Magazine article Risk Management

Mega-Mergers Create Multiple Risks

Magazine article Risk Management

Mega-Mergers Create Multiple Risks

Article excerpt

In the wake of recent giant media, utility and banking mergers, a new report from a national outplacement firm suggests that after the honeymoon is over, a rash of downsizing may occur. The study, conducted by Challenger, Gray & Christmas Inc., based in Chicago, says that layoff announcements jumped 43 percent in August to 33,262 from 23,283 in July. Headlines from the recent deal between New York banking giants Chemical Banking Corp. and Chase Manhattan Corp. pointed to the elimination of 12,000 jobs alone.

"Mergers confuse the work force far more than the impact of a recession," says James E. Challenger, president of the firm. The work force can accept cutbacks when business falls off, but mergers present an entirely different situation, he says. He adds that the work force often feels blindsided when sudden merger announcements are followed quickly by sizable cutbacks.

As a result, employees' sense of insecurity increases because they view mergers as squeezing more work out of fewer people. While some eccnomists caution against reading too much into the one-month jump in the layoff statistic, others say there could be a surge of cutbacks similar to a few years ago, when IBM and regional telephone companies slashed their work forces. …

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