevant to the analysis of mergers. Finally, we will present a study that we conducted in a merger of two hospitals to further corroborate our ideas about the important role of postmerger organizational identification above and beyond the effects of perceived job insecurity. The social identity approach applied to organizational life One of the basic ideas of social identity theory (SIT) (Tajfel and Turner, 1979, 1986) is that the social groups we belong to form a significant part of our self-concept. In contrast to our personal identities, SIT calls that part of our self-concept in which we see ourselves as being similar to other members of our social groups our social identity. Tajfel (1978, p. 68) originally defined social identity as that part of an individual s selfconcept which derives from his [sic] knowledge of his membership of a social group (or groups) together with the value and emotional significance attached to that membership. Because of the embedding of group membership in the individual s self-concept, an individual will, to a greater or lesser extent, think, act and have feelings consistent with the group s values and relative social standing. Thus, to the highly identified individual, violating the group s norms is like breaking a rule set by him or herself and, in the same way, the group s success is experienced as his or her own achievement. Of course not all of our social groups are emotionally significant to us all the time. Self-categorization theory (SCT) (e.g. Turner et al., 1987) articulates the principles according to which different social identities become salient in a given situation. SCT assumes that representations of the self emerge in relation to other social objects that are categorized as either similar to or different from the self. Furthermore, the theory notes that these selfcategories vary on a continuum of inclusiveness so that, at one end, self-categorizations as human beings render ourselves identical in our perception to all humans (in contrast to other animals), whereas at the other end of the continuum, nobody is included in the self-category but ourselves (in contrast to other individuals). The various social groups that we belong to fall somewhere in between these extremes. Situational characteristics determine which of our group memberships become salient and thus relevant to our behaviour. So, if another group is in conflict with our own group, it is more likely that this group membership becomes important in guiding

3 Identification in the Course of a Merger our behaviour. Formally speaking, social identity salience is produced interactively by the cognitive accessibility of the category and how much it fits the situation (Oakes, 1987). Accessibility describes the perceiver s readiness to accept a category, that is the extent to which it has prior meaning and significance for the individual (Oakes, Haslam and Turner, 1994). The more saturated the prior meaning of a category the less input is necessary to activate this specific category (Oakes, 1987). Fit refers to the match between category specifications and the stimulus reality (Oakes, 1987). A soccer player, for instance, may be able to access the social category of his team with ease, and during a match, category specifications such as red and white shirt will serve him well to make sense of the social situation. Alternatively, the category of his team will not come to be salient so easily when he is at the opera where people wear black suits. Thus, the core element of the SCT is that an individual s social identity is not uniformly predictive of his or her behaviour. Rather, which aspect of one s identity is influential in any given situation is dependent largely on the context and the group s salience in that context. While a more detailed account of the situational contingencies of identity salience explicated in SCT is beyond the scope of this introduction, for our purposes it may suffice to say that individuals can have social identities that are chronically important to them and are used to lend structure and meaning to a whole range of situations. In view of the amount of time people spend at work, it is theoretically plausible that work organizations provide such identities (e.g. Ashforth and Mael, 1989), and indeed, numerous studies have shown the empirical reality of organizational identity (e.g. Haslam, 2004; Haslam, Postmes and Ellemers, 2003; Van Dick et al., 2004). Although there is some overlap between the notions of corporate image and organizational identity (e.g. Hatch and Schultz, 2002), we believe the concepts to be distinguishable in that the latter refers to what insiders believe is central and distinctive about the organization, and these beliefs may or may not include things known to or accepted by other stakeholders (e.g. suppliers or customers) who are involved in the construction of the corporate image. The key construct for our discussion of mergers is organizational identification, which is S71 the extent to which these beliefs become selfreferential (Pratt, 1998) for a member of the organization. The critical point is that for those employees who strongly identify with their organization, its identity becomes not only descriptive but prescriptive as well (Haslam, Postmes and Ellemers, 2003). Clearly, organizations benefit from high levels of identification as shown by research linking identification with, inter alia, higher work motivation, performance, organizational citizenship behaviour and lower attrition (e.g. Haslam, 2004; Van Dick, 2004; for the problem of over-identification see Dukerich, Kramer and McLean Parks, 1998). What kind of benefits, then, do strongly identified employees receive in return for the effort expended in identifying with an organization? In this respect, it is important to note that the positive outcomes mentioned above are associated with a salient organizational identity rather than personal identity, which contradicts traditional assumptions of what motivates people at work (e.g. McClelland, 1987). Organizational identification seems to do this job independently of the various benefits tailored to the individual employee (e.g. pay rises, career advancement). People who identify with the organization tend to internalize collective goals as intrinsically motivating (Ellemers, de Gilder and Haslam, 2004). As Haslam, Powell and Turner s (2000) synopsis of social identity theory and need theories suggests, organizational identification breeds motivation based on the fulfilment of needs for relatedness or affiliation. Hence, peer recognition and collective pride (e.g. in achieving group goals) are the chief rewards involved in social identity-based motivation because they feed back into the self-concept (see Ellemers, de Gilder and Haslam, 2004). The social identity approach to organizational mergers Having established how the basic processes of social identity constructs translate into organizational outcomes, we can now turn to their role in organizational mergers. Theoretically, it can be expected that mergers per se should alter an employee s identification because a merger essentially redraws or dissolves the category boundaries of two distinct groups within the newly created merger entity. Thus, mergers inherently

4 S72 threaten the distinctiveness of the pre-merger group identity and, consequently, sub-group identification should increase at the expense of identification with the post-merger entity (for the notion of distinctiveness threat, see Branscombe et al., 1999). Indeed, the negative effects of mere merging have been demonstrated in the laboratory by asking two-person groups to collaborate on a task (Haunschild, Moreland and Murrell, 1994). In this study, groups that had a common identity based on previous interactions showed stronger resistance to the merging of their group than groups with no such shared work history. Outside the experimental laboratory, however, merging organizations are likely to be of unequal vitality in terms of, for example, their physical and human resources, institutional control, and prestige (Bourhis and Barrette, 2000). In generalizing the experimental results, we can therefore expect that the negative effects should be enhanced for members of the organization of lesser vitality, as it is likely to be less dominant in shaping the post-merger identity. Conversely, the dominant merger partner should be able to secure greater continuity of identity-defining characteristics in the course of merger integration, thus increasing the chances that its members will identify with the post-merger entity compared to members of the dominated partner. Van Knippenberg and colleagues have investigated the issue of continuity in a series of studies. They argue that a stronger sense of continuity among members of the dominant organization should manifest itself in a stronger relationship of pre- and post-merger identification (see for an overview: Van Knippenberg and Van Knippenberg, 2004). If employees of a merging organization perceive little change in their daily work it should be more likely that they preserve their identification with the former organization and that this identification will be transferred to the post-merger organization as well. If, on the other hand, discontinuity occurs (such as moving to another location, changing the entire management, or organizational culture) it is less likely that employees will transfer their former identification to the new organization. Van Knippenberg and associates indeed found support for these assumptions across different types of organizations (Van Knippenberg et al., 2002). Van Knippenberg and colleagues have also R. van Dick, J. Ullrich and P. A. Tissington demonstrated the importance of continuity in experimental studies by manipulating it directly. This was done by telling participants in a brainstorming study that their team would join another team in order to brainstorm collectively. Crucially, a stronger relationship of pre- and post-merger identification was obtained for those participants who were led to believe that their group would be continued and merely expanded by the other group, and that their group characteristics (e.g. their group logo) would be maintained. When the perspective was modified to suggest low continuation, pre- and postmerger identification were less closely aligned (Van Leeuwen, Van Knippenberg and Ellemers, 2003, Van Leeuwen and Van Knippenberg, 2003). Lastly, in a field study of two merging banks, Vanbeselaere, Boen and de Witte (2002) also found direct effects of perceived continuity on post-merger identification. The more that people were satisfied with the way their pre-merger bank lived on in the merged bank, the stronger was their identification with the merged bank, and the more positive was their attitude toward people from the merger partner. In reality, continuity of merged companies will be regarded as only moderately desirable, and employees of the less-dominant organization in the merger process are likely to be worse off in terms of continuity (cf. Ullrich, Wieseke and Van Dick, 2005). Thus, an important question is what other antidotes could be employed to alleviate the negative consequences of a merger? We will now review two of those. First, the socio-emotional orientation of the merged organization has been identified by the social identity literature as an important factor influencing the perceived threat to pre-merger identities (Gaertner et al., 2001). Socio-emotional factors underlying perceived organizational support are especially important during merger integration. These include fair organizational procedures and tangible efforts on the part of supervisors and managers to care for the wellbeing of their subordinates and to value their contributions (Rhoades and Eisenberger, 2002). In the context of mergers in the banking industry, Gaertner et al. (2001) observed that when employees perceived a merger as threatening, us against them dynamics and turnover intentions increased and commitment to the merged organization decreased. Importantly, however,

5 Identification in the Course of a Merger bank employees reporting that their merged organization demonstrated a strong socio-emotional orientation experienced less threat and were less likely to reduce their commitment. Second, and related to the notion of organizational support, is the provision of clear and forthright information about what is going to change as a result of the merger. As noted above, rumours quickly take root after the announcement of a merger about lay-offs, compensation, relocation and other issues. These material issues probably form the most prominent part of the merger grapevine. However, communicating envisioned changes related to organizational identity is at least of equal importance. For example, integration of pre-merger teams, changes in cross-level coordination or client relationships hinge upon a collective redefinition of group boundaries and identity that cannot be achieved overnight. Rather, frequent and open communication is required. Schweiger and DeNisi (1991) compared the amount of information desired by employees going through a merger to the uncertainty of a newcomer to the organization. Probing further into this analogy, they applied the idea of realistic job previews (cf. Premack and Wanous, 1985) to a communication programme they created and called realistic merger preview. In the course of a merger between two Fortune 500 companies, Schweiger and DeNisi conducted a longitudinal experiment testing the effectiveness of such a programme. One of the two plants involved in the merger received a realistic merger preview (e.g. a regular newsletter, a hotline, weekly meetings of supervisors and staff) and the other was left to its own devices. Three months after the preview programme had begun, employees of the experimental plant scored significantly lower on stress and uncertainty measures while exhibiting more job satisfaction, commitment and self-reported performance than employees of the control plant. In summary, we have discussed three important process factors related to the sustenance of a positive relationship between merging organizations and its employees: maintaining continuity, showing a socio-emotional orientation and timely and honest communication. Of course, when a merger leads to lay-offs, the importance of these factors will increase. The way departing employees are treated by the merged organization will also have significant effects on the remaining workforce (e.g. Brockner, 1988) and special attention should be paid to their needs for continuity, organizational support and information. However, we have argued previously that mergers can have a large impact on the wellbeing and performance of employees extending beyond the fear of being made redundant. In the final part of this article, we will present a field study that demonstrates these dynamics in the absence of organizational downsizing. In order to adequately assess the differential impact of a merger on social and personal needs, respectively, we find it useful to concentrate on two key variables: organizational identification and job insecurity. As detailed by Haslam, Powell and Turner (2000) and discussed above, organizational identification ties in with social needs (e.g. affiliation and recognition). In contrast, job insecurity can be viewed as arising from a threat to personal needs for safety. Taken together, we assume that both postmerger identification and perceptions of job insecurity affect employees work-related attitudes and behaviour such as job satisfaction, turnover intentions, or extra-role behaviours. Post-merger identification and job insecurity will be influenced by the three factors described above, that is continuity, socio-emotional orientation and communication before and during the merger. Furthermore, levels of pre-merger identification have to be taken into account. Figure 1 illustrates these assumptions in form of a heuristic model and also exemplifies the underlying mechanisms in terms of employees needs. We believe that perceptions of job insecurity have a negative impact on employees attitudes and behaviours because they challenge and threaten basic human needs for security, pay and so on. Post-merger identification, on the other hand, will be positively associated with outcome variables because it satisfies higher order social needs of affiliation and respect (see Haslam, Powell and Turner, 2000). Method S73 In spring 2001 a local council responsible for healthcare developed a strategy of merging two hospitals that were situated about 30 kilometres apart on the outskirts of two middle-sized cities in Germany. The hospitals were of nearly equal

6 S74 R. van Dick, J. Ullrich and P. A. Tissington Pre-merger identification Post-merger identification Social Needs -Affiliation - Belongingness - Respect Communication Socio-emotional orientation Continuity Job insecurity Personal Needs -Security -Pay Outcomes - Well-Being - Satisfaction - Turnover - Performance -... Figure 1. Heuristic model explaining outcomes following an organizational merger Note: The concepts in boxes illustrate the hypothesized input-mediation-output chain, and the constructs in circles refer to underlying needs. size, with about 600 employees each, and both mainly treating mental illnesses of adult patients. Merger plans were first launched in summer 2001 and the merger was formally completed by agreements between representatives of council, senior management and unions. The merger agreement made it explicit that no jobs would be cut as a result of the merger and emphasized that the merger would facilitate the retention of jobs in the face of increasing competition in the health services market. The plan was to keep both hospitals as separate entities with respect to medical services but to merge facilities such as kitchen, laundry, and most parts of the administration. The first author was asked to conduct an employee survey about nine months after the merger agreement, and in September 2002, questionnaires were distributed to all 1244 employees of both hospitals. At the time of the study, few employees had switched positions from one to the other hospital and, with the exception of integrating most laundry facilities, the other planned changes like merging the administration or kitchen facilities had not been carried out. The overall response rate was 37%, resulting in a sample of n employees, which will be used for the analyses. The questionnaire contained several concepts that are not relevant for the present context. We will now describe only those scales that match the present theoretical framework (for further details of this study see Van Dick, Wagner and Lemmer, 2004). Organizational identification was measured with respect to the sub-unit that existed prior to the merger and is continuing to exist after the merger (four items, e.g. I identify with..., I am glad to work for..., alpha ). We will refer to this aspect as pre-merger identification in the remainder of this article. Four items that were identical to the above except the target name (the organization s name after the merger) were used to assess post-merger identification (alpha ). Job insecurity was measured with four items (e.g. I am afraid of losing my job, I am satisfied with the amount of job security I have (reverse scored), alpha ). A measure of continuity was derived from three items (e.g. With regard to my team nothing will change as a result of the merger, The merger will have no impact on my routine work, alpha ). Socio-emotional orientation was obtained with three items (e.g. The organization values the employees contributions, The organization cares for the employees well-being, alpha ). Communication was assessed with six items (e.g. Management has provided information about all processes and effects of the merger, Most decisions have been made without consulting employees (reverse scored), alpha ). Five variables measured desirable outcomes both from the vantage point of the organization and the individual employee: Job satisfaction was measured with three items adapted from the Job Diagnostic Survey (Hackman and Oldham, 1980; alpha ). Organiza-

7 Identification in the Course of a Merger tional citizenship behaviour (OCB) was assessed with five items tapping into extra-role behaviours as defined by Organ (1997; alpha ). Turnover intentions were measured with two items ( I frequently think of quitting this job, and I have already looked for other jobs, correlation between the two items was r , po0.001). An index of negative emotions was derived from averaging responses to items asking for the amount of fear and anger experienced with regard to the merger (both items were correlated at r , po0.001). For all items, participants had to indicate agreement or disagreement on sixpoint rating scales (endpoints: do not at all agree, and do fully agree, respectively). Lastly, physical complaints were measured with six items asking for the frequency of a range of physical symptoms (six response alternatives from never to very often, alpha ). Results First of all, we examined relationships between organizational identification after the merger and potential outcomes. As can be seen in Figure 2, post-merger identification was systematically related to a number of variables essential both for the wellbeing and the productivity of the employees. Highly identified employees reported more citizenship behaviour and job satisfaction, and Standardised mean scores turnover intentions job satisfaction negative emotions OCB low intermediate high Post-merger identification Figure 2. Relationships between post-merger identification and outcome variables S75 also lower turnover intentions and less negative emotions. The opposite is true of employees identifying only weakly with the merged organization. Correlations of these variables with post-merger identification were significant in all cases except for negative emotions and remained stable when we controlled for pre-merger identification and process variables. Consistent with the notion of distinctiveness threat (Branscombe et al., 1999), we also found a positive relationship between pre-merger identification and negative emotions. That is to say, those who accorded more importance to their former hospitals identity reported more anger and fear as a result of the merger. Second, we looked briefly at the prevalence and correlates of job insecurity in isolation before turning to a structural equation model encompassing both of our key variables. Given that no lay-offs had taken place at the time of our study and that it was emphasized that the merger would ensure a prospect of job security, the mean level of job insecurity was relatively high (4.08; with a theoretical maximum of 6). Significant correlates of job insecurity were negative emotions, physical symptoms such as neck and shoulder pains, and organizational citizenship behaviour. In order to determine whether our assumption of the differential functioning of post-merger identification and job insecurity would hold when all relationships are analysed in an overall model, we devised the model depicted in Figure 1 and put it to a test in a structural equation analysis. Sex, age and pre-merger affiliation were entered as control variables; pre-merger identification, continuity, socio-emotional orientation and communication were included as predictors as specified in Figure 1, followed by post-merger identification and job insecurity as mediators. Lastly, wellbeing, OCB, job satisfaction, and turnover intentions were included as criteria. To achieve a good fit to the data, the model has been modified in some respects allowing inter-correlations between the predictor variables on the one hand and the outcome variables on the other as well as some direct effects from the predictor variables on the outcomes in addition to the proposed mediated effects. The overall fit of the model was good (X , po0.05, df 5 31, CFI , AGFI , SRMR , RMSEA ). We will not describe each and every relationship but give a brief overview of the main findings related to

8 S76 R. van Dick, J. Ullrich and P. A. Tissington Pre-merger Identification.25 Communication.12 Post-merger Identification Job satisfaction.23 Socio-emotional orientation Turnover intentions OCB Continuity.34 Job Insecurity Health Complaints Figure 3. Empirical Model Derived from Structural Equation Modelling (all Paths Significant) the proposed model. The empirical model is presented in Figure 3. First of all, in most cases the predictor variables were related to the mediating variables as expected. Specifically, pre-merger identification related to post-merger identification (b ), communication was related to postmerger identification (b ), and continuity was related to job insecurity (b ). Socioemotional orientation was not significantly related to the mediating concepts, although both effects pointed in the assumed direction (0.07 for post-merger identification, and 0.07 for job insecurity, respectively. However, and in line with the review by Rhoades and Eisenberger (2002), socio-emotional orientation had important direct relationships with turnover intentions (b ) and OCB (b ). This finding indicates that employees who feel emotionally valued and supported are more likely to stay within the organization and are ready to go the extra mile independently of identity and securityrelated attitudes. Post-merger identification was related to job satisfaction (b ), turnover intentions (b ), and OCB (b ), whereas job insecurity correlated with healthcomplaints (b ), and OCB (b ). The relationship between wellbeing and job insecurity was as expected since job insecurity, as a classic work stressor, should relate positively to reports of physical symptoms (cf. the meta-analysis by Sverke, Hellgren and Näswall, 2002). However, the positive relation between job insecurity and OCB was unexpected. This may be explained by employees putting in extra effort as a means to keep their job in a time of uncertainty. In summary, we found support for the proposed relationships and have been able to explain substantial amounts of variance in all criterion variables (between R for wellbeing, and R for job satisfaction, respectively). Conclusions We have argued against the merger folklore that maintains that a merger negatively affects wellbeing and work attitudes of the employees involved primarily by inducing feelings of job insecurity. Emphasizing that the workplace is not only a resource for fulfilling people s financial needs, we adopted a dual perspective that shed light on how mergers can undermine social needs as well. This dual perspective allowed us to illustrate in a field study the independent roles of organizational identification and job insecurity in

9 Identification in the Course of a Merger mediating the relationships between theoreticallyderived process variables and organizational outcomes. Whereas the irreducibility of social to personal needs has been implied by the entire social identity literature on mergers (e.g., Terry, 2001, 2003; Van Leeuwen and Van Knippenberg, 2003; Van Knippenberg and Van Leeuwen, 2001), we believe that the contribution of the present article lies in its explicit juxtaposition of these needs and its consequences for merger integration. To our knowledge, the joint operation of material threat (e.g. job insecurity) and identity threat (e.g. discontinuity) has been demonstrated here for the first time empirically. It should be acknowledged that the data set we used here cannot confirm our underlying model in terms of causality. Data have only been obtained in a cross-sectional design and it is theoretically sound to conceive of the causal relationship between identification and the outcome variables as bi-directional. This means that employees with a stronger post-merger identification are more likely to be satisfied and high performing, but, on the other hand, good performance leads to more respect by colleagues and supervisors, which in turn can increase feelings of belongingness, and thus identification. With regard to the effects of pre-merger identification, continuity, socio-emotional orientation and clear communication, the causal direction is more plausibly rendered as in our model than the other way round. Longitudinal studies are of course needed to prove this assumed structure. A further alternative explanation worth considering is that an unknown third variable may be responsible for the observed relationships. As for the most likely candidate of a third variable explaining the relationships that we found, personality (George, 1992), results by Schaubroeck, Ganster and Kemmerer (1996) suggest that trait affect explains correlations of job attitudes only to a moderate extent. Because we did not measure personality traits, we cannot rule out this possibility. On a theoretical basis, however, the mutability of organizational identification with regard to situational changes (see Ellemers, de Gilder and Haslam, 2004) would lead us to rather downplay this concern. Having acknowledged these limitations, we move on to summarize our findings and outline some guidelines for practitioners on how to make use of this knowledge. First of all, our data S77 clearly support the assumption that post-merger identification relates positively to employee attitudes and behaviours. Strongly identified employees are more satisfied, less likely to withdraw and more willing to put in extra effort. Therefore, ensuring a sense of belonging among the workforce and providing a positive basis for employees social identity is key to the success of a merger. Our theoretical analysis which was largely confirmed by the data suggests a number of important ways in which to sustain organizational identification and to lower feelings of job insecurity even in the shadow of a black cloud. First of all, managers should aim for continuity in work routines, teams and communication channels. This, according to our data, would help to reduce feelings of job insecurity. Clear communication, as a second important factor, may be used to build up post-merger identification. Such communication should address all issues of potential job losses but also consistently stress the positive elements of the merged organization to foster identification with this new object. Thus, communication and continuity are both appropriate means for managers to make a merger more successful (see Van Knippenberg and Van Leeuwen, 2001). These are, however, not values in themselves, but work because they respectively increase identification and reduce job insecurity. One has to consider, though, that communication has to be genuine. If management uses communication simply to manipulate the workforce by trying to distract and disguise the real issues, this can easily backfire and cause even more negative reactions towards the merger (for an example of a dissociation between rhetoric and action during a merger, see Vaara, 2003). A different pattern has emerged for socioemotional orientation where we could not find support for the proposed mediation via identification and job insecurity. However, we did find direct effects on two of our outcome variables indicating that the more employees felt cared for, the more likely they were to show extra-role behaviour and the less likely they were to have turnover intentions. This divergence from our proposed model might simply be because communication and continuity have been assessed with questions directly related to the merger whereas socio-emotional orientation was measured in a rather general way not related to the

10 S78 specific situation of the merger. But it also reflects findings from the organizational support literature of direct positive relationships between support and variables such as job satisfaction (e.g. Eisenberger et al., 1997). Thus, losses of continuity may be buffered as long as managers and supervisors show a socio-emotional orientation such as providing emotional support and demonstrating care for employees needs and wellbeing in times of change. Many authors have convincingly argued that it is the people in organizations who are critical to the success or failure of mergers (e.g. Cartwright and Cooper, 1992; Marcks and Mirvis, 2001). However, it has been suggested that the human factor is typically paid less attention than economic and technical aspects when merger and acquisitions are planned and executed (Terry, 2001, 2003). We hope that out analyses have offered managers the means to make the black cloud pass by and possibly even add some sunlight. 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Terry (eds), Social identity processes in organizational contexts, pp Psychology Press, Philadelphia. Terry, D. J. (2003). A social identity perspective on organizational mergers: the role of group status, permeability and similarity. In: S. A. Haslam, D. van Knippenberg, M. J. Platow and N. Ellemers (eds), Social identity at work developing theory for organizational practice, pp Psychology Press, Philadelphia. Turner, J. C., M. A. Hogg, P. J. Oakes, S. D. Reicher and M. S. Wetherell (1987). Rediscovering the social group. Blackwell, Oxford. Ullrich, J., J. Wieseke and R. Van Dick (2005). Continuity and change in mergers and acquisitions: The illustrative example of a German industrial merger, Journal of Management Studies, 42, pp Vaara, E. (2003). Post-acquisition integration as sensemaking: Glimpses of ambiguity, confusion, hypocrisy, and politicization, Journal of Management Studies, 40, pp Vanbeselaere, N., F. Boen and H. de Witte (2002). 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Employee uncertainty during organizational change: A selfconstrual perspective. Unpublished Manuscript, Vrije Universiteit Amsterdam, The Netherlands. Van Knippenberg, D., B. Van Knippenberg, L. Monden and F. de Lima (2002). Organizational identification after a merger: A social identity perspective, British Journal of Social Psychology, 41, pp Van Knippenberg, D. and E. Van Leeuwen (2001). Sense of continuity as the key to postmerger identification. In: M. A. Hogg and D. J. Terry (eds), Social identity processes in organizational contexts, pp Psychology Press, Philadelphia. Van Leeuwen, E. and D. Van Knippenberg (2003). Organizational identification following a merger: The importance of agreeing to differ. In: S. A. Haslam, D. Van Knippenberg, M. J. Platow and N. Ellemers (eds), Social identity at work: Developing theory for organizational practice, pp Psychology Press, Philadelphia. Van Leeuwen, E., D. Van Knippenberg and N. Ellemers (2003). Continuing and changing group identities: The effects of merging on social identification and ingroup bias, Personality and Social Psychology Bulletin, 29, pp Rolf van Dick earned his PhD from Philipps University, Marburg, Germany in social psychology. He is currently a Professor of Social Psychology and Organisational Behaviour at Aston Business School. His primary research interests are in the field of individual s attachment to organizational groups. He has published five books and more than 60 chapters and journal articles and is currently editing a special issue of Journal of Organizational Behavior on identification and commitment in organizations. Johannes Ullrich graduated in Psychology at Philipps University, Marburg, Germany and is currently doing his PhD in the research training group Group-focused enmity at Philipps University. His research interests include attitude strength, intergroup relations, and social identity processes in organizations. Patrick A. Tissington is a lecturer in Work and Organisational Psychology and serves as the Director of the Doctor of Business Administration program at Aston Business School. He obtained his PhD from the Industrial Psychology Research Group at the University of Aberdeen. His research, teaching, and consultancy centre on decision making in executive leadership, emergency services and military contexts.