CREDIT UNION MERGERS:PSYCHOLOGICAL CONTRACTS AND ORGANIZATIONAL TRUST

Abstract

Economies and efficiencies of scale serve as drivers of Canadian Credit Union mergers. The critical success factors of merger initiatives are largely driven by the internal human resources of each entity; however, this critical component of the process is often neglected or apportioned an inappropriate degree of consideration. As a result, employees are frequently not fully engaged or supportive because the tenets of their psychological contracts are not always met and their perceptions of organizational justice and organizational communication are not positive. This potentially impacts the level of organizational trust that results in either merger success or failure, especially in relation to employee impact and employee engagement. In order for Credit Union mergers to succeed, employees must be positioned to buy in to the change process to the point where they embrace and champion merger and its benefits. The purpose of this research study was to examine those factors that influence employees’ perceptions regarding Credit Union merger processes, specifically relating to the importance of their engagement and support. As both successful and less than successful or marginally successful mergers are being examined, it is suggested that the successful firm has good engagement and support. More specifically, the impact of organizational trust was studied in relation to employees’ trust in senior leadership and senior leaderships’ perceived perception of trust in subordinate employees. These significant factors, studied from the perspective of antecedents, dimensions and outcomes of organizational trust, lent support to a proposed foundation to examine their impact on employee engagement and merger success. Deficiencies in these areas were identified and recommendations made to address them. It was proposed that timeliness of employee integration be considered critical in developing the appropriate support framework required for Credit Union merger success, recognizing that financial and logistical considerations invariably dictate decision processes.