M&As increase risk of anxiety: Study

Lack of control, job insecurity cause stress
By Amanda Silliker
|Canadian HR Reporter|Last Updated: 03/26/2012

James Aw, medical director of the Medcan Clinic in Toronto, recently saw a patient, a financial industry executive, whose company merged with an investment firm. The firm featured executives who were “high-octane, Type-A guys who really hustled,” the patient told Aw, while his company moved a bit more slowly. To deal with the stress surrounding the merger, the executive spent more late nights at work, drank more, stopped exercising and slept less, he said.

“The other institution was very hungry and aggressive and it had a different culture and so marrying those two cultures was a challenge,” said Aw. “People respond in different ways — some people get energized by being inspired to be like that other person but, when there’s a merger happening, you’re kind of looking over your shoulder.”

Mergers and acquisitions (M&As) can be very stressful for employees and increase their risk of general anxiety disorder (GAD), according to a study from the University of Calgary. Employees who are exposed to M&As are 2.8 times more likely to be diagnosed with GAD within one year than those who are not.

The study followed 3,280 employees for one year and those who had been exposed to M&As had a much higher incidence of GAD (6.7 per cent) compared to those who had not (2.4 per cent), found “Business mergers and acquisitions and the risk of mental disorders” in the January 2012 issue of Occupational and Environmental Medicine.

“Here, we’re talking about a clinical diagnosis and not just depressive symptoms, and I think everybody is probably going to experience some symptoms but there are only a small proportion of people that meet the clinical criteria,” said JianLi Wang, associate professor at the University of Calgary and lead author of the study.

GAD is a category of anxiety disorders with the essential feature of excessive anxiety and worry for at least six months. Symptoms of GAD include restlessness, fatigue, difficulty concentrating, muscle tension and sleep disturbance.

Lack of control adds to anxiety

The little control employees have over the process is one reason an M&A may lead to an anxiety disorder, found the study.

“We get concerned, if not worried, when there is an uncertain future,” said Merv Gilbert, adjunct professor at Simon Fraser University in Vancouver and principal at organizational health consultants Gilbert Acton.

“It would be things like ‘Will I have a job? Will it be the same job? Will I have the same boss or supervisor? Will I be working with the same people? Will I need to learn new things, do new things? Will I be paid the same?’ — there’s a host of unknowns that can arise.”

The job insecurity employees face when their company undergoes a merger or acquisition is also associated with increased risk of GAD, found the study.

Since these decisions are made first at the executive level, an ordinary employee doesn’t know what her future holds, said Wang.

“It’s natural they will worry about job insecurity, whether or not they will have the income, and those consistent worries will exacerbate their worries about a variety of other things (such as) their family, their kids, their marriage.”

Along with GAD, mergers and acquisitions can increase the risk of depression, other forms of anxiety disorders, substance abuse, panic disorder, fears and social anxiety, said Gilbert, who is also a member of the project team for Guarding Minds @ Work, an online resource helping employers promote psychological health and safety in the workplace.

When people undergo a stressful event, there are three stages they go through before they reach burnout, said Aw. The first stage is anger and irritability, where people are more on-edge and short-fused. The second phase is self-destructive behaviours such as not exercising, eating more or getting into bad behaviours that are an escape from reality.

The third phase is emotional exhaustion, where otherwise bright people go into a “robot mode” of going through the motions but being emotionally checked out — and that’s when the anxiety starts to happen, said Aw.

“Everyone has stressful lives, it comes and goes, there’s good stress and bad stress. You can’t predict things and most people oscillate between these different groups but if you can’t get altitude and get out of these sentiments, that’s when sometimes you sort of spin out.”

Work performance also affected

M&As can not only negatively impact an employee’s health but work performance as well. When employees face uncertainty about their future, morale is often decreased, which can lead to many other issues, said Wang.

“(Employers may) also find an increase in the number of days absent but, more importantly, the mental health problem affects presenteeism, so people may go to work but sit there and do nothing,” he said. “It’s going to affect their employees’ productivity and eventually hurt their bottom line.”

To reduce the negative impact an M&A has on employees and an organization, employers need to make sure they are communicating the changes to employees, said Gilbert. There should be communication sessions with all levels of employees where executives are straightforward about the concrete changes that are happening before, during and after the merger, he said.

“Communicate objective reality. Even if there are some things that are not going to be necessarily good news — we’re talking about a takeover, a downsizing and there are some hard facts there — at least get those facts out there in a timely and honest and open fashion because, if you don’t, employees will fill in the blanks with all sorts of things, it will be speculation,” said Gilbert.

Employers should also provide mental health promotion programs after the M&A announcement, according to the study. This would include educating employees on the signs of mental health problems, offering support and resources, and actively encouraging them to use the employee assistance program (EAP), said Wang.

Employers should be working to reduce the negative impacts mergers and acquisitions have on employees and organizations because they will be seeing even more of them in the coming years, found a recent survey by PwC. One-quarter (25 per cent) of the 130 Canadian CEOs surveyed are planning to engage in M&As, compared to the global average of 12 per cent, found the survey.

“Change handled poorly can have substantial negative ripple effects which can be almost cancerous... and can basically undermine and potentially destroy a successful merger,” said Gilbert.

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