Introduction:

Increased demands for greater efficiency and effectiveness are leading a growing number of North American Jewish organizations to consider merging or consolidating operations. Over the past 10 years day schools, complementary schools, community centers, cultural organizations, social service organizations, and federations have merged or consolidated. In addition, some “functional” community federations have created community consortia to share certain services (e.g., purchasing utilities and supplies, financial management, benefits coordination, etc.) with other communal agencies in order to enhance service delivery, consolidate infrastructure and resources, and reduce costs. The Jewish Federations of North America (JFNA), which has been monitoring and facilitating information sharing about these ventures, expects the number of mergers and consolidations to increase significantly over the next decade. This issue of Quick Bytes describes and analyzes the processes and early results of recent mergers of central agencies for Jewish education with other community organizations.

The Sources of Our Data:

In conducting the research for this issue of Quick Bytes we adapted the case study rubric developed by JFNA for its July, 2011 publication, “Representative Practices: Mergers, Consolidations, Strategic Alliances and Efficiencies in the Federation Movement.” The report provides examples of mergers, consolidations and strategic alliances that occurred between Federations and agencies in eight different communities since 2003. We are grateful to JFNA for permitting us to share their publication and to adapt their framework.

The information for this report comes primarily from in-depth phone interviews with central agency or federation professionals who played key roles in the merger processes and/or guided these new entities after the mergers. We also reviewed written documentation provided by federation leadership to JFNA for the preparation of its report.

It is currently premature to present data about“key successes and accomplishments” since three of the four central agency mergers reported in this publication are only in their first or second year of existence.

Key Learnings:

Four central agencies for Jewish education (bureaus) merged with other community organizations between 2006 and 2011.

• The configurations of involved organizations/agencies varied by community:

1. 1. Two mergers involved the central agency, the federation and the JCC;
   2. One merger involved the central agency, the federation, a JCC and a Center for Jewish Culture;
   3. One merger involved the central agency, the federation and a JCC; and
   4. One merger one involved the central agency, Hillel and the local teen initiative.

• In all cases the federation convened the merger process.

1. 1. In two communities, the federation was an equal partner in the merger.
   2. In one community, the federation was an identified sponsor of the two flagship programs of the new entity.
   3. In one community, the federation remains a financial supporter of the new entity, albeit providing only half the funding that it did before the merger.

• Two communities engaged external consultants to facilitate components of the merger processes and two did not. External consultants were not viewed as great assets to the processes.
• The most frequently cited reasons for exploring mergers were to:

1. 1. Improve finances, operations and efficiencies (e.g., reduce management and administrative costs, increase revenue, achieve economies of scale, increase return on investment, improve accountability, etc.).
   2. Strengthen program and service delivery through creating a “seamless continuum,” creating linkages, shepherding involvement, and synergy and team building, particularly for those “clients” served by multiple communal organizations.
   3. Cross-utilize and maximize skill sets by pooling resources and expertise, capitalizing on synergies, and eliminating redundancies.
   4. Better achieve organizational missions and align programs/services with strategies and priorities, better serve more clients, increase market share, and offer comprehensive service delivery.
   5. Ensure the economic viability of some Jewish communal institutions.

• Each of the four former central agencies now operates in a new structural and functional home.

1. 1. For the three entities in their first or second year of existence, key informants report early successes in clarifying missions and roles, collaborating with new institutional partners, and reducing duplication of services.
   2. The central agency that was reconfigured five years ago reports that it has transformed itself from a merged entity of three separate organizations funded by its local Federation to an organization that is able to implement systematic change in Jewish education.

• All of the mergers followed similar process stages: Exploration, Negotiation, Implementation Planning and Integration. The merger processes took between 9 months and 4 years to complete.
• New Boards and governance structures were created, comprised of volunteer and professional leaders from the merged organizations. Respondents in each community noted that more work is needed to help lay leaders transition from representing one of the previous entities to shepherding the new merged organization.
• There were initial reductions of redundant staff positions (e.g., multiple CFO’s), which often did not impact education staff. With the passage of time and as the organizational missions and staff skills and abilities have become more clearly defined, responsibilities have shifted, staff teams have developed across the merged organizations and staff turnover increased. In the case of the merger that has been in effect the longest (three years into the merger) , there was a 70% turnover in staff actualized over the course of 18 months once the agency’s mission and focus were more finely focused.
• Based on determination of which staff or entities would be the best providers of programs and services, program and service duplication was reduced and efforts at creating synergies across the different program areas began, with much reported success.
• Three communities report immediate economies of scale (e.g., through facilities/space utilization, and the elimination of certain executive staff positions and programs). In one community where the merger was initiated in order to increase the impact of Jewish education in the community (rather than for financial reasons) the Federation allocation was reduced by almost 50% over the last five years, forcing the agency to engage in significant fundraising activities.
• In most cases it is too early to document specific successes and accomplishments attributable to the merger. Nevertheless, key informants from the communities identify the following early benefits of the agency mergers:

1. 1. The merger deliberations provided opportunities for candid discussions among the organizations about their individual strengths, limitations and capacities.
   2. The processes mandated research into community trends, needs and gaps in Jewish educational offerings.
   3. The processes led to greater engagement and support from leadership of multiple organizations.
   4. Community planning was strengthened by building consensus on mission, vision and values.
   5. Some Jewish institutions that were in serious financial difficulty have been able to survive and the merged entities are perceived to provide better, higher quality programming and services.

• Challenges and roadblocks that were encountered in these merger processes included:

1. 1. Addressing history, institutional loyalty and trust issues.
   2. Balancing the pressure to get things done quickly with time consuming negotiations. It is difficult to continue “work as usual” during planning processes. In addition, other events often arose and slowed down the merger process.
   3. The desire of each organization to protect and preserve professional positions.
   4. Significant cultural differences between merging organizations.
   5. Developing new marketing and branding.
   6. A fundamental lack of clarity regarding the mission of the new entity.

• The most frequently cited lessons learned about the merger processes focused on the importance of:

1. 1. Understanding the history and perspectives of community partners, and establishing trust between them.
   2. Clarifying the mission of the new entity from the outset.
   3. Investing the time to get “real buy-in” from all stakeholders.
   4. Communicating - ensuring that people use the same language and mean the same thing.
   5. Using power appropriately and not coercively – this is especially important for leaders in the process and in the merging/merged organizations.
   6. Addressing the loss of communal institutions, professionals and lay leaders.
   7. Being realistic about what can be delivered based on staff capacity.
   8. Focusing on the most efficient ways to maintaining certain services while being open to integrating new ways to do business. Developing a balanced approach that seeks to involve those who are already engaged and invested, and new populations that are not currently being served.
   9. At times, it is beneficial to use outside consultants.

Commentary

Stuart I. Forman, a management consultant hired by JFNA to analyze the data collected about mergers, consolidations or strategic alliances in communities around North America, wrote:

“If you have seen one merger, you have seen one merger. Every community and every organization has its own unique characteristics. Combining those particularities is most often the art of successful mergers/affiliations. Examining best practices is important, but not determinative. In communal alliances there is no such thing as ‘one size fits all’.”

Regardless of the differences between the processes, there were important common themes and early lessons learned. The mergers each dealt with refining and/or redefining institutional missions. They involved key lay and professional leadership, and their roles and support were critical. Clarity of mission helped determine the services and programs that can and should be offered, and by whom. Seeking this clarity often led to the establishment of initiatives that better meet the needs of more people. And, during each of the mergers, at some point there was a painful staff turnover.

Forman concludes his analysis of community mergers by reminding us that:

“Ultimately, affiliations are human processes. They are neither straight forward nor simple. They are exercises in politics, in the sharing of power and control, in the mutual determination of what is best for all, in the distribution of resources and control of finances, and in learning the art of compromise and achieving the ‘win-win”. Even those of the highest motivations must be alert to the potential pitfalls posed within the contexts of some of these issues and the affiliation processes.”

With this in mind, affiliating partners must keep the overarching goals in mind at all times. Consonance with purpose is the job of the leadership. What is best for the community should always trump what is best for any particular organization – even the newly created affiliated entity.

After all, it is the Jewish community whom we serve. Its strength and well-being are our ultimate concerns. Every affiliation, alliance, partnership or merger must always be in service of those principles that make us Klal Yisrael.

Continuing the Conversation: view the follow-up webinar on this topic here in our archives (total running time: 54 minutes).

Questions for Consideration:

• Stuart Forman posits that successful mergers take into account (or even capitalize on) the unique characteristics of the community and organizations. What are the dimensions of characteristics that must be attended to (e.g., organizational culture, leaders personalities, impetus for change, potential resources (human, financial, time), etc.)?
• Compromise and finding the “win-win” are keys to successful mergers. What have been some levers to achieving compromise and finding the “win-win” in successful mergers you know about or have participated in?
• True integration into a new entity clearly takes time and effort. In your experience, what are some promising strategies to support integration? What are some pitfalls to avoid?