Lost in transition
Nineteen thousand. That’s the estimated number of jobs to be cut as the Barclays-Santander-Fortis consortium eats Dutch rival Abn Amro in what is purported to be ‘the world’s biggest financial services takeover’ worth an estimated, staggering US$91bn. It is hard to say how many of the employees that don’t face the chop from these four banks will be convinced to stay, as they pass through several rounds of change out of their control. “The dynamics of this process are rather more complicated than a merger situation,” Abn Amro’s Christine Van Waveren tells Employment Engagement Today. “Right now the consortium, with the help of Abn Amro, is drawing up a transition plan for approval by the Dutch Central Bank (DCB), and they have 45 working days to complete it. Once the plans are approved by the DCB, work with the relevant work councils and staff representative bodies will begin. We think the consortium will be in a position to implement the transition plan with the support of all stakeholders within six to nine months.” The consortium will then split the bank up and divide the spoils among each constituent as they see fit. That is the sort of disruption many employees run from at the first whiff, and that sort of mass defection is guaranteed to have a negative effect on an already nervous (sometimes jaded) workforce. The knock-on can have a negative effect on motivation, output, the bottom line and the company brand.
The concept of employee engagement is never more vital than in a merger or takeover situation. Brand is more than a name: it is the experience customers have through dealing with the workforce, and it is the workforce that absorbs the effects of a merger or takeover. More and more UK companies claim they are waking up to this, and with ferocious merger and acquisition (M&A) activity in the UK showing no signs of abating, the term ‘stakeholder’ – an employee who not only can be affected by a company’s actions, but is empowered to affect the company and shape its future – is gaining credibility as a balm to the madness. In a merger scenario, the stakeholder concept can be used to unite staff in very uncertain times to keep them focused on creating value, completing projects, serving customers and reinforcing the brand equities – instead of watching them become despondent about the quality of their output and corrode those equities. It can be as simple as being honest with them about the merger process, involving them in the details, avoiding an ‘us and them’ division between staff and management that can harbour adversarial feeling.
“It’s about getting rid of the uncertainty, which is exacerbated by the rumour mill you often find in merger or takeover situations. This negativity can draw so much energy out of the workforce because they spend less time working on the company’s goals and more time gossiping and worrying about what is happening. This is especially true if companies don’t communicate the truth to their staff,” says Sue Stoneman, managing director of London-based communications agency NKD Group, who has worked with several large UK firms to oversee employee engagement in a merger situation and has a prior career in private equity firms. Stoneman believes creating trust is the first step to engaging staff, requiring a new approach to communications, an area usually managed through HR. Management tends to focus on informing their employees about what is going to change, but it is a good idea to focus on what is not going to change too, because much stays the same after a merger. It is the fear of change that is so disruptive,” says Stoneman. “The largest takeover I’ve been involved in affected 35,000 staff and we spent most of our time dealing with employee communication, issuing weekly communication packs to staff across the world about what was happening. We also asked them to send us their questions, and issued the answers to the ‘top 10’ questions, telling them as much as we knew at that point and admitting when we didn’t know the answer.”
The view on what employee engagement means is quite different in the UK to, for example, the US. In the UK, it is usually a function of HR; in the US, it is more commonly the mandate of a firm’s corporate communications department, reflecting a better understanding of the relationship between employee engagement and maintaining strong brand equities. Gary Grates, global director of change management and employee engagement for public relations behemoth Edelman, believes it should not be either, but rather a system put in place by, and overseen by, company directors from the outset, to lead it through times of upheaval which can result from a merger.
“First and foremost, when practiced correctly, employee engagement is about making people stronger, smarter and highly effective regardless of the vagaries of an organisation’s success – giving them the ability to withstand lay-offs, downturns or mergers,” says Grates. He, like NKD Group’s Stoneman, believes staff communication is the cornerstone of a good employee engagement plan and should feature heavily in a merger scenario to calm nerves and unite the workforce. That direct, ‘out-there’ channelling of information between the board and the staff translates into direct, positive communication of company brand from the staff to the customer: it is that simple. All become stakeholders.
But the concept of employee engagement being a function of either corporate communications or a direct operational responsibility of the board tends not to wash well in the UK. A look at 2007’s Employee Engagement Awards, run by The Royal Bank of Scotland, show clearly the companies receiving gongs all put their HR teams to work. High street chemist Boots was recognised for its HR department’s engagement strategy pre-merger with Alliance Unichem in 2006. It has revealed that it saved nearly £16m in business lost to staff absence and turnover – boosting its scores by reputational litmus testers, the Great Place To Work Institute, which it believes added £5.8m to its bottom line in 2007. Also included in the awards were the HR teams at B&Q and Vodaphone UK.
The link between engaged staff and an engaging brand is indeed gaining traction. Not only is losing trained, experienced, reliable people costly to replace – it is that great moneyspinner of 21st century business: a reputational risk.
But that does not just apply to firms operating in a consumer-led environment. “It is even worse for companies such as consulting firms, more thought-led, less physical ‘high-street’ operations,” says NKD Group’s Stoneman. “What those firms are selling is the human element, and customers are buying confidence. Employee engagement is even more important for them. If a client rings a consulting firm and they are told someone will call back, but they don’t, it can eat into that relationship.”
What about a firm on a buying rampage? How does its staff deal with a prolonged period of change with no proposed end? London’s Incisive Media, a financial and special interest publisher taken off the public markets last year by private equity house Apax for £199m, is one example of a company that has had to keep a keen grip on its employee engagement and brand. The firm has acquired 11 companies in the last five years, and now employs over 2,000 people across its business in the UK and abroad.
Like most UK companies, Incisive does not have a specific employee engagement plan. It is marked, however, in its approach to integrating new teams to the parent company by going to them once the deal is done, rather than expecting new staff to come to them with concerns following a period of bedding in. Of a handful of induction meetings all staff attend, chief executive James Hanbury manages one for every individual so that they meet the guy at the top in person and instigate a relationship with the board from the outset of their career with the firm. “Every employee meets me and has the opportunity to ask questions at an early stage in their career,” Hanbury tells Employee Engagement Today. “These questions can be very enlightening and can help us shape and improve the way we run the business.”
Hanbury also frequently moves his office to the location of newly acquired businesses and teams, to be with them as they integrate. The firm always sends one of its officers to oversee every remote acquisition, as opposed to issuing a new mandate with orders to cull staff from afar to an incumbent – who may have spent years building trust among their staff. “The aim is to maintain stability by only making necessary changes and by ensuring we adopt best practice from acquired businesses, as well as ensuring they fully understand our way of working,” Hanbury explains. “Every acquisition brings with it new ideas and approaches, so the ability to listen and adapt from both sides is crucial to winning mutual respect and cooperation.”
Allowing staff to draw their own conclusions about their fate and the gossip that can poison motivation is bad business and easily avoided with the will to create trust and open communication between the board and the workforce. Mergers are too expensive and timely to let them fail because a firm has neglected this simple rule. With genuine intentions and a collaborative mindset – HR and internal communications teams working together – it can be possible to retain the affections of valued staff and therefore, some of the elements that constitute brand equities.
Do not let it get to the point one airline in the US suffered: after a messy, badly managed merger, frustrated employers took engagement into their own hands by pouring sugar into jet fuel tanks.
