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A RECENT article by Adam Grossman relayed an interesting story of the 2015 merger of Kraft and Heinz. One of the aspects that made this merger unique was the involvement of Warren Buffet. Adam’s story is a cautionary tale for investors – research shows that, more often than not, the hoped-for corporate synergies and growth are elusive. The story provides more evidence for the benefits of indexing to investors.
There is, however, another side to this story that is very important to an individual’s personal financial life. In addition to being investors, most of us are, or were, employees of a corporation. What if you are an employee of a company that is acquiring another company, being acquired by another company, or part of a merger? How do you navigate the challenges of this significant career event?
In late November 1985, I interviewed with RCA’s Astro Space division in East Windsor, NJ. Several weeks later I interviewed with GE Aerospace in King of Prussia, PA. In between those 2 interviews it was announced that GE was acquiring RCA. I received an offer for a position in the thermal engineering group of both companies. The GE offer was for $32,000, $4,000 more than the RCA offer. The GE plant was about 8 miles from our home; the RCA plant was 62 miles from our home.
I accepted the GE offer. When I called the RCA manager to tell him my decision, he was professional and understanding. He remarked that “who knows, we may end up working together and you got a better deal out of it”. Four months later that RCA manager became the senior manager of the merged thermal engineering organization – my new boss’s boss.
Seven years later my division was sold to Martin Marietta, whose space operations were based in Denver, CO. Two years later Martin Marietta merged with Lockheed, in Sunnyvale, CA, to form Lockheed Martin. Later that year it was announced that the company was closing its 2 east coast plants and moving the work to Sunnyvale and Denver.
Over the 31 years starting in 1986, I was part of numerous acquisitions, mergers, two plant shut-downs, and being sold to a private equity company. Somehow, I managed to stay employed, and grow my career. I wasn’t special – hundreds of colleagues trod the same path. When I look back I can identify some of the attributes that helped me navigate a turbulent career.
Build your Reputation: Be someone that people want to hire. If you move up, be someone that people want to work for. My first senior manager position came about because the hiring team remembered me from 4 years previous
Maintain Flexibility: Are you willing to travel or relocate? Would you take a lateral position, or even a step down, if it meant keeping a job? During my career I traveled extensively, commuted 62 miles for four years, and took new positions that challenged me and my family.
Focus on your Skills: What are the skills and behaviors that are valued by your company, and differentiate successful employees? These include technical, leadership, managerial, and interpersonal skills. My first GE manager provided a sound technical base, but also taught me just as much about work ethic, and professionalism.
Focus on the Culture: Combing organizations means combining cultures, just as much as products or processes. This may require you to be open to a different way of doing things. It requires a willingness to learn and grow. It will also likely require some diplomacy skills. Change is hard for employees, and nobody enjoys being told their processes or products are inferior. When we merged with RCA, we found there was a significant difference in the way that managers and senior technical leaders challenged their employees in public forums, in front of customers. GE preferred to work out technical differences and approaches in-house, and present a united front to customers. This took some time to resolve into a shared approach.
Focus on the People: When my first GE manager retired, we held a group luncheon. He was universally liked and respected. Someone described him as the best “BTU chaser” he’d ever seen, which was high praise. He gave a short speech at his retirement, where he discussed the exciting space programs he had supported. He ended that the thing that made his career special wasn’t the projects and technology, it was the people.
I was also fortunate to work on some exciting, ground-breaking projects. It wasn’t always easy, and the path certainly wasn’t straight. Looking back, it is the people I think of most, and I miss the most.
Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.
Rick,
Wow! What a professional journey. Thanks for sharing.
I found the customer-interaction nuance difference between GE and RCA quite interesting.
Mergers and acquisitions can be great or disastrous for companies and for employees. I’ve read that half of all combinations fail. And a combined company rarely needs duplicate employees in many areas – finance, accounting, HR, legal, many layers of management, and other jobs in areas that are disfavored. That’s where deal “synergies” occur, supposedly.
It pays not to have all your eggs in your employer’s basket. Your salary is there, but most of your investments shouldn’t be. Diversification should be the rule if you’ve gotten stock awards, have options, or get other ownership rights in your big company employer. It is not disloyal to sell stock, exercise options or take other steps to lower your exposure to your employer’s future, especially if there is greater competitive risk ahead.
When Chemical Bank bought Chase Manhattan, about 300 people in the combined department marched into an auditorium to meet our new boss. A year later my department consisted of 60 employees. The old Chase was a paradise for useless employees – that’s why we were losing money and were a good acquisition target. For example, the head of my department had a VP whose job it was to carry the flip charts and get coffee – yes, as a department head, he was entitled to an expensive lackey. No wonder the bank was awash in losses.
My response is to this article as well as another posted today written by Edmund Marsh entitled “A Bit More Humble“.
I guess a lot was going on for many people in the 80s at various aerospace companies.
I also joined an aerospace firm in 1985 (Pratt & Whitney) and from the very start, downsizing and layoffs were continually looming. I always managed to stay employed, and was able to progress within the company.
About 14 years in, my entire department of “information systems” folks were outsourced from P&W to a large IT organization named CSC.
The downsizing and layoffs in the new organization continued, but I retained employment and continued to advance.
CSC merged with another company that became DXC. Again, downsizing and layoffs continued, but I retained employment.
When I reached 55 years old, my age and the emotional drain of this continual corporate churning over the last 30 years influenced me to start evaluating the future financial reality of retirement.
I had hopes and plans of continuing to work until about 62.
But at 58, a lot of troubling dynamics quickly increased within the corporation. And I had determined that even at this age, I had a good degree of confidence that I could comfortably retire.
So after a weekend of heartfelt discussions with my spouse and a bit of tears of my own that this is how my professional path would end, I made the decision to call it quits.
I had a bit of worries that first year, adjusting to the new financial reality of drawing from assets instead of building them.
But that financial fear soon diminished, after I eased into my new reality. And here I am 7 years later, and things are going better than I could have imagined financially.
Taking the step of retiring earlier than I originally had planned was one of the hardest decisions I have ever made. But in retrospect, I am so glad that I did.
Thank you for the article.
My 30 year career in entertainment / tech included many mergers, acquisitions and layoffs.
My takeaways:
1) build a strong reputation and network so you can jump to another rock when things turn South
2) align with a strong mentor within the company who can protect you when layoffs are coming; otherwise you’re a sitting duck.
3) accept that business changes are not personal – – you’re just a name on someone’s list.
Protect your back, keep some money in the bank and be grateful we live in the USA (where 2nd chances are welcomed).
Big companies can merge, purge whatever. You have to be agile, as no one can take away what you know, and hopefully your talent can be used at other companies. I was downsized in 1994, and it turned out to be the turing point upward for my personal working life. I have been smiling ever since.
Hi, Rick! Great to see you back on HD. I think we’ve all missed your substantive contributions as well as your kind and engaging persona.
Andrew
Your last sentence says it all. Good to see you are still writing.
Great article Rick. This really resonated with me as a fellow career-long alum of the Aerospace Industry over a virtually identical time frame (I also started with GE in the fall of 1985). The “family tree” of the Aerospace/Airline industries is a history buff’s dream to study but for the people working in the industry, a challenge at times.
I gained great admiration for the factory workers on aircraft assembly lines during my early days in the late 1980s while working in Southern California. They would move from employer to employer depending who had the latest government contract. As best I understood it at the time, there was very little pension accrual happening with all those moves and portable 401K’s were not yet mainstream.
On the flip side, a relative of mine stayed put at the same aerospace component company for his entire career, survived approximately five acquisitions and finally opted for a severance package during acquisition number six into retirement. Not bad.
I sometimes wondered why I was “still” in that industry as the years went by. In retrospect, if I could rewind time, I’d do it all over again. It was never boring and at times if anything, just a little bit too exciting.
Rick, really glad to see you writing again. Being able to be flexible in one’s career can lead to paths you would never imagine. Have seen this in our family. Chris
Rick, nice article. That’s a great list of behaviors to cultivate for someone starting, or restarting a career. And they have wider application to living life.
As I compare my own career to your list, I see that–on my best days–I followed the practices you advise. They served me well, including your recommendation to stay flexible. And when I lost that flexibility, I’m thankful I was prepared to make the choice I describe in the article posted today.
Sorry, but this is an unrelated comment and perhaps one of the regulars could respond. I get the Humble email on Saturday morning and I see that the articles have been posted earlier as comments are already a day or two old. Seems like it’s too late to join in by Saturday morning and I was wondering if the email notice could be timed to the day the articles first appear? Or, do I just need to login on such days? Thanks
Hensleys, it’s never too late to join in on the comments. You can specify to be notified if someone replies to your comment. I actually prefer forum posts, as I can keep up with the latest posts and comments with one forum page open in my browser.
Randy, I didn’t know you could be notified. Can you let me know how? Thanks, Mark.
Mark, tap the bell icon next to the Post Comment button before hitting the button.
Perfect, that makes things so much easier. Thanks!
Thank you so much for reading, and for your question. As Mark says below, each article has a date attached to it. For instance, today’s newsletter lists three new articles–Adam Grossman’s usual offering, plus one from Rick Conner and one from me. If we click on “HumbleDollar” at the top of this page, at the time I write this comment, we’ll see those three articles contained in the mix of posts. Below the headline, each article has a green “article” tag, the authors byline and the publication date.
On another Saturday we log in and navigate to the Home page, however, among the dozen posts displayed, we may see a green-tagged article from an earlier date, along with the current articles.
Thanks again for reading!
Your observation puzzles me. I receive the email on Saturday, and the articles appear on the same date — so I’m not sure where the disconnect is. Could you be mixing up the forum posts, which go up throughout the week whenever a contributor posts, with the articles, which are only published on Saturdays? It’s also worth checking whether an older article has resurfaced on the Humble Dollar landing page because someone left a recent comment on it. Either way, it’s easy to verify — the publication date is on every article.
Rick, great to see an article with your name on it. Having spent most of my career running my own business, I never faced these particular challenges firsthand. My wife Suzie, however, spent many years in banking and lived through three corporate mergers. Watching from the sidelines as her domestic partner, I was always struck by the stress it placed on her and her colleagues.
From what I observed, adaptability was everything — those who could roll with the punches and find their inner Zen tended to come through it well. It was the ones who dug in and fought every battle on principle who seemed to struggle and, over time, fall by the wayside.