MBS-FEC Merger Announced

UPDATE (1-Oct-09): This merger will no longer proceed. Details here. Also read Joshua Gans' post on this.

The last time I talked about the merger between Melbourne Business School and the University of Melbourne’s Faculty of Economics and Commerce (FEC) the two schools had:

  • agreed in principle that were going to merge

  • started a consultation process to figure out how that would happen.

Since then, they have agreed on the proposed merger and are now waiting on approval from the Members of MBS Ltd – which is the not-for-profit organization that governs Melbourne Business School – before they can go on.

Announcements and News Reporting

This was announced by both MBS and Melbourne Uni:

And has also been discussed in the media:

Yes, the jobs angle was a funny one for The Age to take but I presume they did that because the timing of the merger announcement was unfortunate: Melbourne Uni had only just announced that they were going to cut 220 jobs because of the financial shortfall brought about by the global financial crisis.

Communicating the Plan

In order to give us stakeholders a chance to find out first-hand what was going on with the merger, MBS invited students and alumni for a Questions & Answers session with Acting Dean Jennifer George and Professor Richard Speed.

It was hugely encouraging to know that a session like this had been planned. Mergers are difficult times for both organizations and, during this period, it’s crucial to have this kind of stakeholder communication and engagement. And by ‘stakeholder’ I mean everyone involved in the organization so that includes employees, students, alumni, prospective students, faculty, academia, industry, government, accreditation organizations, suppliers, employers, partners, the media, and so on.

Further, this communication and engagement needs to be:

  • frequent

  • take place at all levels of the organization, and

  • discuss the issue to varying levels of depth depending on who you’re talking to and what’s important to that group of people.

Fortunately, that’s exactly what MBS is doing and this session was an excellent first step.

What was also good was the kind of session that Jenny and Richard ran: it was completely open, honest, and we could ask them anything we liked. They didn’t, of course, know the answers to all our questions – there are still numerous details to be worked out – but they did manage to cover all the important points.

What I liked most about the session, though, was the sense of excitement and realistic optimism that everyone seemed to have. This merger is an exciting opportunity and, though everyone knows it will be difficult and complicated to pull off, we are looking forward having a crack at it.

Details About the Merger

So what have we learnt so far about the proposed merger?

  • The organizational structure of the merged entity, called the Faculty of Business and Economics (FBE), has been finalized:

MBS - Uni Melb Merger Org Chart

  • The main merging is taking place in the graduate space because undergraduate and executive degrees and courses will probably not change very much post-merger. How exactly the graduate space (i.e. degrees, courses, schedules, fees, classes, faculty, research, etc.) will change has yet to be finalized. Indeed, that space may continue to change and evolve over the next 2-3 years as things get tweaked and improved.

  • Academic oversight over all courses, subjects, and degrees offered by the FBE remains, of course, with the University of Melbourne.

  • The management of the FBE goes to MBS Ltd. In exchange, the University of Melbourne increases its stake in MBS Ltd from 45% to 70%.

  • MBS Ltd’s Board gets increased to thirteen members: eight nominated members (to be voted in), two university-appointed directors, one staff director, one alumni director, and one executive director.

  • The current Chair of the MBS Board, Ron McNeilly, continues in his role. The current Dean of the FEC, Professor Margaret Abernethy, becomes the inaugural Executive Dean of the new FBE.

  • Mt. Eliza Executive Education becomes Melbourne Executive Education. However, this is run by a wholly owned subsidiary of MBS Ltd (which I refer to in the chart as Melbourne Executive Education Ltd because I don’t know what it will be called). So, even though this is part of the FBE, it will be managed reasonably independently.

  • The new graduate program will be split into two streams. The pre-experience stream will be for students fresh out of an undergraduate degree (or with limited work experience). The post-experience stream will be for students with some work experience. The existing MBS MBA degree will come under the post-experience stream while some of the FEC’s existing masters degrees will come under the pre-experience stream.

  • Assuming the MBS Board approves this proposal, the FBE will officially come into being on 1 October 2009 with an aim for “full integration” by 1 January 2010.

As you can imagine, most of the synergies of this merger will occur in the graduate area where there are numerous win-win scenarios. For example, MBS students will get access to a wider range of electives while FEC students will get access to the specialist electives that only MBS offers.

What Next?

The next important date for the merger is 26 August, which is when Members of MBS Ltd will meet in an Extraordinary General Meeting to vote on the merger proposal. There is no real reason for the proposal to not be accepted but that is the last formal step that needs to be taken. I’ll keep you posted on how that goes.

Over the next few months, I hope to write more about this merger in particular and about mergers, cultural change, and stakeholder engagement in general. Stay tuned.